Forbes Coal Announces Annual Financial Results Which Include a Substantial Increase to Monthly EBITDA

TORONTO, ONTARIO -- (MARKET WIRE) -- 05/30/11 -- Forbes & Manhattan Coal Corp. (TSX: FMC) ("Forbes Coal" or the "Company") is pleased to announce results for its fiscal year ended February 28, 2011. All figures are in Canadian dollars, unless otherwise stated.

Highlights include:

--  Total revenue of $12.0 and $27.7 million for the two and fourteen months
    ended February 28, 2011 respectively which includes only seven months of
    operations from Slater Coal.

--  South African stand-alone operations generated EBITDA of $5.5 million
    and $9.8 million (see non GAAP measures) during the two and seven months
    ended February 28, 2011 respectively. On a monthly basis, the last two
    months have shown a substantial increase in EBITDA compared to when
    Forbes Coal acquired the assets in August 2010 as the attached
    financials attest. EBITDA for Slater Coal for the 12 months ending
    February 2011 was $16.5 million (Forbes Coal owner 76.75% of Slater

--  EBITDA Margin increased to 45% (Slater stand-alone EBITDA/Sales) for
    January and February 2010 as a result of higher production and coal
    sales. The average EBITDA margin for Slater Coal was 35% for the 12
    month period from March 1, 2010 to February 28, 2011.

--  Production and EBITDA for January 2011 and February 2011 indicates that
    ramp up program is on track (see non GAAP measures).

--  At February 28, 2011, the Company's working capital position was $27.4
    million (see non GAAP measures) including a cash balance of $15.3
    million and inventory at cost of $10.5 million.

--  Slater Coal's year to date production from March 1, 2010 to February 28,
    2011 was 933,993t Run of Mine ("ROM"). Seven months or 593,234t ROM were
    consolidated into Forbes Coal annual financial statements.

--  At the Magdalena mine, the new continuous miner and expansion of section
    4 is expected to add up to 330,000 tonnes per year of saleable

--  The Company completed its' bought deal financing with a 15% over-
    allotment option exercised in full for aggregate gross proceeds in the
    amount of $41.9 million.

--  The Company increased its port capacity at Richards Bay - Grindrod
    Terminals for the shipment of coal products in the following amounts:
    --  2011 - 600 000 metric tons (m/t) per annum
    --  2012 - 720 000 metric tons (m/t) per annum
    --  2013 - 960 000 metric tons (m/t) per annum

--  Forbes Coal signed a three-year off-take agreement with Vitol S.A., a
    leading energy company, for the sale of 1.75 million tonnes of
    bituminous coal.

--  The Company has changed its year end to February 28 to align itself with
    Slater Coal, consequently, the year ended February 28, 2011 is a
    fourteen month year.

In releasing these results, Stephan Theron, President and Chief Executive Officer of Forbes Coal, commented, "Our annual performance highlights strong production results from both the Magdalena and Aviemore properties. We are on track with the planned production ramp up. Furthermore, entering into the Vitol off-take agreement and improved logistics performance sets a positive trend for the next fiscal year. Our management team is now at full strength and the Company is set to capitalize on a strong demand for thermal and metallurgical coal."

Operational highlights

The Forbes Coal management team took control of the Slater Coal operations in August 2010. The ramp-up programme, launched in the second quarter under guidance of the previous management team, continued to gain momentum. The following key points are noted:

ROM Production

--  Total ROM production from all operations for the period August 2010 to
    February 2011 was 593,234t ROM vs. 702,094t ROM planned.

--  Total production from March 2010 to February 2011 was 933,993 t ROM vs.
    1,040,000t ROM originally planned for the financial year.

--  The production for the last two months was 27.9% higher than the monthly
    average for the financial year to date preceding this period (March 2010
    to December 2010).

