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Corsa Files Second Quarter 2011 Financial Results and Updates Production Guidance

Toronto, Ontario - Corsa Coal Corp. (“Corsa”) (TSXV: CSO) announces that it has filed its Interim Consolidated Financial Statements and Management’s Discussion and Analysis for the three month and six month periods ended May 31, 2011 on SEDAR and has posted these documents to its website www.corsacoal.com.

Significant achievements included:

Refer to the Interim Consolidated Financial Statements and Management’s Discussion and Analysis filed for the details of the financial performance of the Company and the matters referred to in this release including the technical reports and independent qualified person.

Don Charter, President and Chief Executive officer stated “We have had a good quarter with the very successful commissioning and start-up of the coal preparation plant and the addition of the Casselman mine as well as the Alumbaugh and Winner resources. The progress at the coal preparation plant is going well as we see recoveries improving and the quality of coal already meeting or surpassing sales specification requirements. With respect to mine production, while we have had minor production issues at some of the surface mines in part due to minor permit delays, coal qualities and start-up issues, we expect these will be made up with the commencement of mining at our first major underground project, Casselman. The reduction of expected coal sales from purchased coal arrangements resulting from suppliers’ operational issues beyond our control represents low margin business. We are working to replace the lost tons if margins can be maintained.”

Coal Preparation Plant

The Plant commenced operations in June 2011 and has been successfully run at its name plate capacity of 400 raw tons per hour.  The quality of coal produced to date has met or exceeded the sales contract specifications.  Recovery rates during the start-up phase have been, as expected, lower than design, however, as the circuits are balanced and coal blend adjusted, the average recoveries are improving and the most recent recoveries are approximately 68%. The targeted recovery rate is approximately 70% based on laboratory analysis of the raw coal feeds to the Plant, which the Company expects is achievable. Some of the coal stockpiled during the construction of the Plant suffered mild deterioration which has impacted recovery in the column flotation circuit of the Plant when this coal is processed. The lower recovery rates, while they persist, will have an impact on both the Company’s clean metallurgical coal production rate and costs per clean ton produced. The Company’s ability to achieve its coal sales target will depend in part on the Plant achieving targeted recoveries.

Coal Production, Purchases and Sales

The Company believes that it will produce between 230,000 and 250,000 clean tons of metallurgical coal from its mines for the year ended November 30, 2011.  During the six months ended May 31, 2011, the Company experienced some metallurgical coal production short falls due to lower production associated with a delay in the change in mining equipment at the Quarry mine, which is remedied, as well as a later start, due to permit delays, at the Plant and Hemminger mines. There was a higher than expected thermal coal to metallurgical coal ratio at the Acosta surface mine. In addition, an improved mine plan designed to increase metallurgical coal production at the Hemminger mine for the balance of the year is awaiting an amended permit which has not yet been received. These have been offset by the expected production from the Casselman underground mine, which is expected to commence operations in August 2011. The Company has also had, as discussed, lower than targeted recoveries in the Plant which has impacted production.

With respect to the Company’s low margin purchased coal, it is reducing its expected clean coal sales to approximately 130,000 to 150,000 clean tons for the year ended November 30, 2011. This is based on reduced coal purchases during the delay in commencement of the preparation plant and expected reduced deliveries for the balance of the year.  Two of the suppliers of purchased metallurgical coal have been experiencing current production shortfalls which are impacting their deliveries and although deliveries are expected to improve, it is difficult to predict when these will return to full scheduled amounts. This has also affected the blend of coal to the Plant which has impacted recoveries from purchased coal. The Company is working to replace these purchases; however it sees little benefit in doing so at lower margins.

While the total expected metallurgical coal sales have changed from 500,000 to between 360,000 and 400,000, the decrease is in low margin coal. 

The Company expects to produce approximately 145,000 tons of thermal coal in fiscal 2011.

The cash operating costs per raw ton of metallurgical coal mined for the six months ended May 31, 2011 were $63. These costs only included mining costs for the period and are higher than those expected to be achieved for the full fiscal year and are due to the production shortfalls as described above. The expected cash operating costs (including mining costs and plant processing costs) per raw ton of metallurgical coal mined for fiscal 2011 are expected to be $69. The Company does not believe that the costs in its start-up year will be reflective of its longer term cash costs when at its planned levels of production and targeted recovery rates.

The cost of purchased metallurgical coal is based on a formula that is dependent on the actual sale price realized by the Company.

The Company has arrangements in place for the sale of 500,000 tons of metallurgical coal from April 2011 to March 2012 at current world prices which it expects will result in net prices to Corsa averaging between $155 to $170 per ton FOB rail car depending on normal industry discounts based on coal specifications. The quality of coal shipments to date has met or exceeded the sales contract specifications. 

The Company’s estimate remains that sales can grow to approximately 1,000,000 tons of clean metallurgical coal and 75,000 tons of thermal coal in fiscal 2012.  This continues to be dependent on some permits being received as expected.

The estimated coal production and purchases and total cash costs per ton of coal disclosed in this press release are considered to be forward looking information and is provided only to provide guidance for the periods noted in this release, and may not be appropriate for other purposes. Readers are cautioned that actual results may vary from this forward looking information. There can be no assurance as to when or if the required permits will be issued. Actual production, total cash costs and sales are subject to variation based on a number of risks and other factors referred to under the heading and “Forward-Looking Statements” below.

The mineral resource estimates for the projects referred to in this press release 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 NI 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”).  Dennis Noll is independent of Corsa and Wilson Creek Energy.  The mineral resources estimates referred to in this press release were derived from the following technical reports prepared in accordance with NI 43-101:  “Technical Report for Wilson Creek Energy, LLC, Coal Resources for the Alumbaugh Property in Somerset County, Pennsylvania, USA, Dennis A. Noll, P.G., C.P.G., Earthtech, Inc., May 5, 2011” and “Technical Report for Wilson Creek Energy, LLC, Coal Resources for the Casselman Mine Site in Garrett County, Maryland, USA, Dennis A. Noll, P.G., C.P.G., Earthtech, Inc., May 5, 2011”.

The estimate of mineral resources in the report reflects known environmental, permitting, title and other relevant matters. The footprint will require further definition in the following areas in order to achieve the classification of a coal reserve: surface and mineral control, mineability related to geologic conditions, and economic viability.  The mineral resources referred to have not been classified as a mineral reserves and a feasibility study has not been completed. Accordingly the economic viability of the proposed Casselman Mine operations and the Alumbaugh property has not yet been demonstrated.

Information about Corsa

Corsa’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 Coal Corp.:

Contact:
Don Charter,
President and Chief Executive Officer

416-214-9800
communication@corsacoal.com www.corsacoal.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: risks that transactions referred to will not be completed; 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 required in connection with the mining and processing of coal;  unexpected changes in coal quality and specification; variations in the coal preparation 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; 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. 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 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.