Forbes & Manhattan (Coal) Inc. Enters Into Agreement to Acquire Slater Coal (Pty) Ltd

TORONTO, ONTARIO--(Marketwire - July 7, 2010) - Forbes & Manhattan (Coal) Inc. ("Forbes Coal"), a private Ontario coal mining company is pleased to announce that it has entered into an agreement with the shareholders of Slater Coal (Pty) Ltd. ("Slater Coal") to acquire Slater Coal and its interests in its coal mines in South Africa. The operating mine, known as the Magdelena bituminous mine (the "Magdelena Property") and the Aviemore anthracite mine (the "Aviemore Property" and, collectively, the "Slater Coal Properties") have a substantial resource base of bituminous and anthracite coal. The Slater Coal Properties are located in the Klipriver coalfield, near Dundee, in the KwaZulu Natal Province of South Africa and can be accessed via the N3, N11 Ladysmith and R102 Dundee tarred national highways that run between Johannesburg and Durban, South Africa.

Zinoju Coal (Pty) Ltd., a subsidiary of Slater Coal, has 197,000 tonnes of export capacity at the Richards Bay Coal Terminal, which is a deep sea port, 190 kilometres north of Durban along the Indian Ocean. The terminal is the world's largest coal export facility, able to handle large ships and volumes and is accessible to the town of Dundee via the Richards Bay Coal Terminal rail line.

For the financial year ended February 28, 2010, Slater Coal (together with its subsidiaries) sold approximately 538,000 tonnes of coal and had consolidated revenue of ZAR263,002,489 (approximately C$35,500,000) and earnings before interest, tax, depreciation and amortization ("EBITDA") of ZAR92,444,839 (approximately C$12,479,055).

Both the Magdelena underground mine and the Aviemore underground mine have expansion potential, and as part of its near term plans, Forbes Coal intends to increase total production from existing levels of approximately 0.6 million tonnes to 1.5 million tones of saleable coal per annum. The current spot prices for export thermal coal are in excess of C$90 per tonne (Richards Bay API4 price) and as evidenced by current sales contracts in place with Forbes Coal, domestic prices are close to C$83 per tonne. Anthracite sales prices range from approximately C$80 per tonne to C$160 per tonne, based on product quality and application.

The Aviemore underground mine, which was closed in early 2009, is currently being reopened. For the 2011 financial year, the total coal sales from both mines are estimated at close to 650,000 tonnes and the estimated EBITDA is approximately C$23 million.

Slater Coal Properties

The Magdelena Property is located 22 kilometers from the town of Dundee in KwaZulu Natal and encompasses approximately 1,844 hectares. The Magdelena Property which consists of the Magdelena underground mine and the Magdelena opencast pit, has an estimated measured and indicated mineral resource of 54.2 million tonnes of in situ coal with an estimated volume of 36.1 million cubic metres. A specific gravity of 1.5 tonnes per cubic metre was applied for the volume-tonnage conversion. The Magdelena opencast pit and underground mine has an estimated production capacity of 100,000 tonnes of bituminous coal per month.

The Aviemore Colliery Property is located 4 kilometers from the town of Dundee in KwaZulu Natal and encompasses approximately 5,592 hectares. The Aviemore Property consists of the Aviemore underground mine and has an estimated measured and indicated mineral resource of 35.9 million tonnes of in situ coal with an estimated volume of 23.9 million cubic metres. A specific gravity of 1.5 tonnes per cubic metre was applied for the volume-tonnage coversion. The Aviemore underground mine has an estimated inferred mineral resource of approximately 16.8 million tonnes of in situ coal with an estimated volume of 11.2 million cubic metres. A specific gravity of 1.5 tonnes per cubic metre was applied for the volume-tonnage conversion. The Aviemore underground mine has an estimated production capacity of 40,000 tonnes of anthracite coal per month.

Mr. C J Muller: B.Sc. (Hons) (Geol.), Pr. Sci. Nat (P.Geo) is a qualified person as defined in National Instrument 43-101 and has read and approved the scientific and technical information contained in this release relating to the Slater Coal Properties. The following table sets forth the resource estimate for the Slater Coal Properties.