--  The production ramp-up is generally going according to plan and is
    nearing the completion of the first phase, Phase 1, of the Forbes Coal
    initiated production ramp-up at the Magdalena and Aviemore operations. A
    delay in the delivery and commissioning of the new Section 4 Continuous
    Miner as well as unplanned maintenance on the original Section 1
    Continuous Miner, significantly contributed to the downward adjustment
    in production for the period ending February 2011.

--  Magdalena operations, underground and open pit combined, produced
    463,068 t ROM vs 558,138 t ROM planned for the period August 2010 to
    February 2011. The average ROM produced per month between August and
    February 2011 was 74,621t, but excluded the December shut down period.

--  Aviemore produced a total of 130,166 t ROM between August 2010 and
    February 2011 vs 143,956 t ROM planned.

--  Aviemore anthracite operation, reopened in June 2010, regularly exceeded
    targeted output of 22,000 t ROM per month, with an average of 20,339 t
    ROM produced per month between August and February 2011, but excluding
    the December shut down period. The daily running rates during the short
    January and February months remain in line with targets.

--  Anthracite Calcine unit was successfully started at the end of August
    and operates near production targets with 33,790 t anthracite peas
    calcined between September 2010 and February 2011. Calcine yield
    performance remains consistent at 84%.

--  Magdalena underground took delivery of new Sandvik ABM30 Continuous
    Miner for the development of the new Section 4. This section is expected
    add up to 330,000 tonnes per year in saleable production.

--  Start-up activities for the new section commenced December 2010, and
    continued throughout January and February 2011. Production from this new
    section was in line with realistic expectations during the ramp-up

--  Additional staffing and equipment were deployed at Magdalena U/G to
    support the ramp-up programme, including the successful commissioning of
    a new 2,500 KVA power supply to Magdalena U/G operations.

Coal Sales

--  Saleable coal production for August 2010 to February 2011 was 418,437 t.
    The total calculated yield from plant feed was 70.9% in this period.

--  Total Saleable production for the financial year, March 2010 to February
    2011 was 648,048 t from the two mines. This equates to 69.4% yield on
    ROM production and 69.1% yield on Feed-to-Plant.

--  Yield performance was above expectations and reflects well on ongoing
    interventions to improve process plant throughput and yield performance.

--  Total reconciled sales of bituminous coal, anthracite and calcined
    products from March 2010 to February 2011 is 529,256 t, with 176,270 t
    moved in the last three months. The average Sales for January and
    February reflects a 63% increase in monthly Sales compared to the
    monthly average for 10 months preceding this period.

--  Coal is transported by rail and truck to domestic and export customers.
    Forbes Coal successfully negotiated an agreement with Grindrod Navitrade
    port terminal for incremental capacity of up to 960,000 tonnes per annum
    over a three year period.

Highlights include:

--  Grindrod Terminals shall provide export capacity in the Terminal for the
    shipment of coal products as follows:
    --  2011 - 600 000 metric tons (m/t) per annum
    --  2012 - 720 000 metric tons (m/t) per annum
    --  2013 - 960 000 metric tons (m/t) per annum

--  At current coal spot prices, the increased throughput of coal could
    potentially lead to incremental cash flows of up to $30 million per

--  Grindrod Terminals provide certain logistical, handling and stock piling
    services to shippers in connection with the shipment of bulk cargoes
    through the dry bulk coal Terminal known as the Navitrade Terminal (and
    its associated facilities), connected to berths in the Port of Richards

--  Grindrod Terminals will provide up to 70,000 t in stockpile capacity to
    receive the coal at the terminal. Forbes Coal can deliver coal to the
    Terminal either by road or rail.

--  Forbes Coal railed 42,301 tonnes of saleable product to the Navitrade
    port to the end of February in preparation of the first shipment.

--  Forbes Coal signed a three year offtake agreement for 1.75 million
    tonnes (total) with Vitol S.A. ("Vitol"), a leading energy trading
    company. Vitol will be purchasing thermal coal produced at the Magdalena
    property at market related prices.

