CALGARY, ALBERTA--(Marketwire - July 27, 2012) - CanAm Coal Corp. (TSX VENTURE:COE) (OTCQX:COECF) ("CanAm" or the "Company") is pleased to announce that CanAm is exercising its option to acquire an additional 30% ownership interest in its principal U.S. mining operations (the "Transaction") for a purchase price of US$11,505,682. The Transaction will be completed through the purchase of additional equity interests in the capital of Birmingham Coal & Coke Co., Inc and Cahaba Contracting & Reclamation LLC (collectively referred to as "BCC") under an existing option and will be effective as of July 1, 2012.
The Company will fund the acquisition through a non-brokered private placement offering (the "Offering") of a minimum of 12,000 and a maximum of 16,000 units ("Units") at a price of CDN$1,000 (and/or its US dollar equivalent) per Unit for total proceeds of a minimum of CDN$12,000,000 and a maximum of CDN$16,000,000. Each Unit will be 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 Series A Warrants have an exercise price of CDN
.20 and a term of four years, and the Series B Warrants have an exercise price of CDN
.25 and a term of four years.
"The exercise of our 30% option is another significant step for CanAm and brings our goal of 1 million tons of annual production one step closer. With completion of the Transaction, we expect 2012 production to be in the range of 450,000 to 500,000 tons with 2013 production in the range of 750,000 tons with substantially all production contracted to existing customers. The fact that we were able to finance the transaction on reasonable terms in a difficult credit environment speaks to the underlying quality of the BCC asset and the strength of our long term business plan." said Jos De Smedt, President and COO of CanAm. "Increasing our ownership in BCC and further investing in a management team that has a proven track record of safe, reliable and profitable operations makes perfect sense at this time," added Tim Bergen, CEO of CanAm.
Radar USA, a wholly owned subsidiary of the Company, acquired 50% of the outstanding equity interest in BCC in May 2011 (the "Original Transaction"). Pursuant to the Original Transaction, Radar USA was granted an option to acquire the additional 30% interest being acquired in the Transaction and the remaining 20% interest until May 9, 2016. The Vendors of the Transaction, Robert A. Lewis, Thomas A. Lewis and R. Wayne Bass (the "Vendors"), will be paid an aggregate purchase price of US$11,505,682. Upon completion of the Transaction, the Company will own 80% of BCC and the Vendors will own 20%.
The aggregate purchase price will be paid 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. 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.
Each of Robert A. Lewis and Thomas A. Lewis is a director and senior officer of BCC and therefore may be considered to be a non-arm's length party within the meaning of the policies of the TSX Venture Exchange (the "TSXV"). R. Wayne Bass is neither a director nor an officer of BCC and would not be considered to be a non-arm's length party.
Certain directors and officers of the Company are expected to subscribe under the Offering for approximately CDN$2.2 million aggregate principal amount Debentures, an aggregate of 2.8 million Series A Warrants and an aggregate of 2.2 million Series B Warrants.
OTHER INFORMATION
The completion of the Transaction and the Offering is subject to certain conditions including acceptance of the Transaction and the Offering by the TSXV and other conditions customary for transactions similar in nature to the Transaction. There can be no assurance that the Transaction or the Offering will be completed as proposed or at all.
Provided that the conditions to completion of the Transaction and the Offering are completed to CanAm's satisfaction, the Company anticipates that the closing of the Offering and the Transaction will be on or about July 30, 2012.
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 its four operating coal 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.