TORONTO, ONTARIO -- (Marketwire) -- 02/15/13 -- Forbes & Manhattan Coal Corp. ("Forbes Coal") (TSX: FMC)(JSE: FMC) advises that it has notified Riversdale Mining Limited ("RML") of the cancellation of the agreement between Forbes Coal and RML ("the agreement") for the acquisition by Forbes Coal of 100% of the shares and shareholder claims of Riversdale Holdings (Proprietary) Limited, which is the 74% shareholder of Zululand Anthracite Colliery ("ZAC").
Subsequent to the parties entering into the agreement in September 2012, and pending fulfillment of the conditions precedent contained in the agreement, the performance of ZAC deteriorated to a material extent. This, in the opinion of Forbes Coal, constituted a material breach of certain of the provisions of the agreement by RML, entitling Forbes Coal to cancel the agreement, which cancellation took place by written notice from Forbes Coal to RML on February 1, 2013.
On February 10, 2013, RML advised Forbes Coal that -
-- RML denied being in breach of the agreement, which would entitle Forbes Coal to cancel the agreement;-- RML did not accept cancellation of the agreement by Forbes Coal;-- Forbes Coal's actions, in RML's opinion, constituted a repudiation of the agreement by Forbes Coal;-- RML accepts the repudiation of the agreement by Forbes Coal; and-- the agreement is being cancelled at RML's instance.
On February 15, 2013, Forbes Coal advised RML that -
-- Forbes Coal denied having repudiated the agreement; and-- Forbes Coal denied that it would be liable to RML for any damages suffered as a result of the cancellation of the agreement.
The parties have attempted to reach agreement on a mutually beneficial way forward in respect of the acquisition, but such discussions have to date been unsuccessful.
Stephan Theron, President and CEO of Forbes Coal commented on the cancellation: "We are disappointed that the situation has necessitated this decision, but believe that cancelling the agreement is in the best interests of all our shareholders and other stakeholders in Forbes Coal."
About Forbes Coal
Forbes Coal is a growing coal producer in southern Africa. It holds a majority interest in two operating mines through its 100% interest in Forbes Coal (Pty) Ltd., a South African company ("Forbes Coal Dundee") which has a 70% interest in Zinoju Coal (Pty) Ltd. ("Zinoju"). Zinoju holds a 100% interest in the Magdalena bituminous mine and the Aviemore anthracite mine in South Africa (collectively, "the Forbes Coal Dundee Properties"). The mines have a substantial resource base and each mine has a projected life span in excess of 20 years. Forbes Coal is in the process of increasing production at both mines using existing infrastructure and capacity. The company has in-place transportation infrastructure allowing its coal to reach both export corridors and the growing domestic coal market. Forbes Coal has a strong balance sheet and an experienced coal-focused management team.
Please refer to the company's NI 43-101 compliant technical report on the Forbes Coal Dundee Properties dated March 1, 2011 entitled "Technical Report on Slater Coal and Subsidiaries, KwaZulu-Natal Province, South Africa", available on the SEDAR profile of the Company at www.sedar.com. Additional information is available at www.forbescoal.com.