Further to a press release dated July 27, 2012, CanAm Coal Corp. (TSX VENTURE:COE) (OTCQX:COECF) ("CanAm" or the "Company") is pleased to announce that CanAm through its wholly owned subsidiary, Radar USA Hold Corp. ("Radar USA"), has completed the acquisition of an additional 30% in equity interests in the capital of Birmingham Coal & Coke Co., Inc and Cahaba Contracting & Reclamation LLC (collectively referred to as "BCC") (the "Transaction") from Thomas A. Lewis, Robert A. Lewis and Robert Wayne Bass ("Vendors"). CanAm retains an option to acquire the remaining 20% of BCC before May 9, 2016.
Additionally, the Company has closed a non-brokered private placement offering (the "Offering") of 13,165 units ("Units") at a price of CDN$1,000 (and/or its US dollar equivalent) per Unit for total proceeds of CDN$13,165,000. Each Unit is comprised of a $1,000 principal amount of 9.5% non-convertible and unsecured debentures ("Debentures"), 1,250 2012 series A common share purchase warrants ("Series A Warrants") and 1,000 2012 series B common share purchase warrants ("Series B Warrants"). The Debentures have a term of four years with a partial repayment feature that is triggered upon the achievement of a certain production level. The Series A Warrants have an exercise price of CDN$0.20 and a term of four years, and the Series B Warrants have an exercise price of CDN$0.25 and a term of four years.
The aggregate purchase price of the acquisition is US$11,505,682, which will be settled by US$5,505,682 in cash and the issuance of Debentures in the Offering in an aggregate principal amount of US$6,000,000 together with 7,500,000 Series A Warrants and 6,000,000 Series B Warrants. As previously disclosed, the exercise of the Series A Warrants and Series B Warrants issued to the Vendors is subject to disinterested shareholder approval which the Company intends to seek at its next annual general meeting. The remainder of the private placement will be used for general corporate purposes.
Certain directors and officers of the Company have subscribed under the Offering for CDN$860,000 aggregate principal amount Debentures, an aggregate of 1.1 million Series A Warrants and an aggregate of 0.9 million Series B Warrants. In relation to the insiders who participated in the Offering, the Company has determined that there are exemptions available from the various requirements of TSX-V Policy 5.9 for formal valuation and minority shareholder approval.
A finder's fee of 7% or CDN$14,000 was paid under the Offering to Wolverton Securities for CDN$200,000 aggregate principal amount Debentures.
The Transaction and the Offering were completed upon receipt of conditional TSX-V approval. The Warrants issued under the Offering are subject to a four month hold period that will expire on December 8, 2012.
At the close of the Transaction, the Company's Alabama mine operations will be comprised of:
-- 4 operating mines
-- 4 mines in development
-- Annual productive capacity of 1 million tons
-- Permits and leases covering approximately 5,000 acres of land
-- Workforce of approximately 140 employees
"We are excited about completing this transaction as this will allow us to fully integrate all of CanAm's Alabama mining operations and further achieve synergies across our mines. Our integrated team will also be better positioned for continued growth through current asset expansion and the development of additional opportunities in Alabama", said Robert A. Lewis, President of Birmingham Coal & Coke Company, Inc.
About CanAm Coal Corp.
CanAm is a coal producer and development company focused on growth through the acquisition, exploration and development of coal resources and resource-related technologies. CanAm's main activities and assets include operating and development mines in Alabama and the Buick Coal Project which holds significant coal resources, 188 million indicated and 103 million inferred resources, in Colorado, USA (see the technical report entitled "Limon Lignite Project, Elbert County, Colorado, USA," dated October 26, 2007 and filed on SEDAR on November 2, 2007). Other coal and related opportunities continue to be evaluated on an ongoing basis.
About Birmingham Coal & Coke, Inc.
Incorporated in 1975 by H. Kent Lewis, BCC started as marketer of coal produced from mines located in Alabama to industrial, utility and export markets. Since then, BCC has grown to become a significant Alabama coal producer. Based on a foundation of prudent financial stewardship, safety and strong ethical values, BCC is one of only three coal mining companies operating in Alabama in 1975 that still exists today; the others being Drummond Coal Company and Jim Walter Resources. In May 2011, pursuant to the Original Transaction, CanAm acquired a 50% ownership interest in BCC.
This news release may contain certain forward-looking information. All statements included herein, other than statements of historical fact, is forward-looking information and such information involves various risks and uncertainties. There can be no assurance that such information will prove to be accurate, and actual results and future events could differ materially from those anticipated in such information. A description of assumptions used to develop such forward-looking information and a description of risk factors that may cause actual results to differ materially from forward-looking information can be found in the Company's disclosure documents on the SEDAR website at www.sedar.com. The Company does not undertake to update any forward-looking information except in accordance with applicable securities laws.
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 release.
Contacts:
CanAm Corporate Office:
Timothy Bergen
CEO
403.262.3797 or Toll Free: 1.877.262.5888
tbergen@canamcoal.com
