Western Canadian Coal Enters into an Agreement with Cambrian Mining plc Relating to the Acquisition of Falls Mountain Coal Inc.



    TSX: WTN, WTN.DB and AIM: WTN

    VANCOUVER, April 27 /CNW/ - Western Canadian Coal Corp (TSX: WTN and
WTN.DB and AIM: WTN) ("Western") announced that it has entered into an
agreement with Cambrian Mining plc ("Cambrian") dated April 26, 2007 (the
"Master Agreement") governing the respective rights of Western and Cambrian
with respect to the acquisition by Cambrian of Falls Mountain Coal Inc.
("FMC") from Pine Valley Mining Corporation ("PVMC") and the possible
subsequent disposition by Cambrian to Western.
    Cambrian announced on April 27, 2007 that it has entered into a sale and
purchase agreement (the "Purchase Agreement") between PVMC, FMC and Cambrian,
pursuant to which Cambrian will acquire all of the issued and outstanding
shares of FMC from PVMC (the "Acquisition"). The proposed consideration for
the Acquisition to be paid by Cambrian is approximately C$15.6 million in
cash, C$11 million principal amount of 7.5% convertible unsecured subordinated
debentures due March 24, 2011 issued by Western and held by Cambrian, and a
royalty payment of C$1.00/tonne, escalating at 2% per annum to a maximum of 
C$1.50/tonne on coal loaded through the load-out at Willow Creek up to a
maximum total royalty payment of C$26 million. Assuming approval by the
creditors of PVMC and FMC and the satisfaction of a number of other
conditions, the Acquisition is likely to be completed in late June 2007.
    FMC is the owner of the Willow Creek open pit metallurgical coal mine
(the "Willow Creek Coal Mine") located in the Peace River region in
north-eastern British Columbia, approximately 45 kilometres west of Chetwynd,
British Columbia, including the coal handling, processing and rail car
facilities associated with the Willow Creek Coal Mine. Western is uniquely
positioned to take advantage of the Willow Creek facilities which offer
significant synergies to Western's Brule mine. In particular FMC's plant would
eliminate the need to build a new preparation plant and load-out to serve the
Brule mine. The FMC load-out will enable Western to experience significant
transport cost savings versus current operations and the combination of the
FMC properties with the Western properties will provide the opportunity to
produce coal with product mix and marketing synergies.
    Both PVMC and FMC have been inoperative and in care and maintenance since
being granted creditor protection under the Companies' Creditors Agreement Act
(Canada) ("CCAA") on October 20, 2006. PVMC intends to make an application in
the CCAA proceedings for an order authorizing it to accept the break fee
obligations set out in the Purchase Agreement and to seek procedural
directions from the Court on the approvals and other steps necessary to
proceed with a Plan of Arrangement with its creditors, which plan will include
the purchase and sale contemplated by the Purchase Agreement. The Purchase
Agreement contemplates that by May 31, 2007 PVMC will initiate the
applications in the CCAA proceedings necessary for an order to approve the
Plan of Arrangement and the contemplated transactions and obtaining such other
approvals as may be required by the Court.

    
    The Master Agreement is intended to set out the relationship between
Western and Cambrian with respect to the Acquisition and the operation,
management and maintenance by Western of the Willow Creek Coal Mine. The
Master Agreement has four progressive alternatives for disposition of FMC
prior to or after completion of the Acquisition;

    (a) prior to the Acquisition being completed, Western, subject to receipt
        of all necessary consents and approvals, will be entitled to request
        the assignment by Cambrian of the Purchase Agreement and Cambrian
        will take all necessary steps to assign the Purchase Agreement and be
        released from all obligations and liabilities thereunder; or

    (b) for a period of 180 days following the Acquisition by Cambrian,
        Western, subject to receipt of all necessary consents and approvals,
        will be entitled to acquire, and Cambrian will be entitled to require
        Western to acquire, all of the shares or assets of FMC, in either
        case for the purchase price of the consideration paid by Cambrian
        pursuant to the Purchase Agreement plus any additional contributions
        made by Cambrian to FMC less any net cash received by Cambrian from
        the FMC assets taking into account the Royalty plus 7.5% per annum
        of such aggregate costs; or

    (c) in the event that Western does not acquire the shares or assets of
        FMC, Western subject to receipt of all necessary consents and
        approvals, and Cambrian may form a limited partnership that would
        develop and operate the Willow Creek Coal Mine and Brule deposits,
        being the Brazion, Brule and Burnt River property group (the "Brule
        Deposit"); or

    (d) in the event that none of the aforementioned transaction alternatives
        are achieved for a period of 270 days after the completion of the
        Acquisition, Cambrian will have the option to purchase the Brule
        Deposit from Western, subject to Western receiving the necessary
        consents and approvals. The purchase price for the Brule Deposit will
        be agreed between the parties, failing which the price will be the
        fair market value as determined by an expert independent valuator
        appointed jointly by Western and Cambrian (the "Brule Option").
    

