CALGARY, ALBERTA--(Marketwire - July 11, 2012) - Cobalt Coal Ltd. ("Cobalt") (TSX VENTURE:CCF), announces it has entered into extension agreements in relation to the previously announced substantial property acquisitions on March 8, 2012. Those agreements extend the closing date for the acquisitions to no later than October 31, 2012 (the "Extending Agreements").
The Extending Agreements
The Extending Agreements were required due to the delays Cobalt experienced in completing the extensive National Instrument 43-101, Standards of Disclosure for Mineral Projects, compliant technical report on the leases to be acquired. While the Extending Agreements do not contemplate a change to the total purchase price of $15MM (the "Purchase Price"), they do require Cobalt to make additional funding commitments between now and the extended closing date as follows:
- Cobalt must provide an additional $250,000 deposit by July 15, 2012. This deposit, together with the previous deposit of $500,000, will become non-refundable as Cobalt has completed its due diligence on the leases to be acquired. The full deposit of $750,000 will be credited towards the Purchase Price;
- Cobalt must pay an additional $150,000, payable in 3 equal monthly payments of $50,000 as recoupable advance minimum royalties;
- Cobalt must place a $150,600 bond deposit with the Virginia Department of Mines, Minerals and Energy and maintain the existing permit that allows mining operations to be conducted on the Mill Creek Tract;
- Cobalt must spend a minimum of $200,000 on mine "face up" improvements on the Mill Creek Tract; and
- Cobalt must drill a minimum of 5 test holes on the lands to be leased, each to a depth that tests the Pocahontas No. 3 coal seam, and provide the information obtained from those test holes to the Vendors.
In exchange for Cobalt making these additional funding commitments, however, the method by which the purchase price may be paid to the vendors has been expanded to include an option for Cobalt to pay the purchase price in 4 annual installments as follows:
- $1,000,000 on Closing (on or before October 31, 2012);
- $3,250,000 on the first anniversary of Closing;
- $4,500,000 on the second anniversary of Closing: and
- $5,500,000 on the third anniversary of Closing.
In the event Cobalt elects this option, interest of 5% per annum will be payable on the outstanding balance of the purchase price.
Commenting on having now finalized the Extension Agreements, Mike Crowder, Cobalt's President and CEO commented "I'm very pleased that all parties were able to agree to these amended terms such that we can proceed with the steps needed to place the first of many mines into production. The high quality mid vol metallurgical coal contained on the lands continues to command attractive prices in the domestic and international markets".
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 to capitalize on the growth opportunities that exist in the metallurgical coal mining industry.
Statements in this news release may contain forward-looking information including the closing of the proposed acquisition, the availability of funds to pay the purchase price for the proposed acquisition and the timing of closing the proposed acquisition. 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.
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