Corsa’s Wilson Creek Coal Plant and 2011 Sales Both Expected to be on Plan and Budget
January 19, 2011 Toronto, Ontario – Corsa Capital Ltd. (TSXV: CSO) (“Corsa”) is pleased to announce that it’s Wilson Creek Coal Plant is expected to start as planned and on budget at the end the first quarter. As well the Company expects coal sales to be on plan and the Company is pleased to provide an update on its coal preparation plant and coal projects.
Wilson Creek Coal Preparation Plant
The Company’s Wilson Creek coal preparation plant is nearing completion and is expected to be commissioned and operational on schedule by the end of this calendar quarter. This capital project continues to be on budget with the expected cost to remain at $21 million.
The Plant is designed to produce metallurgical coal for domestic and export use at a capacity of approximately two million clean tons per year. Located near Somerset, Pennsylvania and on the CSX railway line, the Plant will initially have coal production shipped by truck pending completion of the rail load out which is expected to be completed by the end of May 2011.
Initial production feed will be from the Company’s three currently operating surface mines and additional coal purchase contracts from other regional operations.
Production
The Company currently has three producing surface mines, Quarry, Acosta and Cramer and is currently stockpiling coal for Plant through put from these three operations. In addition, the Company has the Plant, Hemminger, Spory, Bando, Ankeny and Hastings surface projects and the Garrett, Acosta Deep and Winner underground projects as well as the large West Penn Kovalchik underground project. Management expects in calendar 2011 to have sales of approximately 562,000 tons of clean metallurgical coal, including both produced and purchased coal, and 238,000 tons of thermal coal. Management estimates the average cash cost per clean ton of metallurgical coal produced will be between $65 and $70.
Management’s initial estimate is that sales can grow to approximately 916,000 tons of clean metallurgical coal and 99,000 tons of thermal coal in calendar 2012.
The estimated coal production and cash costs per ton of coal disclosed in this press release are considered to be forward looking information. These production estimates are based on management’s estimate of when the required mining permits for the Plant, Hastings, Acosta Deep, Garrett and Winner projects are received as well as the results from the current drilling program on Winner. Readers are cautioned that actual results may vary from this forward looking information. Actual production and cash costs are subject to variation based on a number of risks and other factors referred to under the heading “Forward-Looking Statements” below, including the actual date the relevant facilities and projects are permitted, actual coal production, actual costs and actual preparation plant recovery rates.
Quarry, Cramer, Acosta, Hemminger, Plant and Hastings Mines
The Quarry, Cramer and Acosta surface mines are operating; the Hemminger mine is permitted and expected to commence in the first quarter; the Plant mine in the second quarter; and, the Hastings mine in the third quarter. These six mines have combined proven and probable recoverable reserves of metallurgical coal of 1,150,000 tons and 494,218 of thermal coal. These mines are expected to produce approximately 564,240 tons of raw coal in calendar 2011. These estimates are subject to the receipt of mining permits on the Hastings and Plant mines.
Acosta Deep
The Acosta Deep underground project is a 940 acre property with proven recoverable reserves of low volatile metallurgical coal of 5.7 million tons in the Middle and Lower Kittanning seams located 18 miles from the Wilson Creek Coal Preparation Plant.
The Company previously announced that it has entered into an agreement that provides its subsidiary with an option, for 120 days, to acquire the rights to mine all coal seams under a further 5,643 acres in Jenner, Quemahoning, Lincoln, and Somerset Townships in Somerset County, Pennsylvania, referred to as the Alumbaugh property, which is immediately adjacent to the Acosta Deep property.
The Alumbaugh property has been the subject of previous drilling and Company management has reviewed 27 drill holes which show an average minable seam thickness of 40 to 42 inches (true seam thickness is not known) in the Middle Kittanning coal seam. Analysis of the coal from these 27 drill holes shows coal averaging approximately 11.6% ash and 1.24% sulfur with a volatility of 17.7% and an estimated wash plant recovery of 60%. The Company is conducting further drilling to more fully explore the property.
Management estimates that it will file its permitting application in the first quarter and expects to have the permits in place by the second quarter of 2012 with production commencing in the third quarter. Management’s initial estimate is that the project, assuming a third quarter start up, can produce approximately 50,000 clean tons of low volatile metallurgical coal in 2012 and can ramp up to a production rate of approximately 302,000 clean tons by 2013 and approximately 486,000 by 2014. Production for 2012 is dependent on the receipt of mining permits.
With the addition of the Alumbaugh property, the Company is exploring the possibility of a second access point which could allow the project to have higher than currently estimated production rates.
