Thursday, January 20, 2011

Cobalt Coal Corp. (CCCXF.PK) Updates Investors Concerning Westchester Expansion

Yesterday, Cobalt Coal Corp. announced that the Westchester Expansion is moving forward. Phase 1 of the Westchester Expansion involves the signing of a lease, adding new coal reserves immediately adjacent to the Company’s current underground Westchester Metallurgical Coal Mine in McDowell County, West Virginia. It is accessible from Cobalt’s existing underground infrastructure.

The Phase 1 Westchester Expansion comprises approximately 121 acres. It contains the same high-grade low volatile metallurgical Sewell Seam Coal currently undergoing mining by Cobalt at their Westchester Mine. Isopach maps (supported by historic core drill data on the lands) indicate that the seam thickness increases by as much as 15 inches on the Westchester Expansion. Consequently, seam heights greater than 47 inches are to be expected as mining progresses to the southwest compared to seam heights of approximately 32 inches on Cobalt Coal Corp.’s existing Westchester Mine lease.

The Company understands that the Phase 1 Westchester Expansion represents approximately 10 percent of the In-Place Coal owned by the Lessor at this location and believes that with performance on Phase 1 they may be able to obtain further leases from the Lessor.

The Phase 1 Expansion alone adds approximately 600,000 tons of In-Place Coal Resources to the existing 1,200,000 tons of In-Place Coal Resources currently under lease for a total of approximately 1,800,000 tons of In-Place Coal Resources. Cobalt Coal Corp. expects that an additional 330,000 to 450,000 tons of metallurgical coal is potentially recoverable from the Phase 1 Expansion using the room-and-pillar and the retreat mining techniques.

The Westchester Expansion should add 4 to 5 years of mineable reserves to Westchester Mine’s existing mine life of 6 to 10 years, based on a targeted production rate of 7,000 clean tons per month. The anticipation is that the Westchester Expansion may allow a doubling of targeted production if both leases are produced concurrently. For this to occur, the Company’s mining equipment fleet would need to almost double in size. Cobalt’s management will be addressing this capital requirement in the near future.

Cobalt Coal Corp. has started the mapping and engineering work necessary to complete permitting of the Westchester Expansion. The Company has completed Hydrology, which includes surface and groundwater inventories of the new mining acreage. Obtaining regulatory approval and expansion for revision to an existing permit has historically taken from 30 to 120 days when no additional surface areas are disturbed. This is a significant advantage to Cobalt in this instance.

Commenting on the Westchester Expansion, Mike Crowder, CEO of Cobalt Coal Corp. noted, “Since recommencing operations in late 2010 we have had to overcome several challenges from a regulatory, financial and operational perspective. For example, Cobalt has been subjected to significantly greater regulatory oversight in advance of the filming of Spike TV’s reality Show ‘Coal’. Closing of several financings in the last half of 2010 has provided the additional capital needed to acquire the additional equipment we very much needed as well as to ensure that our day to day operating bills are paid. Cobalt is especially grateful to our various industry suppliers who have worked hand in hand with us to provide Cobalt this equipment. We’ve added a continuous miner, an upgraded generator, an additional battery powered hauler, feeder/crusher, conveyor belt upgrades and a state of the art communication and tracking system. All these items are necessary to operate the mine efficiently. Signing of the Westchester Expansion together with signing of the increased price contract is the icing on the cake to launch Cobalt into continuous, profitable and sustainable operations for many years to come.”

Headquartered in Calgary, Alberta, Cobalt Coal Corp. is a coal exploration and production company. Founded in 2007, the Company also has a regional office in Welch, West Virginia. Cobalt underwent creation to capitalize on the growth opportunities that exist in the modern metallurgical coal mining industry.

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