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News out today:
WESTERN ANNOUNCES WOLVERINE MINE PROJECT ECONOMICS
Vancouver, BC, June 24, 2003 Western Canadian Coal Corp. (TSX - V: WTN)
Western Canadian Coal Corp. ("Western") advises that it has successfully completed a feasibility level Project Document that demonstrates the viability of developing the Wolverine Coal Mine in northeast British Columbia. Highlights include:
Reserves of 25.2 million tonnes of run-of-mine metallurgical coal
Initial production of 1.6 million tonnes per annum
11 years of production from currently defined reserves
Generates a pre-tax undiscounted cash flow of approximately Cdn$177 million,
IRR of 21.2% based on revenue of US$44/tonne coal and US$0.72 = C$1.00
Significant potential for production expansion
With the completion of the Project Document, Western has commenced discussions with potential coal customers and financiers for the development of its Wolverine coal mine in British Columbia.
The Wolverine property is situated in northeast British Columbia, approximately 725 km north of Vancouver, about 20 km west of the town of Tumbler Ridge, and favorably located adjacent to the BC Rail line which runs through the Wolverine Valley.
The coking coal reserves of 25.2 million tonnes defined in this report include 17.1 million (M) run-of-mine tonnes (tROM) from Perry Creek Pit and 8.1 M tROM from EB Pit. The Perry Creek Pit has an overall strip ratio of 4.9 bank cubic meters of waste rock to each tonne of mined coal; i.e. 4.9 BCM:t ROM. On a clean coal basis this would be 7.4 BCM: t product at an average wash plant yield of 68.2 %. The EB Pit has an overall strip ratio of 4.8:1 BCM:t ROM or 7.8 BCM:t product at an average yield of 62 %.
The Project Document includes a proposed schedule that provides for 11 years of production for the Wolverine Mine starting in early 2005 at an initial 1.6 million tonnes of metallurgical coal per year through the Ridley Coal Terminal. The initial capital cost is estimated at between $50 million and $116 million depending on whether or not mining operations are contracted or owner operated.
Full production at the Wolverine Mine can be achieved by the 2nd quarter of 2005. Detailed engineering and procurement will start during the 4th quarter of 2003. Site preparation is scheduled to start in the spring / early summer of 2004. With a 10 to 12-month development and construction schedule, the plant would be ready for commissioning in the 1st or 2nd quarter of 2005. Open-pit development and prestrip would occur in parallel with the plant construction allowing for full production by the 2nd quarter of 2005.
The base case cash flow model using an average metallurgical coal price of US$44.00 per tonne at an exchange rate of US$0.72 per C$1.00 generates a pre-tax undiscounted cash flow of approximately Cdn$177 million, and an internal rate of return of 21.2 %. The model, with Western as the owner-operator, assumes all-equity funding. The alternative to the base case is a contracted open pit mine operation. In this case, the mine equipment capital cost requirements would be reduced with the operating margin being reduced accordingly.
With initial capital costs of about $116 M and revenue from sales in the order of $100 M annually, the project brings needed economic benefits and largely positive socio-economic impacts to the Town of Tumbler Ridge and the region. The project represents approximately 200 direct jobs during operation, in addition to construction employment and indirect jobs. Coal transportation charges also benefit the regional transportation network, supporting operation of the Port of Ridley Terminals and the BC Rail branch line. First Nations and local communities have indicated a high level of support for the project.
For the purposes of National Instrument 43-101 Securities filing, this Project Document is being classified as a Preliminary Feasibility Study for reporting reserves and project economics and will be followed by a "Technical Report" submission by an independent third party. The completion of market and transportation plans would enable the project to meet the 43-101 requirements as a Feasibility Study.
Management is assessing early development of the Burnt River PCI coal property southeast of Chetwynd, B.C. for an additional 1.0 M tonnes per year. An accelerated effort could also be made to expand Wolverine production by an additional 1.6 million tonnes per year from the 27 million tonne Hermann open pit deposit. These coal property developments by Western could bring shipments to Ridley Coal Terminal of 4.2 million tonnes per year within three years of startup.
In related matters, Western has completed a coal quality assessment on its planned Perry Creek product. As a result of the bulk sample test work, the Company changed its target ash content specifications from 9 % to 7.5 % to improve the product's coking properties. Test work completed by Birtley Coal and Minerals Testing, CANMET, and CoalTech Petrographic Associates (CoalTech), together with evaluation of coking properties by CoalTech, show that the Upper seams have excellent coking properties in terms of ash chemistry, fluidity, and predicted coke strength-after-reaction (CSR), hence contributing positively to a blend with the lower CSR in J Seam. CoalTech reports the predicted CSR for a blend of J Seam and the Upper seams to be 57, "a significant improvement that may approach 60 CSR in a coke plant environment".
About Western Canadian Coal
Western Canadian Coal Corp. is a Vancouver based coal company with a large portfolio of coal properties in northeast British Columbia, three of which have advanced exploration and feasibility completed. The Company currently has more than 250 million tonnes of coal under exploration and development planning, with priority on bringing the Wolverine Project to construction 2004 leading to full commercial production in the 2nd quarter of 2005.
Contact Barry Girling or David Fawcett, President at 604-608-2692 or info@westerncoal.com for further information. Website www.westerncoal.com
WESTERN CANADIAN COAL CORP.
Charles Pitcher
Chief Executive Officer