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Coal mining in the Grande Cache area
Message: Grande Cache Coal Corporation Provides Operational Update
| May 20, 2009 |
| Grande Cache Coal Corporation Provides Operational Update |
| CALGARY, ALBERTA--(Marketwire - May 20, 2009) - Grande Cache Coal Corporation (TSX:GCE) ("Grande Cache Coal" or the "Corporation") today provided the following operational update. Global steel production continues to be weak and has resulted in lower demand and pricing for metallurgical coal. The World Steel Association is currently forecasting an estimated 15% reduction in worldwide apparent steel usage in 2009. Grande Cache Coal has adjusted it's business plan to reflect this reality and is aggressively pursuing new markets and spot sales, while continuing to position the Corporation for opportunities in the future. - Grande Cache Coal sold 1.06 million tonnes of metallurgical coal in the fiscal year ended March 31, 2009, including 0.11 million tonnes in the fourth quarter. - The Corporation anticipates sales volumes of 1.1 to 1.3 million tonnes in fiscal 2010. To date, the Corporation has contracted a significant amount of the anticipated tonnage for fiscal 2010, which includes a portion of carryover from fiscal 2009 at last year's contracted price. Current year price settlements are in keeping with other announced settlements in the industry. Negotiations are continuing with the remaining historical customers of the Corporation, as well as with prospective new customers. - Grande Cache Coal intends to manage production levels throughout fiscal 2010 to meet the anticipated demand for coal. This is expected to result in the curtailment of production for a series of two week periods during May, July and December. - The Corporation anticipates capital expenditures will total approximately $67 million in fiscal 2010. This includes approximately $20 million related to the development of the No. 8 surface mine and the No. 12B2 underground mine, subject to receipt of pending regulatory approval for both mines. The anticipated capital expenditures also include the acquisition of new surface mining equipment required for the development of the No. 8 surface mine totaling approximately $28 million. The Corporation has received expressions of interest from a number of financial institutions to provide lease financing for this equipment denominated in U.S. dollars. This equipment was ordered in 2008 for delivery early in 2009 and was subsequently deferred to the fall of 2009. The fiscal 2010 capital expenditures are expected to be funded by cash flow from operations and equipment leases. - Grande Cache Coal has received a commitment from a Canadian chartered bank to provide the Corporation with an operating credit facility of up to $25 million and the ability to enter into foreign exchange hedging arrangements. "The outlook for global steel production in 2009 continues to be bleak" said Robert Stan, President and Chief Executive Officer. "This has resulted in reduced demand and lower prices for metallurgical coal which are being reflected in contract settlements for fiscal 2010. We continue to have a strong balance sheet and a focused operational plan and believe our company is well positioned to be successful in the current economic climate. While there is a lot of uncertainty in the metallurgical coal industry today, we believe that demand and pricing will stabilize and we continue to permit new areas, increase productivities and expand our customer base to position our company for future growth when market conditions improve." Grande Cache Coal is an Alberta based metallurgical coal mining company whose experienced team of coal professionals are managing a mine that produces metallurgical coal for the steel industry and holds coal leases covering over 22,000 hectares in the Smoky River Coalfield located in west-central Alberta. Grande Cache Coal's common shares are listed on the Toronto Stock Exchange under the trading symbol "GCE". |
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