Resource Capital Fund V L.P. Completes Buffalo Coal Corp. Loan Facility Conversion and Private Placement

DENVER, Dec. 7, 2015 /CNW/ - On December 3, 2015, Resource Capital Fund V L.P. ("RCF") announced that it agreed to convert US$20 million of its outstanding US$29 million convertible loan (the "Convertible Loan") advanced to Buffalo Coal Corp. (the "Company") into common shares of the Company ("Common Shares") over a two year period at the agreed conversion price of C$0.0469 per Common Share (the "RCF Conversion"), subject to a minimum conversion of US$10 million within the first year.  An initial amount of US$2 million was converted on the closing of the transactions described herein (the "RCF First Tranche Conversion") resulting in 56,963,752 Common Shares being issued to RCF.

Prior to the conversion of the US$20 million, interest will be settled through the issuance of Common Shares, priced at the 20 day volume weighted average price ("VWAP") on the Toronto Stock Exchange ("TSX"). Following the date of the conversion of the US$20 million, interest will be payable in cash subject to Buffalo Coal Dundee Proprietary Limited ("Buffalo Dundee"), a wholly owned subsidiary of the Company, having paid Investec Bank Limited ("Investec") its scheduled principal repayment for the prior quarter. If Investec's principal repayment has not been made, RCF's interest will accrue until such time as Investec has been paid, subject to RCF's election for interest to be settled through the issuance of Common Shares.

The percentage interest rate will be determined as follows:

• if the 20 day VWAP is greater than C$0.05 per Common Share then the interest rate will be 15% per annum;
• if the 20 day VWAP is less than or equal to than C$0.0313 per Common Share then the interest rate will be 24% per annum; and
• if the 20 day VWAP is greater than C$0.0313 but less than C$0.05 per Common Share then the interest rate will be calculated as being between 15% and 24% per annum.

On December 4, 2015, an additional 11,015,880 Common Shares (conversion of US$362,500 in interest at a conversion price of C$0.0440 per Common Share and applying a Canadian-US dollar exchange rate of USD$1 = $1.3371) were issued to RCF to satisfy the interest on the Convertible Loan for the period from November 1, 2015 to November 30, 2015.

The RCF Conversion was a condition precedent to an extension of an existing working capital facility between Buffalo Dundee and Investec, whereby Investec agreed to increase its loan facility to Buffalo Dundee from R30 million to R80 million (the "Supplemental Investec Loan").

As a further condition precedent to the Supplemental Investec Loan, RCF has subscribed for a further US$2 million of equity in the Company by way of a private placement (the "Private Placement").  Pursuant to the Private Placement, RCF acquired 72,272,480 Common Shares at a price of C$0.0367 per Common Share.

As of the date hereof, RCF holds an aggregate of approximately 88.7% (249,035,457 Common Shares) of the 280,729,049 outstanding Common Shares of the Company on an undiluted basis. Assuming full conversion of the RCF Conversion, based on a conversion price of C$0.0469 per Common Share, RCF will hold approximately 96% (767,159,124 Common Shares based on the current exchange rate) of the 798,852,719 then outstanding Common Shares of the Company on a partially diluted basis (without taking into account the conversion of the remaining US$9 million of the Convertible Loan).

The Common Shares were acquired for investment purposes. RCF will evaluate its investment in the Company from time to time and may, based on such evaluation of market conditions and other circumstances, increase or decrease its shareholdings in the Company as circumstances require.

For further information and to obtain a copy of the early warning report filed under applicable Canadian securities laws in connection with the transactions hereunder, please see the Company's profile on the SEDAR website www.sedar.com or contact:  

SOURCE Resource Capital Fund V L.P.

Resource Capital Fund V L.P, 1400 Sixteenth Street, Suite 200, Denver, CO, 80202, Telephone: [phone], Attn: Molly Campbell