On May 22, 2013 the Board resolved to place Inter-Invest (which operates the Menzhinsky mine and owns the wash plant) into administration and/or liquidation and to work with the relevant administrators and other stakeholders to inter alia seek an orderly disposal process of the assets or possible third party investment in an attempt to satisfy claims against Inter-Invest.
2.1 The vision
The Company's vision is to become a leading producer of high quality coal in the Ukraine.
Verticalnaya, with large resources, good location and an existing management, workforce and infrastructure, provides an exceptionally attractive development opportunity and cornerstone project for the future execution of the Company's vision.
The Company, deploying a strong and experienced team to develop value from Verticalnaya, is the leader of western investment into the Donbass coal basin - an area which has been identified as having tremendous potential.
2.2 Management Changes
In March 2013, the Company appointed Mr. Vernon (JR) King as Chief Operating Officer. Mr King. has 35 years' experience in the mining industry and has held several senior positions in the industry, including President of the Kentucky Division of Alpha Natural Resources. He holds a Mining Engineering Degree from Bryson University in the United States. Mr. King replaced Mr. Colin Stocks who retired from the Company in March 2013.
Mr. George Lawton, previous CFO and Company Secretary, left the Company in April 2013. Mr. Jonker was appointed acting CFO in his stead.
In addition to his role as General Counsel, Mr. Hendrik Dietrichsen was appointed Company Secretary in April 2013. Mr. Dietrichsen has more than 30 years' experience as a legal practitioner and advising at senior management and board level within private and public listed companies. He has also held various positions at board level.
Verticalnaya comprises two operations, the Verticalnaya Mine accessing the lower level H8 seam and VNP, an incline mine in development accessing the upper level H11 and H11B seams. Production from VNP is expected in Q3 2013.
At VNP, the Company has completed the portals and in excess of 2,500 meters of drift and roadway development and commenced the drivage of the two surface drifts to access the H11 and H11B seams where the first coal production will take place. A full description of the mine and its operations is contained in the Competent Person Report (the "Verticalnaya CPR"), prepared by IMC Group Consulting Ltd. ("IMC Group") of the United Kingdom in November 2012, which is set out at Section A of Part III of the AIM Admission Document which can be found on SEDAR (www.sedar.com) and the Company website at www.eastcoal.ca.
In addition, in April 2011 and amended in June 2012, the Company filed a NI 43-101 technical report prepared by IMC Group. This report may be viewed on SEDAR and the Company website at www.eastcoal.ca.
Verticalnaya is located in the Donbass region. A number of settlements lie in the vicinity including the towns of Lunacharsk, Leninskiy, Volodarsk, Ustinovka and the villages of Malomedvezhje and Fedorovka; the latter is located only 1.5 kilometers from the mine.
EastCoal has been issued a mining license which allows the Company to extract coal from seams H11, H11B, H10B, H8 and H8B within the license area. This license is valid for 20 years from the date of issue and expires on the July 19, 2027.
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