Corsa Files Technical Report For PBS Coals

October 14, 2014 - Toronto, Ontario - Corsa Coal Corp. (TSXV: CSO) ("Corsa" or the "Company") is pleased to announce that a technical report prepared by Cardno MM&A ("Cardno") in accordance with the requirements of National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101") has been prepared and filed on www.sedar.com under Corsa's profile in respect of the Company's properties located in and around Somerset County, Pennsylvania which are under the control of PBS Coals, Inc. ("PBS"), a wholly-owned subsidiary of the Company that was acquired on August 19, 2014, and is entitled "Technical Report on the Coal Resource and Coal Reserve Controlled by PBS Coals, Inc. Pennsylvania, USA - Prepared in accordance with National Instrument 43-101 Standards for Disclosure for Mineral Projects - Effective August 19, 2014" (the "Technical Report").

George Dethlefsen, Corsa's Chief Executive Officer, commented: "We are pleased to provide the details of the newly acquired reserves and resources from the acquisition of PBS.  These reserves fit perfectly with our investment strategy of acquiring high scarcity value, long lived reserves at a time of market weakness.  The actively producing mines and the portfolio of mining projects will provide for significant production optionality and expansion opportunities in the future."    

Selected summary information from the Technical Report is presented below. Readers are cautioned that the summary information set out in this press release are subject to important qualifications, assumptions and exclusions, all of which are detailed in the Technical Report. To fully understand the summary information set out below, the Technical Report should be read in its entirety.

Coal Resources and Coal Reserves

The Technical Report provides a geological evaluation and estimate of coal resource and coal reserve as of August 19, 2014. This coal resource and reserve determination includes: coordination, assembly, and analysis of all pertinent resource data and processing into a resource database; the mapping of coal resources; estimation of coal resources and coal reserves; review and compilation of coal quality data; review and assessment of the economics associated with the planned mineral development and production by PBS. The coal resource has been estimated following the guidelines of GSC Paper 88-21: A Standardized Coal Re/_templates/4/source/Reserve Reporting System for Canada.

Coal resources and coal reserves are herein reported using imperial units of measurement, the prevalent units of measurement in the USA.

The coal resources controlled by PBS are summarized below:

Note: 
(1)Coal resource tons are inclusive of reserve tons; recoverable coal reserves are the economically mineable portion of the in-situ coal resources from which they are derived.
(2)Mineral resources that are not mineral reserves do not have demonstrated economic viability.

In summary, PBS controls a total of approximately 123.34 million measured and indicated in-situ coal resource tons and 0.03 million inferred in-situ coal resource tons. Of the total measured and indicated tons, 86% are measured and 14% are indicated.

Proven and probable coal reserves were derived from the defined coal resources considering relevant processing, economic (including independent estimates of capital, revenue, and cost), marketing, legal, environmental, socio-economic, and regulatory factors.

The coal reserves controlled by PBS are summarized below:

Note:
(1)While all of the coal resources for this area are measured, the coal reserves for specific areas have been categorized as probable for the Technical Report.
(2)Totals may not sum due to rounding.

In summary, PBS controls approximately 37.00 million moist, recoverable proven and probable coal reserve tons, of which 80% is considered proven and 20% is considered probable, after the application of all mining factors.  Of the total coal reserve, approximately 2.84 million moist, recoverable tons are surface-mineable and approximately 34.16 million moist, recoverable tons are underground-mineable.  Of the total coal reserve, approximately 17.54 million tons are permitted for mining by appropriate state and federal regulatory authorities with the responsibility for oversight of mining operations in the USA and in Pennsylvania. 

Economic Evaluation

The pre-feasibility financial model, prepared for the Technical Report, was developed to test the economic viability of each coal resource area. The results of the financial model are not intended to represent a bankable feasibility study, required for financing of any current or future mining operations contemplated for the PBS properties, but are intended to establish the economic viability of the estimated coal reserves. It should be noted that all aspects of the economic analysis presented herein was based on an effective date of June 30, 2014. The reserve estimates previously presented are as of August 19, 2014. The amount of coal mined at the three active mines between June 30 and August 19 (approximately 91,500 saleable tons) have no significant impact on the overall production forecast and economic analysis.

Mine plans and projections were developed by Cardno for each of the PBS mining areas. Using the mine plans, Cardno developed a detailed financial model for each projected PBS mine and produced a consolidated financial model. The financial model projects the revenue stream, operating costs, and capital expenditures for the life-of-reserves presently controlled by PBS.  Cash flow after tax, but before debt service, generated over the life of the project was discounted to net present value (NPV) at a 10.78% discount rate, which represents Cardno's estimate of the constant dollar, risk-adjusted weighted average cost of capital (WACC) for likely market participants if the subject coal reserves were offered for sale. The resulting NPV represents the enterprise value of the project. Sensitivity of the project economics was tested by separately varying coal sales prices, operating costs, and capital expenditures. The terms "cash flows" and "project cash flows" used in this report refer to after-tax cash flows. Currency reported herein is expressed in USA dollars ($).

