Cline Announces Acquisition of New Elk Surface Assets and Completion of NI 43-101 Technical Report on New Elk Coal Properties
(PressMethod) - Cline Mining Corporation ("Cline" or the "Company") (Toronto:CMK.TO - News) announces that it has acquired the existing coal property surface assets (the "New Elk Surface Assets"), including the coal preparation plant, silos, buildings, railway right of way, surface real estate, mining equipment, conveyor systems, electrics and coal waste dump all related to the New Elk Coal Company LLC ("New Elk") coal properties (the "New Elk Coal Properties") located near the town of Trinidad in Los Animas County, Colorado, U.S.A. The New Elk Surface Assets were acquired from a group of companies unrelated to New Elk. In addition, as a result of the acquisition, the royalty (U.S.$2.50 per ton of coal sold or 10% of gross sales whichever is greater) payable to the vendors of the New Elk Surface Assets was terminated. The consideration paid by the Company for the New Elk Surface Assets was U.S.$1.6 million plus the assumption of an existing reclamation bond to the government of Colorado in the amount of U.S.$967,000. The New Elk Surface Assets, which includes the coal preparation plant, presently has a designed capacity of 550 tons per hour.
ADVERTISEMENT
The purchase of the New Elk Surface Assets by Cline is the first stage in its acquisition of all of the coal properties and coal resources of New Elk, with which it intends to proceed. The New Elk Surface Assets are key to the development of the New Elk coal resources, and fundamental to Cline's plan to bring the New Elk coal resources into commercial production as soon as possible. Cline acquired the New Elk Surface Assets pursuant to an agreement dated November 26, 2007 with New Elk, which agreement also provides Cline with the right to acquire all of the existing New Elk Coal Properties including the existing New Elk coal mine properties, coal resources and related assets.
The New Elk Coal Properties include New Elk's substantial metallurgical and thermal coal resources of 315,000,000 total tons of National Instrument 43-101 ("NI 43-101") compliant in-place coal, detailed below, located within 18,355 contiguous acres. Additional assets to be acquired include a comprehensive earlier data base prepared by CF&I Steel Company (see History of New Elk Mine below) and a current coal mining permit. The purchase price for the New Elk Coal Properties is U.S.$13.8 million, the assumption of the existing U.S.$2.8 million reclamation bond and a U.S.$1.00 per ton royalty on coal sales with a Cline buy-out right of $15 million. The acquisition of the New Elk Coal Properties, data base and mine permit together with the New Elk Surface Assets will enable Cline to bring the mine to production with minimal startup time. The Company is currently arranging the financing to complete this second stage of the acquisition.
Behre Dolbear & Company Ltd. ("Behre Dolbear") was commissioned by and has delivered to Cline a NI 43-101 compliant Technical Report on the New Elk coal resources. The independent Qualified Person responsible for authoring the Technical Report and summarizing the technical material presented in this release is Mr. Gardar G. Dahl, Jr., C.P.G., a senior associate of Behre Dolbear. Mr. Dahl is an established coal consultant with more than 40 years experience in coal exploration, mining and sales, both in surface and underground operations.
Behre Dolbear is one of the oldest, continually operating minerals industry consulting firms in the world, offering fully integrated management consulting and technical advisory services specializing exclusively in the minerals industries from offices around the world. Behre Dolbear has performed numerous coal assignments globally for major and junior mining companies alike.
A summary of the coal resources, measured in millions of tons, included in the Technical Report prepared by Behre Dolbear are summarized below:
------------------------------------------------------------------------
Description Measured Indicated Total Inferred
------------------------------------------------------------------------
New Elk Mine 19.2 38.7 57.9 6.7
Colorado DOW Lease 52.7 159.2 211.9 27.2
NEC Properties 5.8 15.3 21.1 0.8
XTO Lease 9.9 14.2 24.1 0.3
------------------------------------------------------------------------
Total 87.6 227.4 315.0 35.0
------------------------------------------------------------------------
Note: Density Factor equals 85#/Ft3
The complete Technical Report will be posted on the Cline website located at www.clinemining.com and filed on SEDAR in the normal course.
History of New Elk Mine
The New Elk Mine was opened in 1951 by the CF&I Steel Company to provide metallurgical coking coal for its blast furnace iron and steel production plant at Pueblo, Colorado. The CF&I plant was converted to direct electrolytic reduction of steel in 1981 eliminating its need for coking coal and the mine was sold to Wyoming Fuels who continued operation of the mine through 1989. The coal preparation plant, which was built in 1984 to improve product coal specification, continued operating until 1996.
About Cline
Cline Mining Corporation is a mine development company focused on the exploration and development of gold in Canada, uranium and iron-ore in Madagascar and metallurgical coal in Canada for the international seaborne coal trade market.
This news release has been prepared by Cline's management and the technical information has been reviewed and approved by Mr. Gardar G. Dahl, Jr., CPG, a Qualified Person for the purposes of NI 43-101.
CLINE MINING CORPORATION
Ken Bates, President and Chief Executive Officer
CONTACT INFORMATION Email Us http:// ### Disclaimer: If you have any questions regarding information in these press releases please contact the company listed in the press release. Please do not contact PressMethod. We will be unable to assist you with your inquiry. PressMethod disclaims any content contained in these release. |