/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/
CALGARY, May 31, 2011 /CNW/ - China Coal Corporation ("China Coal" or the "Company") (TSXV: CKO) is pleased to provide a corporate update on its 75% Coal Bed Methane
("CBM") exploration project located in Xinjiang province, China, and on
its previously announced intention to acquire 60% of the newly
operating Mei Feng coal mine, also located in Xinjiang province.
With respect to the CBM
A little over a year ago, on May 19, 2010, the Company, previously known
as JYW Capital Corp. ("JYW"), announced it closed its Qualifying
Transaction ("QT") and related financing, as accepted for filing on May
14, 2010 by the TSX Venture Exchange (the "Exchange"). The QT was
originally announced on June 25, 2009 and updated on August 25, 2009,
and full particulars are disclosed in the JYW CPC Filing Statement
dated February 25, 2010.
As part of the QT, a plan to explore for CBM in Xinjiang, China, was
proposed and approved: the Norwest Corporation technical report. This
report provides for a 3 year exploration program that totals
approximately $3.6 million in drilling and the related expenses
associated with exploration drilling and permit development. The
Company notes that this exploration work can only be prosecuted in the
summer drilling months and can, with proper planning, be initiated and
completed in a single drilling season. The Company intends for this
drilling program to be conducted with its 25% Peoples' Republic of
China ("PRC") partner, Hami Zhongmei Energy Co., Ltd., which has
committed approximately $4.6 million towards the exploration work.
During the initial summer 2010 drilling season, only immaterial
geological survey work was completed on the CBM lands and no
exploration drilling was conducted. Since the passing of the 2010
drilling season there has been no opportunity to commence an
Shortly after May 19, 2010, the Company became aware of several nearby
acquisition opportunities in coal mining and CBM, and on June 25, 2010,
announced that its PRC subsidiary had executed an agreement to acquire
60% of a newly built coal mine (now identified as the Mei Feng coal
mine) in Xinjiang province. This coal mine is now operating. Thus, as
a result of the shortened timeframe for the summer drilling season and
the merits of deferring the work program on the CBM lands to at least
the 2011 summer drilling season, management determined it was in the
best interests of the Company to reallocate original QT cash for a
deposit to be applied against the Mei Feng acquisition.
The original QT provided that the Company had the power to reallocate
funds as deemed necessary. After the June 25th, 2010 announcement of the intent to acquire the interest in Mei Feng,
management reallocated and paid a cash deposit of 22 million RMB or
approximately $3.3 million (100% refundable or convertible into a
working interest equity position in Mei Feng) to the Vendor of Mei
China Coal is currently continuing to examine opportunities to start and
complete exploration on the CBM lands during the summer drilling
seasons of 2011/2012. In order to fund this work the Company will
likely call on resources from its PRC partner, but it can also employ
other resources. The Company is therefore confident it can fund and
conduct any and all required operations on its CBM lands, as originally
described in the QT.
The QT documentation also originally identified certain capital
contributions that were to be made (to the Company's subsidiary) in
2010 - essentially injections of equity (called registered capital)
into China Coal's subsidiary, Xinjiang Huamei Mining Co., Ltd.
("Huamei"). These were required in order to keep the status of the
subsidiary active and valid according to PRC private company
regulations. During 2010 and in connection with the deposit made by
the Company through its subsidiary identified above, Huamei negotiated
with the appropriate PRC regulatory authorities to have the total
amount of capital contribution required reduced to a total of $5.4
million. Given injections previously made and the above referenced
reallocation deposit towards the Mei Feng acquisition, the Company met
its obligation to inject 75% of $5.4 million by the deadlines referred
to in the QT. Thus, Huamei met this capital hurdle under PRC and
permit agreement requirements, and also met one of the two conditions
for timed release of escrow shares issued on May 19, 2010.
With respect to Mei Feng coal mine acquisition
As previously announced in news releases of June 25, 2010, January 28,
2011, March 17, 2011 and March 28, 2011, the Company intends to acquire
a 60% interest in the Mei Feng coal mine.
The acquisition of the interest in Mei Feng is an arm's length
transaction and no finder's fee is to be paid by China Coal.
Completion of the proposed acquisition is subject to a number of
conditions, including but not limited to, Exchange approval. The Mei
Feng acquisition is defined as a "Fundamental Acquisition" under
Exchange policy and China Coal is in the process of submitting the
required documentation to the Exchange, and notes that it may also be
required to seek shareholder approval.
China Coal intends to finance this acquisition by way of cash on hand,
credit available to its Chinese subsidiary, Huamei, and an equity
financing to be announced in due course.
About China Coal Corporation
China Coal is focused on the acquisition of existing producing, or
formerly producing, coal mines, properties, and related assets in
China. The Company will provide capital to increase production, enhance
productivity, and focus on compliance with Chinese regulations. These
cash-flowing properties supply coal to one of the fastest growing
economies in the world. China relies on coal to supply over 70% of its
primary energy consumption.
On behalf of the Board of Directors
CHINA COAL CORPORATION
Chief Financial Officer and Director
This news release does not constitute an offer to sell or a solicitation
of an offer to buy any of the securities of the Company in the United
States. The Company's securities have not been and will not be
registered under the United States Securities Act of 1933, as amended
(the "U.S. Securities Act") or any state securities laws and may not be
offered or sold within the United States or to U.S. Persons unless
registered under the U.S. Securities Act and applicable state
securities laws or an exemption from such registration is available.
WARNING: This news release may contain forward looking statements based
on assumptions and judgments of management regarding future events or
results that may prove to be inaccurate as a result of exploration and
other risk factors beyond its control, and actual results may differ
materially from the expected results.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER
(AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE)
ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS NEWS
SOURCE China Coal Corporation
For further information:
+1403 452 8806; FAX +1403 452 8892
Mark Roth, CFO; Ray Fong, CEO
Brad Bloomer, Corporate Development, +1613 851 5156