19th Nov 2007 11:03
Atlantic Coal PLC19 November 2007 19th November 2007 Atlantic Coal plc / Index: AIM / Epic: ATC / Sector: Mining Atlantic Coal plc ('Atlantic Coal' or the 'Company') First day of Trading Atlantic Coal plc (formerly Summit Resources plc), has commenced trading on AIMfollowing the acquisition of the Stockton Coal Group ("SCG") in Pennsylvania,USA, which was approved by its shareholders on 13 November 2007. Atlantic Coalis an open cast production and processing business focussing on incrementalreserves of high grade coal for immediate and near term production. SCG's assetsinclude the ownership and operation of the Stockton Colliery which comprises ofthe producing Stockton Mine and an adjacent anthracitic washing plant. Highlights: •Acquired the fully permitted producing Stockton Mine, an established union free surface mine encompassing circa 900 land acres in the Hazle Creek Valley, Pennsylvania •Consideration Share Price - 2.5p •Estimated production rate of over 400,000 run-of-mine ("ROM") tonnes of coal per annum and ten year mine life from existing proven reserves •Infrastructure in place including mining machinery and anthracite preparation plant •Currently evaluating additional opportunities, targeting high quality anthracitic coal in low risk geographical environments •Favourable coal prices - now in excess of US$120 per tonne Atlantic Coal Managing Director, Stephen Best, said, "Atlantic Coal stands outas its Stockton Mine is currently producing, processing and selling high qualityanthracitic coal. We have estimated over 400,000 tonnes of production per annumand we are already generating revenue. We believe sales of processed anthracitefor both commercial and domestic heating could prove defensive in this currentenvironment of rising energy prices, with increased demand generating favourableconditions for the sale of anthracitic coal. The Company is working to acquiremore reserves and additional production projects on both sides of the Atlantic." The Stockton Coal Group ("SCG")-------------------------------SCG comprises a group of US companies and partnerships namely Coal Contractors(1991) Inc. Stockton Anthracite LP and Stockton Anthracite LLC. The business of SGC consists of the ownership and operation of the StocktonColliery which comprises the Stockton Mine, an established union free anthracitesurface mine which encompasses about 900 land acres in the Hazle Creek Valley,Pennsylvania, USA and an anthracite preparation plant which currently produces avariety of sizes of clean coal products for sale. Due to its high carbon qualityand the specialised markets it serves, Pennsylvania anthracite is considered a"niche industry" within the US coal sector. Most of the original surface area of the Stockton Mine is overlain by previoussurface mine spoil material. The current Stockton Mine operations are beingconducted under a valid mining permit issued by the Pennsylvania Department ofEnvironmental Protection. SGC also holds additional permits on three other siteswhich are reportedly depleted of economically recoverable coal, and SGC is inthe process of fulfilling reclamation obligations in respect of these. The Stockton Mine operation was temporarily idled in December, 2005 pending theconstruction and commissioning of the anthracite preparation plant which wasdesigned to produce various sizes of clean coal products for sale, which thecurrent management believed would be highly advantageous for the business. Resumption of mining operations was commenced in November 2006 with the start-upof the new anthracite preparation plant in February 2007. The preparation plantis a 150-200 tonnes per hour Parnaby coal preparation plant located adjacent tothe open-pit anthracite mine. Sales of a variety of washed anthracite productsbegan in February 2007. The preparation plant can currently processapproximately 300,000 ROM tonnes of anthracite coal annually into variousproduct sizes for sale to both retail and industrial consumers. The plant isprojected to recover approximately 50 per cent. of the material processed, thusyielding approximately 150,000 tonnes of clean coal per year, which is currentlysaleable locally at an average price of circa $120 per tonne. The Competent Person, J T Boyd Company, estimates that there is over 10 years ofmine life from existing reserves at an average production rate of 400,000 ROMtonnes per annum. The Stockton Mine has previously achieved annual revenues ofover $11 million per year and an annual output of over 450,000 ROM tonnes ofcoal. Based on historic production levels, the mine is capable of and isprojected to produce approximately 450,000 ROM tonnes of coal per year. It isanticipated that of the 450,000 ROM tonnes produced, 300,000 tonnes will beprocessed by the new preparation plant to yield approximately 150,000 tonnes ofclean anthracite product and the remaining 150,000 tonnes of ROM output will besold under existing ROM sales commitments. Valuation and Consideration. Based on the current mining projections, the pretax net present value of the free cash flow from SGC's operations has beenvalued at $33,974,000 using a discount rate of 10 per cent. and at $44,153,000using a discount rate of 5 per cent. SGC had audited net liabilities of($3,260,755) at 31 August 2006 and unaudited net liabilities of ($5,152,909) at28 February 2007. The Acquisition Under the terms of the Acquisition Agreement, the Company agreed to pay theconsideration by the allotment and issue on Completion of 400,000,000 newordinary shares of 0.07p (" the Consideration Shares") and 36,208,000 newordinary shares ("the Loan Conversion Shares") by the Company to the Vendors,credited as paid up at 2.5p per New Ordinary Share ("the Consideration SharePrice"). Pursuant to the Acquisition the Company will issue in aggregate494,131,736 new ordinary shares ("the New Ordinary Shares") to the owners ofSGC, and to certain creditors of SGC and to certain professional advisers of theCompany. The New Ordinary Shares will comprise the Consideration Shares, theLoan Conversion Shares, 42,857,136 new ordinary shares ("the DebentureConversion Shares"), 5,000,000 new ordinary shares ("the Broker Shares") and10,066,600 new ordinary shares ("the Introductory Shares"). At the Consideration Share Price the value of the Consideration Shares will be£10 million, and the value of all the New Ordinary Shares will be approximately£12.35 million. Following completion of the Acquisition ("Completion") and admission of theexisting ordinary shares and the New Ordinary Shares ("Admission") the EnlargedGroup's market capitalisation (at the Consideration Share Price) is £19.05million. The New Ordinary Shares will represent 64.85 per cent of the EnlargedShare Capital and will, when issued, rank pari passu in all respects with theother ordinary shares then in issue, including all rights to all dividends andother distributions declared, made or paid following Admission. * * ENDS * * For further information, visit www.atlanticcoal.com or contact:Toby Howell Atlantic Coal plc Tel: 020 7182 1747 Rod Venables HB Corporate Tel: 020 7510 8600 Hugo de Salis St Brides Media & Finance Ltd Tel: 020 7242 4477 Victoria Thomas St Brides Media & Finance Ltd Tel: 020 7242 4477 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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