Magdelena Property – April 30, 2010
Mineable In Situ Coal Resource(2)
Bituminous Coal   Full Extraction of Seam Width 1.7 Float Qualities Area
Seam Resource Category Volume SG Tonnes ASH FC GCV H2O TS VOL YIELD
Mm3 t/m3 Mt % % MJ/Kg % % % %
Lower Gus Measured 8.4 1.5 12.6 14.9 65.6 29.5 1.2 1.6 17.9 77.3 Magdalena Underground
Upper Gus Measured 10.6 1.5 15.9 15.7 66.1 30.7 1.4 1.5 16.8 79.5
Joined Seam Measured 13.8 1.5 20.7 14.7 67.3 29.3 1.3 1.6 16.0 82.8
Joined Seam Indicated 2.8 1.5 4.2 15.0 67.5 29.4 1.5 1.7 16.0 84.3
Lower Gus Measured 0.2 1.5 0.3 15.7 59.2 29.2 1.4 1.6 23.6 81.4 Magdalena Opencast
Upper Gus Measured 0.3 1.5 0.5 15.1 61.9 29.3 1.5 1.5 21.5 81.0
Total Measured & Indicated 36.1 1.5 54.2   Magdalena Underground & Opencast
    Aviemore Property – April 30, 2010
     Mineable In Situ Coal Resource(2)
Anthracite Coal   Full Extraction of Seam Width 1.7 Float Qualities Area
Seam Resource Category Volume SG Tonnes ASH FC GCV H2O TS VOL YIELD
Mm3 t/m3 Mt % % MJ/Kg % % % % Aviemore Underground
Gus Measured 1.2 1.5 1.8 13.5 77.7 30.1 1.8 2.0 7.2 73.9 Aviemore Mine
Gus Indicated 9.7 1.5 14.6 13.6 77.5 29.0 2.2 1.8 6.7 63.5 Leeuw Mining & Exploration
Gus Indicated 13.0 1.5 19.5 13.5 75.5 28.9 2.6 1.6 8.3 57.0 Zinoju Coal
Total Measured & Indicated 23.9 1.5 35.9   Aviemore Underground
Gus Inferred 1.1 1.5 1.7 15.0 74.8 27.3 1.8 1.4 8.5 56.0 Leeuw Mining & Exploration
Gus Inferred 10.1 1.5 15.2 14.1 74.7 28.9 2.5 1.7 8.6 59.6 Zinoju Coal
Total Inferred(1) 11.2 1.5 16.8   Aviemore Underground
  1. The inferred coal resources are conceptual in nature and have a large degree of uncertainty as to their existence and whether they can be mined economically or legally, as there has been insufficient exploration to define a mineral resource. It cannot be assumed that all or any part of the inferred resource will be upgraded to a higher confidence category.
  2. The current coal resource model is based on available sampling data collected over the history of the project's area. The coal resources estimation was carried out by Mr. Q.C. Antunes, who is independent and a "Qualified Person" (as such term is defined in NI 43-101). Mr. C. Muller, Director of Minxcon (Pty) Ltd. and an independent "Qualified Person" (as such term is defined in NI 43-101) reviewed the coal resource estimate and is responsible for the technical aspects of coal resources set forth above. The resource estimate is based on a 2D computer block model with estimation parameters estimated into 100X100 metre blocks using full seam width composite data. The qualities models were constructed from inverse square distance estimates. The coal resource estimates were not diluted. The quality models were verified by visual and statistical methods and deemed to be globally unbiased. The blocks were classified into inferred, indicated and measured resource categories using the following and not limited thereto: data spacing, geological confidence, number of samples used to inform a block and other factors, etc. No environmental, permitting, legal, title, taxation, socio-political, marketing or other issues were taken into account to estimate the coal resource estimate. Only the coal resource lying within the identified target areas are reported. These fall within the legal boundaries. A 0.8 m seam width cut-off was used in the declaration of the Magdalena and Aviemore coal resources. Numbers may not add up due to rounding.

In April 2010, Forbes Coal entered into an agreement with the shareholders of Slater Coal to acquire all of the issued and outstanding common shares of Slater Coal, a private South African coal mining company that has collieries in production. Slater Coal holds a 70% interest in Zinoju Coal (Pty) Ltd. ("Zinoju") which holds all the mineral rights and prospecting permits with respect to the Slater Coal Properties. The remaining 30% interest is held by the South African Black Economic Empowerment partners. Pursuant to the terms of the agreement, Forbes Coal is required to pay Slater Coal an aggregate of ZAR600,000,000 (approximately C$80,000,000) over a two year period.