    The Master Agreement provides that upon the completion of the
Acquisition, Western will pay to Cambrian a fee of C$250,000. If the
Acquisition does not complete, except due the deliberate or willful default of
Cambrian, and a break fee of C$1.5 million (which is subject to Court
approval) is payable pursuant to the terms of the Purchase Agreement, Cambrian
will receive C$100,000 with the remainder of the break fee being held by
Cambrian for the account of Western. Additionally, the Master Agreement
provides that Western will pay Cambrian's reasonable costs in connection with
entering into the Purchase Agreement and the Master Agreement. From the date
the Acquisition is completed by Cambrian until the termination or expiry of
the Master Agreement, Western shall have the right to use the coal handling,
processing and rail car loading facilities owned by FMC. In consideration for
such use, Western will pay Cambrian C$2.50/tonne of coal loaded through the
facilities. The fee ceases to be payable upon the occurrence of the one of the
alternatives in (b), (c) or (d) set out above.
    In accordance with the terms of the Master Agreement, Western also agreed
to the terms of an interim management services agreement (the "Management
Agreement") with Cambrian dated April 26, 2007, pursuant to which Western is
to provide Cambrian with the management services and the personnel necessary
to operate and maintain the Willow Creek Coal Mine and related facilities.

    Related Party Transaction

    Cambrian, together with Cambrian's wholly-owned subsidiary Deepgreen
Minerals Corporation Ltd. of Melbourne, Australia currently hold approximately
45.9 million common shares of Western, representing approximately 47.4% of
Western's issued and outstanding shares. Mr. John Byrne, Chairman of Western,
is also the CEO of Cambrian and holds approximately 7.5% of the outstanding
shares of Cambrian. Mr. John Conlon, a director of Western, is also a director
of Cambrian and holds approximately 1.0% of the outstanding shares of
Cambrian.
    The independent directors of the board of Western have reviewed the terms
of the Master Agreement and the Management Agreement (together, the
"Agreements"). Following their initial review, the independent directors
requested that certain key provisions of the Agreements be discussed with
Cambrian. Following the discussions and further review by the independent
directors of the final terms of the Agreements, the independent directors
recommended to the board of directors of Western that Western enter into the
Agreements.
    The Agreements and the transactions contemplated thereby were approved by
the board of directors of Western at a meeting on April 26, 2007. As Cambrian,
together with its subsidiary is a substantial shareholder of Western, the
Master Agreement constitutes a related party transaction under the AIM Rules
and the Business Corporations Act (British Columbia). Having consulted with
Western's nominated adviser, the directors of Western, other than John Byrne
and John Conlon, who are also directors of Cambrian, consider that the
Agreements are fair and reasonable insofar as the shareholders are concerned.

    Cautionary Statements

    The information in this news release contains certain forward-looking
statements that involve substantial known and unknown risks and uncertainties,
which are beyond Western's control, including the price of coal, risks
relating to the exploration and development of coal deposits, and other risk
factors outlined in Western's Annual Information Form available on SEDAR at
www.sedar.com. Western's actual results and performance could differ
materially from those expressed in, or implied by, such forward-looking
statements and, accordingly, no assurance can be given that any of the events
anticipated by the forward-looking statements will transpire or occur or, if
any of them do, what benefits Western will derive from them.

    This press release is neither an offer to purchase securities nor a
    solicitation of an offer to sell securities.





For further information:

For further information: Western Canadian Coal Corp., Gary K.
Livingstone, President & CEO, or Greg Jones, Corporate Secretary, Phone (604)
608-2692, Fax (604) 629-0075, Email: info@westerncoal.com,
www.westerncoal.com

Organization Profile

WESTERN COAL CORP.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890