Press Release Source: Cobalt Coal Corp. On Tuesday January 18, 2011, 1:59 pm EST
CALGARY, Alberta--(BUSINESS WIRE)-- Cobalt Coal Corp. (“Cobalt” or the “Company”) (TSX VENTURE:CBT.v - News) (OTCBB:CCCXF.ob - News), announces that it has entered into a new coal sales contract and also provides an operational update on mining operations at its Westchester Metallurgical Coal Mine (the ‘Westchester Mine’) in McDowell County, West Virginia USA.
Revised Sales Contract
Cobalt is pleased to report that it has entered into a new contract for the sale of all of its mined coal effective January 1, 2011.
The sales price for 2011 of US$110 per clean ton represents a 29% increase over the 2010 price. The price to be paid to Cobalt is FOB the nearest wash plant where after the buyer will be responsible for all of the additional costs of washing, loading and transportation to market. This price increase is the product of significant worldwide events which have propelled prices of metallurgical coal upwards.
Operations
Since recommencing operations in the fourth quarter of 2010, very significant progress has been made by Cobalt’s management with the aim of improving efficiency, decreasing production costs per ton and increasing monthly production.
During the last quarter of 2010, management of Cobalt was successful in acquiring significantly more appropriate mining equipment by way of lease arrangements and by utilizing the proceeds of the financings conducted during the period. Cobalt acquired a continuous miner in September 2010 under a long-term lease which has operated without any problems. Additionally, Cobalt has secured a battery powered hauler, a feeder/crusher and improved the belt system.
A second shift crew was added during the last quarter of 2010. Each week during the month of December 2010 the second shift improved their production performance. It is management’s intention to add a third shift maintenance crew during the first quarter of 2011 that will improve equipment maintenance and allow the two production shifts more on stream time.
An inadequate supply of power has historically accounted for approximately 30% of the downtime encountered at the Westchester Mine – this being the number one source of downtime. Management was able to negotiate the acquisition of a larger 2,000 kilowatt generator to replace the existing 1,000 kilowatt generator as the smaller generator did not have the capacity to run the various pieces of machinery concurrently and therefore caused numerous circuit breaker trips requiring an inordinate amount of time to rectify. The new, larger generator has now virtually eliminated all downtime related to this problem.
Management continues to ensure that worker safety and health remains the core value and central mission of the company. Mine safety and efficiency have been greatly enhanced through the installation of a new communications and tracking system. This state of the art system, known as “The ImPact I.S Communications & Tracking System” is a digital wireless communication and tracking system designed specifically for underground mining operations. The system enables the above ground communication center to monitor and communicate directly with all underground personnel at all times.
The production results for the first half of January 2011 have been steadily improving with Cobalt delivering coal to the wash plant at a rate of approximately 650 raw tons per day. By comparison, Cobalt’s production during on stream days in December averaged 385 raw tons per day. The increased production rates can be directly attributed to the additional new equipment, the experience that the miners on both shifts have gained over the last few months and to the elimination of generator related downtime.
Based on the raw coal shipped to date in January 2010 and depending on the coal recovery rate at the wash plant, Cobalt may be able to achieve upwards of 5,000 clean tons sold for the month. In the fourth quarter of 2010, we were achieving sales of approximately 2,500 to 3,000 clean tons per month. Although, sales of clean coal are still lagging behind our target, production is improving and is anticipated to continue to improve.
“COAL” – The TV Show
The new documentary-reality television series “Coal” will telecast on the U.S. cable network Spike TV. The 10 episode, one-hour series, produced by Original Productions, a FremantleMedia Company, is being shot at Cobalt’s Westchester Mine and is scheduled to premiere on Spike starting Wednesday, March 30, 2011 at 10:00 p.m. eastern time. Spike TV is currently available in 99.4 million U.S. homes.
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 modern metallurgical coal mining industry.
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.
READER ADVISORY
Statements in this news release may contain forward-looking information including expectations of future production and cash flows from the Westchester Mine, as well as the expansion plans of Cobalt. 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 Corporation. 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.
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