Forbes Coal Special Warrant Financing

Forbes Coal has entered into a Private "Bought Deal" agreement with Canaccord Genuity Corp. pursuant to which a syndicate of underwriters (the "Underwriters") have agreed to purchase, on an underwritten basis, 12,500,000 special warrants of Forbes Coal (the "Special Warrants") at a price of $2.80 per Special Warrant for gross proceeds to Forbes Coal of $35,000,000 (the "Forbes Coal Financing"). Each Special Warrant will convert automatically and without any further action on the part of the holder into one post-consolidation common share of Forbes Coal immediately before the completion of the Proposed Acquisition Forbes Coal will pay the Underwriters a cash commission in an amount equal to 6% of gross proceeds raised from the Forbes Coal Financing. In the event that Forbes Coal receives net proceeds less than $35,000,000, the commission payable to the Underwriters, may be paid in a combination of cash or Special Warrants. In addition, Forbes Coal shall issue to the Underwriters compensation special warrants (the "Broker Special Warrants") exercisable to acquire that number of compensation warrants (the "Broker Warrants") equal to 6% of the aggregate number of Special Warrants issued pursuant to the Forbes Coal Financing. Each Broker Warrant will entitle the holder thereof to acquire one common share of Forbes Coal, at a price of $2.80 per common share for a period of 18 months following the closing of the Forbes Coal Financing. The Broker Special Warrants will convert into the Broker Warrants concurrently upon conversion of the Special Warrants.

In connection with the Forbes Coal Financing, the Company and certain of the shareholders of the Company shall enter into lock-up agreements which will restrict their ability to issue, sell or grant, or announce any intention to issue, sell or grant, any equity or quasi-equity securities from the date hereof until the date which is the earlier of (a) 12 months following the closing date of the Forbes Coal Financing, and (b) three months after the completion of the Proposed Acquisition.

Commenting on the acquisition, Forbes Coal President and CEO, Mr. Stephan Theron stated, "Forbes & Manhattan (Coal) Inc. views the transaction as a cornerstone investment for its global coal growth strategy. This is a world class coal asset in a highly developed coal market. Slater Coal has a terrific track record, lead by an excellent management team. We see tremendous growth potential for the operation, driven by a strong fundamental demand for high quality thermal and metallurgical coal."

Forbes Coal Management Team

  • Stephan Theron – President and Chief Executive Officer - Mr. Theron has over ten years of extensive financial management, project finance and equity analysis experience in the mining, energy and infrastructure sectors. Prior to joining Forbes Coal, Mr. Theron was Sector Head, Materials and Energy at an independent investment research firm with a focus on emerging markets. He also worked on various capital projects in Southern Africa, North America and Europe. Mr. Theron is a Certified General Accountant ("CGA") and has a Bachelor of Commerce degree from the University of Johannesburg.

  • Stan Bharti – Executive Chairman – Mr. Bharti is a business consultant and a professional mining engineer with more than 25 years experience. Mr. Bharti is also the President of Forbes & Manhattan, Inc. a private merchant bank focused on the natural resource sector. 

  • Johan Louw – Vice President, Africa Operations – Mr. Louw is a capital project specialist with almost 15 years experience in the Southern African mining and energy sectors.

  • Charles Mostert – Vice President, Corporate Development – Mr. Mostert has over 30 years experience in the mining industry.

  • David Stein – Director - David Stein is a former mining equities analyst, director and member of the executive committee at Cormark Securities Inc. Mr. Stein joined Cormark's predecessor Sprott Securities Inc. in 2001 and during his nine year career has gained experience with equity research, corporate finance and marketing. Mr. Stein holds a Master of Science degree (Economic Geology) and Bachelor of Applied Science (Geological Engineering) degree from Queen's University, and is a CFA charter holder. Mr. Stein is also the President of Aberdeen International Inc.

  • Grant Davey – Director – Mr. Davey is a mining engineer with almost 20 years' experience in the mining industry including senior mine and operational management roles within the AngloGold Ashanti and Anglo American organizations in South Africa and Australia. Mr. Davey has operated mines in the gold, platinum and coal sectors, and also has experience in the mining contracting business. He was previously the Chief Operating Officer of GBS Gold and the Chief Operating Officer of Crocodile Gold Corporation.

  • Deborah Battiston - Chief Financial Officer - Ms. Battiston is a Certified General Accountant with over 20 years of accounting and financial management experience. At present she is the Chief Financial Officer of a number of Canadian public companies. She has obtained a B.A. in Economics from the University of Guelph.

  • Jennifer Wagner - Corporate Secretary - Ms. Wagner is the Corporate Secretary of various junior exploration companies. Prior to this role, Ms. Wagner was a lawyer at a major Canadian law firm. She holds an LL.B. from the University of Windsor and obtained a Bachelor of Arts from McGill University in Montreal.

For more information, please contact

Forbes & Manhattan (Coal) Inc.
Stephan Theron
President and CEO
(416) 861-5912