Coalcorp Responds to Allegations in Pala Press Release

    TORONTO, Oct. 23 /CNW/ - Coalcorp Mining Inc. (TSX-CCJ) responded today
to the incorrect, unfair and unjustified allegations contained in the press
release issued yesterday by Pala Investments Holdings Limited regarding the
employment contracts between the company and certain members of its senior
    Pala's statement that "it only recently learned" of such contracts is not
plausible. The existence of change of control provisions in employment
agreements for executive officers of the company and the amounts of such
change of control payments have been publicly disclosed in all of the
company's annual management information circulars since 2006. The agreements
were duly authorized by the board of Coalcorp at that time. These provisions,
which are not uncommon in the resource sector, are intended to protect
management of the company in the event of a change of control. As Pala is
fully aware, an effective change of control of a public company can occur well
below an acquisition of 50.1% of that company's shares. The change of control
provisions of the agreements allow management to receive certain change of
control payments if they resign following the acquisition of 25% or more of
the shares of the company, provided that, among other triggering events,
Serafino Iacono has resigned as a director of the company. At this time, none
of the triggering events has occurred and management has not triggered any of
the events within its control.
    For some time, Pala has been engaged in a creeping take-over bid for
Coalcorp: it recently announced it has a 44% shareholding in the company.
Following this announcement, at Pala's request, Coalcorp management met
earlier this week with representatives of Pala to respond to a proposal by
Pala to add nominees selected by Pala to the board of directors.
    At the meeting, Pala was principally interested in having the company
nominate a slate of directors selected by Pala. Coalcorp believes that Pala's
objective is to obtain control of the board, and thereby the company, without
triggering the obligation to offer to repurchase at a premium the $115,000,000
of Series A Notes which are currently outstanding, as required under the terms
of the Series A Notes.
    "We continue to be disappointed by Pala's unwarranted public
disparagement of Coalcorp and its board," said Michael Beckett, the Chairman
of the Board of Coalcorp. "Pala has been effecting a creeping take-over bid
without extending an offer to all shareholders and thereby depriving
shareholders of a control premium. Pala has repeatedly resorted to these types
of tactics in an attempt to intimidate the company and impose its views as to
how Coalcorp is managed and operated. If Pala wishes to control Coalcorp, it
should make a proper take-over bid and pay the company's shareholders an
appropriate premium for such control. In the absence of any such responsible
action on the part of Pala, the board will continue to work diligently in the
interests of the company and its business, for the benefit of all
shareholders. The board intends to propose the present slate of directors,
including Mr. Iacono, for re-election at its annual meeting, scheduled for
December 11, 2008."
    Current management and the board of directors are fully committed to
maximizing shareholder value through the implementation of the company's
strategic plan. The current board and management of Coalcorp have been
integral to the successful and continued implementation of the strategic plan
and other actions, which have encompassed to date: the appointment of a new
Chief Executive Officer and Chief Operating Officer, Colombian Operations; the
appointment of two new independent directors to the board; a focus on the
company's core assets; a reduction in costs; and the successful negotiation of
forward coal sales contracts that will increase the company's average price
per tonne of coal pre-sold over the next six years from approximately
US$52.00/tonne to approximately US$81.00/tonne.

    Coalcorp is a coal mining, exploration and development company with
interests in the La Francia coal mine and related infrastructure projects and
a number of coal exploration properties, all located in Colombia. Further
information can be obtained by visiting our

    This news release contains forward-looking statements within the meaning
of Canadian securities laws relating to Coalcorp including statements
regarding Coalcorp's proposed slate of directors for its upcoming annual
meeting and Coalcorp's implementation of its previously announced strategic
plan. The terms and phrases "intends", "continued", "will" and similar terms
and phrases are intended to identify these forward-looking statements.
Forward-looking statements are based on estimates and assumptions made by
Coalcorp in light of its experience, its current assessment of matters
relating to its meeting with Pala, and its perception of historical trends,
current conditions and expected future developments, as well as other factors
that Coalcorp believes are appropriate in the circumstances. Many factors
could cause future events to differ materially from those expressed or implied
by the forward-looking statements, including, without limitation unanticipated
developments and delays encountered in connection with expanding production at
the La Francia mine and the other matters set out in the strategic plan, risks
associated with operations in Colombia, unexpected requirements for additional
capital to meet the strategic plan, the price of coal and environmental and
other regulatory requirements. Readers are cautioned to consider the
forward-looking statements in light of these risks and others relating to the
companies which are discussed in greater detail in the "Risk Factors" section
of the company's Annual Information Form (a copy of which may be obtained at These factors should be considered carefully, and readers
should not place undue reliance on the company's forward-looking statements.
The company has no intention and undertakes no obligation to update or revise
any forward looking statements, whether as a result of new information, future
events or otherwise, except as required by law.

    %SEDAR: 00004043E

For further information:

For further information: Peter Volk, General Counsel and Secretary,
(416) 360-4653

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