CALGARY, ALBERTA--(Marketwire - Sept. 15, 2011) - Cobalt Coal Ltd. (formerly Cobalt Coal Corp.) ("Cobalt" or the "Company") (TSX VENTURE:CCF), is pleased to announce that it has engaged Mackie Research Capital Corporation ("Mackie") to act as lead agent on a financing for the Company to raise $6,000,000 through the completion of a brokered private placement (the "Offering"). The Offering will be in the form of common shares of the Company (the "Shares") at a price of $0.12 per Share.
The entering into of the engagement letter with Mackie to act as lead agent of Cobalt for the Offering is in furtherance of previous press releases made by Cobalt over the last three months, including the June 8, 2011 and July 21, 2011 press releases, regarding the restructuring initiatives that management of Cobalt has determined are necessary to transition the Company into a profitable, producing metallurgical coal mining company.
The Offering is subject to the approval of the TSX Venture Exchange. Pursuant to applicable securities laws, all securities issued pursuant to the Offering will be subject to a hold period of four months following the closing of the Offering.
With the closing of certain restructuring transactions and the completion of a minimum private placement of $2,078,500 on August 19, 2011, Cobalt has: (i) retired certain of its senior debt; (ii) acquired the Westchester Coal Limited Partnership; (iii) acquired a continuous miner; and (iv) reduced the amount of Cobalt debentures outstanding such that the balance of the remaining outstanding debentures are expected to be repaid from Cobalt's cash flow by December 15, 2011.
As a result of the decrease in the outstanding debt, only $1,000,000 of the proceeds raised through the Offering will be used to retire debt, specifically the residual indebtedness to Cobalt's senior lender. The remainder of the proceeds of the Offering will be used to acquire mining equipment, to perform infrastructure upgrades at Cobalt's Westchester/Westchester Expansion mine, and for working capital purposes.
Management of Cobalt remains confident that production volumes will increase and operating costs will be materially reduced as a result of the addition of the new equipment and the completion of the proposed infrastructure upgrades.
In connection with the Offering, Cobalt will pay a cash commission and grant compensation options (the "Compensation Options") to Mackie to purchase 8% of the number of Shares sold under the Offering, with each Compensation Option entitling the holder to purchase one Share at $0.12 per Share for a period of 18 months from the closing of the Offering.
About Cobalt
Cobalt is a publicly traded coal exploration and production company headquartered in Calgary, Alberta, Canada with a regional office in Welch, West Virginia, USA. Cobalt was created in August 2007 to capitalize on the growth opportunities that exist in the metallurgical coal mining industry.
The securities of Cobalt being offered have not been, nor will be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent U.S. registration or an applicable exemption from U.S. registration requirements. This release does not constitute an offer for sale of securities in the United States.
READER ADVISORY
Statements in this news release may contain forward-looking information including the timing of closing of the Offering, intended use of proceeds of the Offering increases in production volumes and reductions in operating costs. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company. These risks include, but are not limited to, the risks associated with the coal mining industry, commodity prices and exchange rate changes. Industry related risks could include, but are not limited to, operational risks in exploration, development and production, delays or changes in plans, risks associated to the uncertainty of reserve estimates, health and safety risks and the uncertainty of estimates and projections of production, costs and expenses. The reader is cautioned not to place undue reliance on this forward-looking information.
Neither TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.