CANONSBURG, PA, March 7, 2018 /CNW/ - Corsa Coal Corp.
(TSXV: CSO) ("Corsa" or the "Company") is pleased to announce that
it is selling its thermal and industrial coal division, Central
Appalachia ("CAPP"), to a buyer group led by CAPP's current
management team (the "Transaction").
"The sale of our CAPP division will allow us to dedicate all of
our corporate resources to the metallurgical coal market where we
believe we can achieve the highest rates of return on investment,"
said George Dethlefsen, the
Company's Chief Executive Officer. "Corsa's focus going forward is
to aggressively increase its metallurgical coal production,
maximize value added services activity, and continue to grow our
metallurgical sales and trading platform."
CAPP division's current operations include one underground mine,
the Cooper Ridge Deep Mine, and two surface operations, the Valley
Creek and Buffalo Creek mines. The consideration to be received by
the Company in connection with the Transaction consists of the
assumption by the buyer group of certain debt, leases and future
costs, including end of mine closure costs, estimated in the
aggregate by the Company at approximately US$8.0 million. For the year ended December 31, 2017, the CAPP division
(i) generated revenues of US$46.4
million and had US$20.2
million of negative EBITDA, inclusive of a US$20.0 million asset impairment; and
(ii) sold 539,000 tons of thermal coal and 135,000 tons of
high vol metallurgical coal.
As a result of the Transaction, the Company is postponing the
release of its fourth quarter and full year 2017 financial results,
and the related conference call previously scheduled for
10:00 a.m. (Eastern Time) on
March 8, 2018, until the week of
March 12, 2018. A new time and
date for this conference call will be announced shortly.
Further Transaction Details
The Transaction will be
effected by way of a sale of the membership units of Company's
subsidiary, Kopper Glo Mining, LLC to Industrial Minerals Group,
LLC (the "Buyer") expected to be completed on or about March 9, 2018. Principals of the Buyer include
Hunter Hobson, the president of the
Company's CAPP division, Keith Dyke,
former president of the Company's CAPP division and the Buyer
received financing from entities controlled by a member of the
Robertson family. The Robertson family controls the general partner
of Quintana Energy Partners, L.P. and its affiliated investment
funds (collectively, "Quintana"). Quintana currently controls
approximately 41% of the Corporation's issued and outstanding
common shares.
The board of directors of the Company has unanimously (with
conflicted directors abstaining) determined that the Transaction is
in the best interests of the Company and approved the
Transaction.
The Transaction constitutes a "related party transaction" as
defined under Multilateral Instrument 61-101 - Protection of
Minority Security Holders in Special Transactions ("MI 61-101").
However, the Transaction is exempt from the minority approval
requirements of MI 61-101, as neither the fair market value of the
subject matter of, or the consideration for, the Transaction,
exceeds 25% Corsa's market capitalization calculated in accordance
with MI 61-101. In addition, the Transaction constitutes a
"Reviewable Disposition" under Policy 5.3 of the TSX Venture
Exchange Corporate Finance Manual. Shareholders holding
approximately 34% of the Company's issued and outstanding common
shares, and approximately 56% of the Company's issued and
outstanding common shares excluding common shares of the Company
controlled by Quintana, evidenced their approval of the Transaction
by written consent provided to the TSX Venture Exchange (the
"Exchange"), and the Transaction was subsequently approved by the
Exchange.
Although the Company is confident that the Transaction will be
completed expeditiously, at this time there can be no assurance
that the Transaction will be completed or completed in a timely
manner.
Additional Disclosure Required by the Exchange
Further
information regarding the CAPP division can be found in the
technical report titled "Technical Report on the Coal Reserve and
Coal Resource Controlled by Kopper Glo Mining, LLC, Tennessee, USA - Prepared in Accordance with
National Instrument 43-101 Standards for Disclosure for Mineral
Projects Effective December 31, 2016"
(the "Technical Report"), which was prepared by Marshall Miller & Associates, Inc. under the
supervision of Justin S. Douthat, P.E., M.B.A. and John W. Eckman, C.P.G., each a qualified person,
as such term is defined in NI 43-101, and each of which is
independent of Corsa and its subsidiaries. In particular, Item 22
of the Technical Report provides an economic analysis of the CAPP
division's coal reserves and resources, including projected future
revenue, cash costs and EBITDA, which, based on certain
assumptions, may impact that value of the CAPP division and which,
over time, may exceed the consideration received by the Company in
connection with the Transaction.