--  Forbes Coal's management team is mobilized at site and has integrated
    very well with the Slater Coal management team.

Financial highlights

Slater Coal financial highlights


                   Summarized Financial Results (Actual)

                                Slater Coal

                                 January 1,          Date of
                                       2011   acquisition to  March 1, 2010
                               February 28,     February 28,       February
                                       2011             2011       28, 2011
                                   2 months         7 months      12 months

Run of Mine (ROM) (t)               190,278          593,234        933,993
Saleable production (t)             137,576          418,437        648,048
Plant feed (t)                      187,312          589,812        938,148
Yield (%) on ROM                       72.3%            70.5%          69.4%
Yield (%) on Plant feed                73.4%            70.9%          69.1%
Inventory tonnes balance open       173,791           86,742         74,704
Inventory tonnes balance
 close                              189,778          189,778        189,778
Sales (t)                           129,774          311,682        529,256

Revenue 000,000's ($)                  12.0             27.7           46.7
EBITDA 000,000's ($)                    5.5              9.8           16.5

CDN$: US$ (average)                    0.99             1.01           1.02
ZAR: CDN (average)                     7.13             6.94           7.09

Selling price (average) /
 sold production t (CAD$)             92.62            88.81          88.31
Selling price (average) /
 sold production t (US$)              93.48            87.57          86.50

Cash cost of sales and
 operating expenses CAD
 000,000's ($)                          5.4             16.4           28.6

Cash cost of sales and
 operating expenses / sold
 production t (CDN$)                  41.54            52.56          53.98

Cash cost of sales and
 operating expenses / sold
 production t (US$)                   41.93            57.83          52.88

Capital expenditures
 000,000's (CAD$)                      9.22            11.68          14.84
Capital expenditures per t of
 saleble production $                 67.02            27.91          22.90

Numbers in this chart are derived from the Slater Coal stand alone financial statements

these are not affected by the adjustments related to the purchase price allocation or consolidation adjustments

See non GAAP measures


Total Comprehensive Income

The net income and net loss for the two and fourteen months ended February 28, 2011, was net income of $1.8 million and a net loss of $15.04 million, respectively, compared to a net loss of $0.04 million for the period ended December 31, 2009. Comprehensive loss for the two and fourteen months ended February 28, 2011, was $4.60 million and $15.58 million respectively compared $0.04 million for the period ended December 31, 2009. Forbes & Manhattan (Coal) Inc., was incorporated in November 2009. Forbes & Manhattan Coal Corp, is the continuing combined entity following the September 2010 Transaction between Forbes & Manhattan (Coal) Inc. and Nyah whereby Nyah, a public company listed on the Toronto Venture Stock Exchange ("TSX-V"), acquired all of the outstanding shares of the Company in exchange for common shares of Nyah. Also, the Company changed its year end to the end of February in order to align itself with its subsidiaries in South Africa. Consequently, there is no two month period for comparison in 2009, also the 2009 results contain only minimal overhead expenses as the Company had recently been incorporated. Following completion of the Transaction, the Forbes & Manhattan (Coal) Inc board and management team became the board and management team of the combined entity, which was renamed Forbes & Manhattan Coal Corp. Forbes and Manhattan Coal Corp. began trading on the TSX under the symbol "FMC" as of September 27, 2010.

The Company completed the acquisition of Slater Coal at the end of July 2010. Consequently seven months of results for Slater Coal have been consolidated into Forbes & Manhattan Coal Corp.


