🕐07.12.09 - 09:25 Uhr
Atlantic Coal plc - Proposed acquisition of Maple Carpenter Creek
Atlantic Coal plc / Index: AIM / Epic: ATC / Sector: Mining
7 December 2009
Atlantic Coal plc (Atlantic or the Company)
Proposed acquisition of Maple Carpenter Creek
Atlantic, the AIM listed open cast coal production and processing
company with activities in Pennsylvania, USA, announces that it has
entered into a non-binding memorandum of terms to acquire the entire
issued and to be issued share capital of Maple Carpenter Creek, LLC
(MCC) (the Proposed Transaction).
MCC is a Montana based clean
burning coal development company with over 380 million tons of coal
resource (controlling surface rights and mineral rights) in prime coal
mining territory.
The Proposed Transaction is part of the Companys
strategy to expand its asset base and production, by leveraging its cash
flow from the producing Stockton Coal Mine in Pennsylvania.
Overview:
* MCC is a major surface mining opportunity of high-BTU steam
quality thermal coal in North America
* Independent study by Skelly & Loy reported that the Carpenter
Creek coal project has control over current measured resource (proven)
coal reserves of 91.3 million tons, indicated coal reserves of 145.2
million tons and inferred coal reserves of 144.3 million tons over a
30,000 acre licence area, covering surface and mineral areas
* Transaction to be satisfied through the staged issue, dependent
on achieving certain milestones, for up to 1,330,689,665 new ordinary
shares in Atlantic (the Consideration Shares)
* Acquisition (subject to due diligence) would expand Atlantics
portfolio of quality clean burning coal projects - Montana is one of the
USAs premier low sulphur coal producing regions
* Atlantic to provide a short term loan to MCC for working
capital
Atlantic Coal Managing Director Steve Best said, "We have been
increasing production, revenues and margin at Stockton and we are now
leveraging our improved financial performance and operational
experience, to take advantage of well priced development opportunities
in the US and act as a consolidator in what is still a fragmented
market.
"MCC holds large economically attractive surface and mineral interests
in the State of Montana, one of the US premier low-sulphur coal
producing areas.
In particular, the Carpenter Creek holding is a major
undeveloped high-BTU, low-sulphur and large surface-mining coal
deposits.
This is of key interest following the USs Clean Air Act,
and with increased oversight on mountain top mining, which is forcing
energy generators to use this type of coal, we expect to experience a
rise in demand.
Furthermore, Warren Buffetts recent investment in the
major coal haulier, Burlington Northern Santa Fe Railroad, has
highlighted the potential growth of the industry, which he believes is
set to accelerate in line with the recovering economy.
"The size and quality of the MCC asset, its location and near term
production potential are all factors that underpin this as a fantastic
opportunity for the Company.
We therefore believe that it will greatly
complement our operation at the Stockton Anthracite Colliery in
Pennsylvania, where we are closing in on our target of producing 450,000
ROM tons."
It is proposed that the consideration payable to the owners of MCC will
be satisfied by the issue of up to 1,330,689,665 Consideration Shares.
The issue of the Consideration Shares would be phased over time, which
may take a number of years, and would be dependent upon the achievement
of certain milestone events.
Based upon Atlantics current issued share
capital and assuming no additional issuance of new ordinary shares by
Atlantic, the Consideration Shares would represent 49% of the enlarged
groups issued share capital.
Details on MCC:
MCC is a Montana based coal company established in 2007.
Its main focus
is on the Carpenter Creek coal deposit where it holds circa 30,000 acres
of economically viable surface and mineral interests in the State of
Montana.
The Carpenter Creek holding is a high-BTU, low sulphur and
large surface-mining coal deposits.
MCCs licences are located in Musselshell County, Montana, 50 miles
Northeast of Billings in an area of significant historically mined
reserves.
The Carpenter Creek prospect is approximately 20 miles to the
East of the Signal Peak underground mine that is currently being
developed with an investment of over US$400 million, which includes mine
development, mine infrastructure and a 30 mile railway spur.
Some of
MCCs other prospects are located adjacent to the Signal Peak mine.
The
whole Carpenter Creek coal area covers approximately 70,000 acres, and
contains an estimated 1.2 billion tons of high quality thermal coal.
Surface control at Carpenter Creek means MCC has direct influence over
the mineral resources of 380 million tons of coal.
MCC will target two mineable coal seams on its Carpenter Creek project -
the Carpenter Creek and McCleary seams.
Previous business models
developed by MCC have targeted production for 2012 and provide modelling
for a mine with potential for over 30 years production at 6 million tons
per annum washed coal, 10,400-10,800 BTU, with approximately 0.5%
sulphur.
Importantly, there is good access to existing transportation
infrastructure including a direct line to key coal markets in the US and
Asia.
Loan Agreement:
In conjunction with the Proposed Transaction, Atlantic has agreed to
make a loan to MCC of up to US$400,000, to be drawn down on the basis of
US$200,000 by 4 December 2009 and up to US$100,000 per calendar month
for January and February 2009 (the Loan).
MCC will apply the Loan to
general working capital purposes or other transactions by MCC, as
approved by Atlantic.
Should the Proposed Transaction not close within
120 days of 4 December 2009 the Loan shall, at Atlantics sole
discretion, become immediately repayable together with a break fee equal
to 10% of the amounts advanced by Atlantic to MCC pursuant to the Loan.
The Proposed Transaction is subject, inter alia, to the completion of
satisfactory due diligence of both parties on each others company and
assets and certain other approvals, including certain regulatory
approvals.
As a consequence there can be no certainty that the Proposed
Transaction will be completed.
The Board of Atlantic will make further
announcements as appropriate.
**ENDS**
For further information on the Company, visit: www.atlanticcoal.com
or contact:
Greg Kuenzel
Atlantic Coal plc
Tel: 020 3328 5670
Steve Best
Atlantic Coal plc
Tel: 020 3328 5670
Nick Naylor
Allenby Capital Limited
Tel: 020 3328 5656
Jamie Boyd
Allenby Capital Limited
Tel: 020 3328 5656
Daniel Fox Davies
Fox Davies Capital Ltd
Tel: 020 7936 5230
Hugo de Salis
St Brides Media & Finance Ltd
Tel: 020 7236 1177
Paul Youens
St Brides Media & Finance Ltd
Tel: 020 7236 1177
Paul Youens
St Brides Media & Finance Ltd
Chaucer House
38 Bow Lane
London EC4M 9AY
T: +44 (0) 207 236 1177 | M: +44 (0) 7989 384 551 | F: +44 (0) 207 236
1188 | www.sbmf.co.uk
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