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Updated Technical Report on Verticalnaya Coal Mine

Sep 9 2013 12:00AM

Marketwire

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VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 09/09/13 -- EastCoal Inc. (TSX VENTURE: ECX)(AIM: ECX) (the "Company" or "EastCoal") is pleased to announce that it has filed an updated National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101") compliant technical report on its Verticalnaya Mine, Ukraine.

The updated technical report presents the latest business plan for the development of the Verticalnaya anthracite mine, which has two mine sites. As presently envisaged, the original mine will be used to access the old, currently flooded, mine workings and to extract the undeveloped Coal Reserves in the H8 coal seam. The second site, known as the Verticalnaya North Project ("VNP") site, is being used to develop two surface drifts to access the Coal Reserves in the H11 and H11B seam.

The economic evaluation included in the NI43-101 reflects the Company's strategy to initially increase production at the VNP to circa 11,000 tonnes per month by December 2013, prior to ramping up the mine to its full capacity over time. The current plan indicates a decision regarding the further ramp-up of production will be taken during the 1st half of 2014. The economic evaluation includes the initial development costs and capital expenditure required for such a ramp-up of production to be incurred commencing 2014. The 2014 forecast numbers include circa $3 million of development costs, included in operating costs, and circa $12.5 million of capital expenditure that relate to the ramp-up and the removal of a gas pipe line. If warranted by market conditions at the time, the Company could temporarily delay the removal of the gas pipe and the development cost and capital expenditure related to the ramp-up, and continue production at 11,000 tonnes per month.

The project has a net present value ("NPV") of US$ 330.2 million, at a discount rate of 10%. Based on a post-2015 real price increase per year of 2%, NPV at 10% discount rate is increased to US$453.9 million. The evaluation was prepared on an all equity basis and excludes the possible benefit from debt finance on certain large capital items. The NPV has varied due to a detailed review by the Company of its mine plan, associated capital and operating costs as well as a reduced sales price in light of current market conditions. Average operating cost per tonne assessed over the life of mine for H8 Seam is US$31.83/tonne saleable and for H11 Seam is US$25.58/tonne saleable. The internal rate of return is 62.1% and the payback period is 6 years.

The Technical Report, prepared by IMC Group Consulting Ltd. of the United Kingdom, is available on Sedar (www.sedar.com) and the Company's website (www.eastcoal.ca). It updates the "Amended Pre-Feasibility Study Report on the Verticalnaya Mine, Ukraine", dated June 2012. It also updates the Competent Persons Report ("CPR") filed as part of the Company's admission to trading on the AIM market of the London Stock Exchange plc and in accordance with the AIM rules. The CPR disclosed a 26% increase (from the Previous Report) in JORC-compliant total resources (inclusive of reserves), and an amended economic analysis, with a downgrade of some reserves from proved to probable class.

Upon publication of the updated report, the Company will also re-file its annual information form for the year ended December 31, 2012 on SEDAR as well as its annual management discussion and analysis ("MD&A") and the MD&As for Q1 and Q2, 2013 to reflect the changes to the Company's technical disclosure set out in the updated report.

Mr. David J.F. Smith, C. Eng., MIoM3, BSc (Eng), is the Qualified Person responsible for reviewing the accuracy of this news release in compliance with NI43-101 and the AIM Guidance Note for Mining and Oil & Gas Companies.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

This press release contains projections and forward-looking information that involve various risks and uncertainties regarding future events. Such forward-looking information can include without limitation statements based on current expectations involving a number of risks and uncertainties and are not guarantees of future performance. There are numerous risks and uncertainties that could cause actual results to differ materially from those expressed in the forward looking information. These and all subsequent written and oral forward-looking information are based on estimates and opinions on the dates they are made and are expressly qualified in their entirety by this notice. Except as required by law, EastCoal assumes no obligation to update forward-looking information should circumstances or management's estimates or opinions change.



Contacts:
EastCoal Inc.
Abraham Jonker, President and Acting CFO
+1 (604) 973 0079 / +1 (604) 992 5600 (Cell)
www.eastcoal.ca

Cenkos Securities plc
Ken Fleming
+44 (0) 207 397 8900

Alan Stewart/Derrick Lee
+44 (0) 131 220 6939





Source: Marketwire


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