Coal sales during the two and fourteen months ended February 28, 2011 were $12.02 million and $27.68 million, respectively. The summary of Slater Coal's physical tonnages included in these sales numbers along with production tonnage is outlined below:

                                    January 1, 2011   Date of acquisition to
                                       February 28,
                                               2011        February 28, 2011
                                           2 months                 7 months

Sales from:
-Aviemore operations (t)                      8,411                   23,166
-Calcine operations (t)                       2,915                   10,750
-Magdalena operations (t)                   118,449                  277,767

Total sales (t)                             129,774                  311,682

Run of Mine production
-Aviemore operations (t)                     31,067                  130,166
-Magdalena operations (t)                   159,211                  463,068

Total ROM production (t)                    190,278                  593,234


Saleable production from:
-Aviemore operations (t)                     20,493                   84,179
-Magdalena operations (t)                   117,083                  334,258

Total saleable production (t)               137,576                  418,437

The Company experienced a logistics backlog which generated stockpiles at February 28, 2011. The Company acquired 86,742 tonnes of stockpile as at the acquisition date in July, 2011 and produced 418,437 saleable tonnes while only 311,682 tonnes were sold during the seven months since the acquisition.

The production target for Slater Coal for its fiscal year, twelve months ending February 2011 was an estimated 650,000 tonnes of coal. Slater produced 648,044 tonnes of salable coal during the period or 95.3% of target. Historically Slater Coal had conducted the majority of its coal sales in the domestic market.

The Company has taken initiatives to increase its' export sales and port allocations in order to move the backlogged inventory and provide increased capacity for the future.

The Company has entered into agreements with Transnet Freight Rail ("TFR"), and Grindrod Terminals Richards Bay, a division of Grindrod South Africa (PTY) Ltd., to export coal produced by Forbes Coal from the Slater Coal operations in Dundee through the Port of Richards Bay. The Company has also signed a three year off-take agreement for 1.75 million tonnes (total) with Vitol S.A. ("Vitol"), a leading energy trading company. Vitol will be purchasing thermal coal from the Slater Coal properties at market prices.

Cost of Sales and Operating Expenses

Operating expense for the two and fourteen months ended February 28, 2011, was $8.94 million and $19.93 million respectively ($68.86 per tonne and $63.92 per tonne). This amount includes transportation, rail and port handling costs. Amortization and depletion amounted to $1.54 million and $3.51 million respectively for the two and fourteen months. Cash cost of sales also includes the fair value adjustment to the inventory purchased at July 31, 2010 totaling $2.49 million. The Company purchased the stockpile at July 31, 2010 when it acquired Slater Coal. The margin on the sale of the 86,742 tonnes acquired was essentially $nil, consequently cash cost of sales was increased related to these acquired tonnes by $2.49 million.

Excluding the adjustment related to the fair value of the acquired inventory, the cash cost of sales and operating expenses per tonne were lower during the two months due:

--  lower downtime on the continuous miner,
--  higher monthly sales compared to the previous period.


The Company recorded expenses of $2.08 million during the two months and $18.25 million during the fourteen months ended February 28, 2011, respectively. During the fourteen months ended February 28, 2011 the Company recorded $13.52 million in stock based compensation comprised of $6.32 million related to the issuance of 2,435,000 options and $7.20 million related to issuance of 2,700,000 performance special warrants.

The Company also recorded $0.43 million and $1.81 million in consulting and professional fees and $1.61 million and $2.73 million related to general and administrative expenses for the two and fourteen months ended February 28, 2011 respectively. The general and administrative expense appears high for the two month period. Upon acquisition of Slater the Company underwent a review of all cost categories and classifications and determined that certain expenses related to administration had been included in operating expenses. The Company adjusted the classification in order to provide more accurate historical information for comparative purposes. The Company has been steadily building its management team and engaging professionals as it embarks on its new coal operations.

Other items

During the two and fourteen months ended February 28, 2011 the Company recorded a gain of $2.24 million and a loss of $0.35 million in other items.

Included in these amounts are the transaction costs associated with the Slater Coal purchase and the Nyah Transaction totaling $1.34 million. The Company has adopted CICA handbook section 1582 and consequently the transaction costs related to Slater Coal have been expensed to the consolidated statements of operational loss and comprehensive loss and deficit.