Garrett
The Garrett project is an underground Upper Freeport Seam project with approximately 1300 acres in Somerset County, Pennsylvania. This project is located approximately 9 miles from the site of the Wilson Creek Coal Preparation Plant.
The Company has drilled 16 holes on the leased area with drill intercepts averaging 42 inches in thickness (true seam thickness is not known). Clean coal quality analysis conducted on 7 drill hole cores indicated an ash content of approximately 10.6% and sulfur content of 0.99% with a volatility of 19.5% and an estimated wash plant recovery of 66%.
The Company expects to file its mining permit application this quarter and to receive these permits in the second quarter of 2012 with production commencing in the third quarter 2012. Management’s initial estimate is that this project can produce approximately 38,000 tons of clean metallurgical coal in 2012 ramping up to an annual production rate of approximately 324,000 tons in full production. The Company continues to expand the leased area of this project. Production for 2012 is dependent on the receipt of mining permits.
Winner
The Winner underground project is a 450 acre Middle Kittanning property with an inferred resource of 2.4 million tons located near Swanton in Garrett County, Maryland. The Company has an option to lease approximately 3,000 acres directly adjacent to this underground project which the Company believes has the potential to be a significant expansion of the project. The Company is commencing a drilling program this month to fully explore the additional acreage and provide coal quality data.
The Company expects to file its mining permit applications in the second quarter and to have this project permitted in the second quarter of 2012. Management’s initial estimate is that this project can produce approximately 77,000 tons of metallurgical coal in 2012 if permitting is received by the second quarter and can produce approximately 162,000 tons per annum at full production. Production for 2012 is dependent on the receipt of mining permits. This is also dependent on the results of the current drilling and coal quality testing program.
Pittsburgh-Kovalchik
The Pittsburgh-Kovalchik is an underground project located in Washington County, Pennsylvania, which the Company has the right to acquire. It has indicated resources of 71 million tons of which 57 million is steam coal quality and 14 million is high volatile coking coal quality. The full purchase price is US$20 million. The option is now to be exercised by December 31, 2011 (the previous exercise date of December 31, 2010 has been extended). Wilson Creek will make quarterly installments of US $150,000, US $200,000, US $250,000 and US $300,000 in 2011 to maintain this option. These payments will be credited toward the US$7 million exercise price. If exercised, the balance of the purchase price will be paid over four equal annual payments commencing September 2012.
Qualified Person
The mineral reserve and resource estimates have been prepared under the supervision of, and the technical information in this press release was verified and approved by, Dennis Noll of Earthtech Inc., a qualified person, as such term is defined in National Instrument 43-101 – Standards of Disclosure for Mineral Projects. Dennis Noll is independent of Wilson Creek. A technical report prepared in accordance with National Instrument 43-101 entitled “Amended and Restated Technical Report on Coal Reserves and Resources; Wilson Creek Energy, LLC; Somerset, Cambria and Washington Counties, Pennsylvania and Garrett County, Maryland, USA, dated November 16, 2010” in respect of Wilson Creek’s material properties has been filed on www.sedar.com. The technical report describes the exploration history, geology and resources of all of the properties in this press release except Garrett and Ankeny. Disclosure in this press release of mineral resources is based on the technical report. Details of the quality or grade of each category of mineral resources and key assumptions, parameters and methods used to estimate the mineral resources are included in the technical report. The technical report also includes production projections for the reserves as well as a description of environmental and permitting matters. Sales projections expressed in tons in this press release that differ from the Technical Report are due to revisions by Management since the date of the report as a result of operational modifications and outside coal purchases.
Share Capital
There are currently 232,656,771 common shares of Corsa now issued and outstanding
Information about Corsa
The Company’s main operating subsidiary is Wilson Creek Energy LLC based in Somerset County, Pennsylvania. Its primary business is the mining, processing and selling of metallurgical coal, as well as actively exploring, acquiring and developing resource properties consistent with its coal business.
For further information please contact:
Corsa Capital Ltd.:
Contact:
Don Charter, President and Chief Executive Officer
Corsa Capital Ltd.
416-214-9800
communication@corsacapital.com
www.corsacapital.com
Forward-Looking Statements
Certain information set forth in this press release contains “forward-looking statements” and “forward-looking information under applicable securities laws. Except for statements of historical fact, certain information contained herein 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”, 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: liabilities inherent in coal mine development and production; geological, mining and processing technical problems; Wilson Creek’s inability to obtain required mine licenses, mine permits and regulatory approvals required in connection with the mining and processing of coal; unexpected changes in coal quality and specifications; variations in the coal 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 of coal; the effects of competition and pricing pressures in the coal market; the oversupply of, or lack of demand for, coal; 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; and management’s ability to anticipate and manage the foregoing factors and risks. 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.
The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release. Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.