Railroad, Operational and Acquisition Update (5694B)

TIDMATC

RNS Number : 5694B

Atlantic Coal PLC

18 April 2012

Atlantic Coal plc / Index: AIM / Epic: ATC / Sector: Mining

18 April 2012

Atlantic Coal plc ("Atlantic" or the "Company")

Completion of Norfolk and Southern railroad diversion,

operational update and acquisition update

Atlantic Coal plc, the AIM listed opencast coal production and processing company with activities in Pennsylvania, USA, is pleased to announce the completion of the Norfolk and Southern railroad diversion at its Stockton colliery ("Stockton") together with an operational update at Stockton.

Highlights

-- Completion of the Norfolk and Southern Railroad Diversion allowing the working of over approximately 1.0 million tons ("Mt") of coal of previously unworkable reserves

-- An independent mining report highlights that, with the diversion complete, production of 160,000 tons of clean coal per annum is achievable in 2012

-- Existing equipment provides sufficient capacity to achieve production targets at Stockton - delivery of the second Liebherr excavator now expected in H2 2012

Atlantic Managing Director, Steve Best, said, "I am delighted to announce that the railroad at Stockton has now been diverted with the first train travelling over the diversion on Sunday 15 April 2012. With this in place, we can now advance plans to increase coal production at Stockton and at the same time improve efficiency at the site for the remainder of 2012 and beyond. Underpinning this strategy, independent consultants have confirmed that production of 160,000 tons per annum of clean coal at Stockton is achievable during 2012. In calculating this production rate, Mine Engineers Inc. assessed both the mine's current operational capacity as well as the positive impact of the completion of the rail line diversion. Combined with strong demand and higher prices for Pennsylvania anthracite, we look to the remainder of 2012 with confidence.

"Stockton provides the Company with a solid regional footprint from which to acquire further properties in the area. As announced earlier in the year, we have acquired options over two prospective anthracite projects and we are currently conducting due diligence on those assets. Further updates will be made at the appropriate time."

Railroad diversion

The Norfolk and Southern Railroad has now been diverted away from the future extraction area at Stockton, allowing the working of over approximately 1.0 Mt of coal of previously unworkable reserves included in Atlantic's original competent persons report in 2007. This diversion is also expected to allow more efficient working of the remaining reserves at Stockton.

Operational update

An independent mining report has been produced by Mine Engineers Inc. in order to evaluate the Company's mine plan and operations at Stockton. The report has highlighted that, with the diversion of the railroad now complete, production of 160,000 tons of clean coal is achievable for the year to 31 December 2012. This would represent a considerable improvement on the 106,403 tons production of clean coal achieved in 2011. The projected 2012 strip ratio of 17:7 set out in the independent mining report also compares favourably to the 2010 and 2011 strip ratios of approximately 32:1, leading to a significant increase in operating efficiencies at Stockton.

The new Liebherr 9250 19-yard bucket hydraulic excavator ("Liebherr"), originally anticipated to be operational in Q1:2012, will now not be delivered until H2:2012. However, the Company's existing Liebherr and the recently acquired PC-2000 excavator will provide sufficient excavator capacity to achieve production targets at Stockton and it is envisaged that the new Liebherr will be put to work at one of the potential acquisition sites.

Potential Acquisitions Update

On 3 January 2012, the Company announced that it had entered into a lease option agreement with Reading Anthracite Company ("RAC"), an established operator in Pennsylvania's anthracite coal industry, over the fully permitted 410 acre Pott & Bannon anthracite mining property in New Castle Township, Schuylkill County, Pennsylvania. If Atlantic chooses to exercise this lease option, the consideration payable to RAC will be c. US$6.0 million in cash and Atlantic shares plus the grant of US$3.0 million worth of warrants in Atlantic at 0.75 pence per share. The Directors anticipate that the cash component will be satisfied from Atlantic's existing cash resources. Further details of the lease position and the 410 acre Pott & Bannon anthracite mining property are set out in the announcement dated 3 January 2012.

Additionally, on 15 February 2012 the Company announced that it had entered into an option agreement to acquire additional anthracite mining assets in Pennsylvania. This option, which is exercisable entirely at the Company's discretion, has an exercise price of US$35 million and the exercise period ends on 31 October 2012. Further details of this additional option are set out in the announcement of 15 February 2012.

Due diligence on both the potential acquisitions is progressing and further announcements will be made at the appropriate time.

**ENDS**

For further information on the Company, visit: www.atlanticcoal.com or contact:

 
 Steve Best         Atlantic Coal plc           Tel: [phone] 
 Nick Naylor        Allenby Capital Limited     Tel: [phone] 
 Mark Connelly      Allenby Capital Limited     Tel: [phone] 
 Alex Price         Allenby Capital Limited     Tel: [phone] 
 Andy Frangos       Cornhill Capital Ltd        Tel: [phone] 
 Hugo de Salis      St Brides Media & Finance   Tel: [phone] 
                     Ltd 
 Elisabeth Cowell   St Brides Media & Finance   Tel: [phone] 
                     Ltd 
 

This information is provided by RNS

The company news service from the London Stock Exchange

END

MSCUWVWRUAASARR