The Company has also recorded the estimated fair value of the two cash payments of Rand 140 million (approximately $21.14 million) payable by March 1, 2011 and Rand 140 million (approximately $21.14 million) payable by March 1, 2012 as described under the "Acquisition of Slater Coal" section of this report. The estimated fair value of these payments was calculated using a Random Walk method. Probabilities were assigned to the amounts as described in the "Purchase of Slater Coal" section of this report based on various scenarios and management's and other expert's expectations of the scenarios materializing. The results were present valued using a discount rate of 10%. As a result an amount of $0.63 million and $2.24 million has been accreted during the two and fourteen months ended February 28, 2011 respectively related to the current and long term portion of the amounts due which are included on the consolidated balance sheets under acquisition obligations. As at December 31, 2010, based on revised estimates related to production targets, the Company adjusted the estimated fair value of the contingent consideration related to the payments. The current portion of the liability related to the March 1, 2011 payment was reduced by $3.15 million and the long term portion of the liability related to the March 1, 2012 was increased by $0.43 million. These adjustments have resulted in a net recovery on the estimated fair value of the contingent liability of $2.72 million being recorded.

The Company recorded other income of $0.25 million and $0.45 million during the two and fourteen months ended February 28, 2011 respectively. Other income, results from small scrap sales, discounts received and certain fair value adjustments.

The Company recorded interest income of $0.03 million and $0.14 million during the two and fourteen months ended February 28, 2011 respectively and interest expense of $0.40 million and $0.72 million during the two and fourteen months ended February 28, 2011 respectively. Investment revenue results primarily from interest bearing deposits held in banks. The Company invests its excess cash in liquid low risk investments.

The Company has also recorded foreign exchange gains of $3.11 million and $0.63 million respectively for the two and twelve months ended February 28, 2011. As previously discussed, the Company owed ZAR 280 million, payable in March 2011 (paid on February 24, 2011) and March 2012. Movements in the South African Rand against the Canadian dollar from July 31, 2010 to February 28, 2011 have generated significant foreign exchange gains.

The Company recorded an income tax recovery of $0.13 million and an income tax expense of $0.69 million during the two and fourteen months ended February 28, 2011.

Other comprehensive income items

The functional currency of the Company is the Canadian dollar. The Company's foreign subsidiary is considered to be a self-sustaining operation in accordance with Section 1651 Foreign Currency Translation of the CICA handbook. Accordingly, the results are translated to Canadian dollars using the current method. Under this method, the assets and liabilities are translated into Canadian dollars at the exchange rate in effect at the balance sheet date, the revenue and expense items are translated at the exchange rate in effect on the dates on which such items are recognized in income, and exchange gains and losses arising from the translation are recognized in other comprehensive income. Accordingly, for the two and fourteen months ended February 28, 2011, losses of $6.43 million and $0.54 million respectively, have been recorded to other comprehensive income.


The Company has included in this document certain non-GAAP performance measures that are detailed below. These non-GAAP performance measures do not have any standardized meaning prescribed by GAAP and, therefore, may not be comparable to similar measures presented by other companies. The Company believes that, in addition to conventional measures prepared in accordance with GAAP, certain investors use this information to evaluate the Company's performance. Accordingly, they are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared with GAAP. The definition for these performance measure and reconciliation of the non-GAAP measure to reported GAAP measures are as follows:

Working Capital

                                                 February 28,   December 31,
                                                         2011           2009
                                                       $000's         $000's
Current Assets
  Cash and cash equivalents                         15,252.65          52.18
  Restricted cash                                    1,736.00              -
  Accounts receivable and other receivables         12,410.38           0.60
  Inventories                                       10,526.68              -
  Prepaid expenses                                      60.30           7.14
                                                    39,986.01          59.92