Qualified Person
Other than in connection with the
Technical Report, all scientific and technical information
contained in this news release has been reviewed and approved by
Peter V. Merritts, Professional
Engineer and the Company's President - NAPP
Division, who is a qualified person within the meaning of
National Instrument 43-101 - Standards of Disclosure for Mineral
Projects.
Information about Corsa
Corsa is a coal mining company focused on the production and
sales of metallurgical coal, an essential ingredient in the
production of steel. Our core business is producing and selling
metallurgical coal to domestic and international steel and coke
producers in the Atlantic and Pacific basin markets.
Forward-Looking Statements
Certain information set
forth in this press release contains "forward-looking statements"
and "forward-looking information" (collectively, "forward-looking
statements") under applicable securities laws. Except for
statements of historical fact, certain information contained herein
relating to projected sales, coal production, rates of return on
expenditures and the capacity and recovery of Corsa's preparation
plants, constitutes forward-looking statements which include
management's assessment of future plans and operations and are
based on current internal expectations, estimates, projections,
assumptions and beliefs, which may prove to be incorrect. Some of
the forward-looking statements may be identified by words such as
"estimates", "expects" "anticipates", "believes", "projects",
"plans", "capacity", "hope", "forecast", "anticipate", "could" and
similar expressions. These statements are not guarantees of future
performance and undue reliance should not be placed on them. Such
forward-looking statements necessarily involve known and unknown
risks and uncertainties, which may cause Corsa's actual performance
and financial results in future periods to differ materially from
any projections of future performance or results expressed or
implied by such forward-looking statements. These risks and
uncertainties include, but are not limited to: the completion, and
timing for completion, of the Transaction, risks that the actual
production or sales will be less than projected production or
sales; risks that the prices for coal sales will be less than
projected; liabilities inherent in coal mine development and
production; geological, mining and processing technical problems;
inability to obtain required mine licenses, mine permits and
regulatory approvals or renewals required in connection with the
mining and processing of coal; risks that Corsa's preparation
plants will not operate at production capacity during the relevant
period, unexpected changes in coal quality and specification;
variations in the coal mine or preparation plant recovery rates;
dependence on third party coal transportation systems; competition
for, among other things, capital, acquisitions of reserves,
undeveloped lands and skilled personnel; incorrect assessments of
the value of acquisitions; changes in commodity prices and exchange
rates; changes in the regulations in respect to the use, mining and
processing of coal; changes in regulations on refuse disposal; the
effects of competition and pricing pressures in the coal market;
the oversupply of, or lack of demand for, coal; inability of
management to secure coal sales or third party purchase contracts;
currency and interest rate fluctuations; various events which could
disrupt operations and/or the transportation of coal products,
including labor stoppages and severe weather conditions; the demand
for and availability of rail, port and other transportation
services; the ability to purchase third party coal for processing
and delivery under purchase agreements; and management's ability to
anticipate and manage the foregoing factors and risks. The
forward-looking statements contained in this press release are
based on certain assumptions regarding, among other things, coal
sales being consistent with expectations; future prices for coal;
future currency and exchange rates; Corsa's ability to generate
sufficient cash flow from operations and access capital markets to
meet its future obligations; the regulatory framework representing
royalties, taxes and environmental matters in the countries in
which Corsa conducts business; coal production levels; Corsa's
ability to retain qualified staff and equipment in a cost-efficient
manner to meet its demand; and Corsa being able to execute its
program of operational improvement and initiatives. There can be no
assurance that forward-looking statements will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such statements. The reader is
cautioned not to place undue reliance on forward-looking
statements. Corsa does not undertake to update any of the
forward-looking statements contained in this press release unless
required by law. The statements as to Corsa's capacity to produce
coal are no assurance that it will achieve these levels of
production or that it will be able to achieve these sales
levels.
The TSX Venture Exchange has in no way passed on the
merits of this news release. 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.
SOURCE Corsa Coal Corp.