The operations are projected on a calendar year basis from 2014 through 2046. While all PBS coal resources properties deemed by Cardno to have potential for classification as coal reserves were evaluated as part of the economic model, some of those resource areas were determined to be uneconomical in the current market and were therefore excluded from coal reserves as discussed below.

P&L and EBITDA Summary

The following table shows total life-of-mine (LOM) tonnage, profit and loss before tax (P&L), and Earnings before Interest, Taxes, Depreciation, and Amortization (EBITDA) for the PBS underground and surfaces mines evaluated herein.

Note:
(1)EBITDA is a non-GAAP financial measure. Please see "Non-GAAP Financial Measure" below.

The LOM total pre-tax P&L amounts to $562 million and LOM EBITDA totals $845 million.

Cash Flow Summary

PBS's consolidated project cash flow summary in constant 2014 dollars, excluding debt service, is shown below.

Notes:
(1)All dollar amounts are presented in thousands of dollars.
(2)EBITDA is a non-GAAP financial measure. Please see "Non-GAAP Financial Measure" below.

Qualified Person

The scientific and technical information contained in this press release has been prepared under the supervision of and approved by Justin S. Douthat, P.E., Michael G. McClure, C.P.G. and Hugo L. Fournier, P.E., all of Cardno, an independent mining consultant, and Qualified Persons within the meaning of NI 43-101.

Non-GAAP Financial Measure

EBITDA, is not a defined measure under International Financial Reporting Standards ("IFRS"). Management and certain investors use this information to assess the Company's performance and also determine the Company's ability to generate cash flow for investing activities. In addition, management utilizes this metric as an important management tool to monitor cost performance of the Company's operations. This measurement has no standardized meaning under IFRS and may not be comparable to similar measures presented by other companies. This measurement is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

Information about Corsa

Corsa's primary business is the mining, processing and selling of thermal and metallurgical coal, as well as actively exploring, acquiring and developing resource properties consistent with its coal business.

For further information please contact:

Paul D. Caldwell
Chief Financial Officer and Corporate Secretary
Corsa Coal Corp.

416-214-9800
[email protected]
www.corsacoal.com

Forward-Looking Statements

Certain information set forth in this press release contains "forward-looking statements" and "forward-looking information" under applicable securities laws. Except for statements of historical fact, certain information contained herein pertaining to estimates of life of mine tonnage production, P&L and EBITDA, constitutes forward-looking statements which include management's assessment of future plans and operations and are based on current internal expectations, estimates, projections, assumptions and beliefs, which may prove to be incorrect. Some of the forward-looking statements may be identified by words such as "estimates", "expects" "anticipates", "believes", "projects", "plans", "outlook", "capacity" and similar expressions. These statements are not guarantees of future performance and undue reliance should not be placed on them. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause the Company's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: risks that the actual production or sales for the 2014 fiscal year will be less than projected production or sales for these periods; risks that the prices for coal sales will be less than projected or expected; liabilities inherent in coal mine development and production including restarting idled mines; geological, mining and processing technical problems; inability to obtain required mine licenses, mine permits and regulatory approvals or renewals required in connection with the mining and processing of coal; risks that the Company's coal preparation plant will not operate at production capacity during the relevant period, unexpected changes in coal quality and specification; variations in the coal mine or coal preparation plant recovery rates; dependence on third party coal transportation systems; competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel; incorrect assessments of the value of acquisitions; changes in commodity prices and exchange rates; changes in the regulations with respect to the use, mining and processing of coal; changes in regulations on refuse disposal; the effects of competition and pricing pressures in the coal market; the oversupply of, or lack of demand for, coal; inability of management to secure coal sales or third party purchase contracts; currency and interest rate fluctuations; various events which could disrupt operations and/or the transportation of coal products, including labour stoppages and severe weather conditions; the demand for and availability of rail, port and other transportation services; the ability to purchase third party coal for processing and delivery under purchase agreements; and management's ability to anticipate and manage the foregoing factors and risks. The forward-looking statements and information contained in this press release are based on certain assumptions regarding, among other things, coal sales being consistent with expectations; future prices for coal; future currency and exchange rates; the Company's ability to generate sufficient cash flow from operations and access capital markets to meet its future obligations; the regulatory framework representing royalties, taxes and environmental matters where the Company conducts business; coal production levels; and the Company's ability to retain qualified staff and equipment in a cost-efficient manner to meet its demand. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The reader is cautioned not to place undue reliance on forward-looking statements. The Company does not undertake to update any of the forward-looking statements contained in this press release unless required by law. The statements as to the Company's capacity to produce coal are no assurance that it will achieve these levels of production or that it will be able to achieve these sales levels.

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