Current Liabilities
  Accounts payable and accrued liabilities           7,031.20          32.36
  Other financial liabilities                        2,660.47              -
  Future income taxes                                2,200.00              -
  Provisions                                           261.93              -
  Loans payable                                        389.18              -
                                                    12,542.78          32.36
Working capital (deficiency)
Current assets less current liabilities             27,443.23          27.57


                                    Two months ended  Fourteen months ended
                                   February 28, 2011      February 28, 2011
                                              $000's                 $000's
Net income (loss) for the period               1,836                (15,041)
  add back
Amortization and depletion                     1,540                  3,510
Consolidation amortization and
 depletion adjustment                          1,050                  1,050
Operating expense related to
 inventory Fair Value adjustment               2,494                  2,494
Income tax expense                              (130)                   686
Foreign exchange gain/loss                    (3,114)                  (631)
Interest and dividend income                     375                    577
Change in estimates on contingent
 acquisition liablity                              -                 (2,725)
Accretion                                        627                  2,242
Business combination transaction
 costs                                           118                  1,340
Mineral properties investigation
 costs                                             -                    112
Sock based compensation                            -                 13,522
General and administration (Non
 Slater)                                         221                    786
Directors' fees (Non Slater)                      30                     73
Consulting and professional fees
 (Non Slater)                                    433                  1,813

EBITDA Slater Coal                             5,480                  9,808

Johan Odendall, B.Sc. (Geol.), B.Sc. (Hons)(Min. Econ.), M.Sc. (Min. Eng.), a director of Minxcon and an independent Qualified Person, as defined in National Instrument 43-101, has reviewed and approved the scientific and technical information contained in this release.

About Forbes Coal

Forbes Coal is an emerging mid-tier Southern African coal company. The Company holds a 76.75% interest in Slater Coal (Pty) Ltd., a South African company ("Slater Coal") which has a 70% interest in Zinoju Coal (Pty) Ltd. ("Zinoju"). Zinoju holds a 100% interest in certain coal mines in South Africa (the "Slater Coal Properties"). The Slater Coal Properties comprise the operating Magdalena bituminous mine (the "Magdalena Property") and the Aviemore anthracite mine. The Slater Coal Properties have a substantial combined resource of coal and each mine has a current projected 18 year life of mine plan. Forbes Coal is increasing production at both mines and has almost doubled production levels since acquiring the Slater Coal Properties. The Company has in- place transportation infrastructure allowing its coal to reach both export corridors and the growing domestic coal market.

Please refer to the Company's NI 43-101 compliant technical report on the Slater Coal Properties dated April 30, 2010 entitled "Technical Report on Slater Coal and Subsidiaries, KwaZulu-Natal Province, South Africa", available on the SEDAR profile of the Company at Additional information is available at

This press release does not constitute an offer of securities for sale in the United States. The securities being offered have not been, nor will be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States absent U.S. registration or an applicable exemption from U.S. registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Common Shares or Warrants in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Cautionary Note Regarding Forward-Looking Information This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements with respect to the anticipated production results with respect to the Slater Properties, future financial or operating performance of the Company and its projects, statements regarding the prospects for the business of the Company, requirements for additional capital, government regulation of the mineral exploration industry, environmental risks, acquisition of mining licences, title disputes or claims, limitations of insurance coverage and the timing and possible outcome of pending litigation and regulatory matters. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including but not limited to: general business, economic, competitive, foreign operations, political and social uncertainties; a history of operating losses; delay or failure to receive board or regulatory approvals; timing and availability of external financing on acceptable terms; not realizing on the potential benefits of the proposed transaction; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of mineral products; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; and, delays in obtaining governmental approvals or required financing or in the completion of activities. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

Forbes & Manhattan Coal Corp.
Stephan Theron
President and Chief Executive Officer
(416) 861-5912
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Forbes & Manhattan Coal Corp.
Sabina Srubiski
Investor Relations Manager
(416) 309 2957
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Source: Forbes & Manhattan Coal Corp.