Cobalt Coal Ltd announced that it has engaged Mackie Research Capital Corporation to act as lead agent on a financing for the Company to raise USD 6,000,000 through the completion of a brokered private placement. The Offering will be in the form of common shares of the Company at a price of USD 0.12 per Share.
The entering into of the engagement letter with Mackie to act as lead agent of Cobalt for the Offering is in furtherance of previous press releases made by Cobalt over the last three months including the June 8 2011 and July 21 2011 press releases regarding the restructuring initiatives that management of Cobalt has determined are necessary to transition the Company into a profitable, producing metallurgical coal mining company.
The Offering is subject to the approval of the TSX Venture Exchange. Pursuant to applicable securities laws, all securities issued pursuant to the Offering will be subject to a hold period of four months following the closing of the Offering.
With the closing of certain restructuring transactions and the completion of a minimum private placement of $2,078,500 on August 19, 2011, Cobalt has
I). Retired certain of its senior debt
II). Acquired the Westchester Coal Limited Partnership
III). Acquired a continuous miner
IV). Reduced the amount of Cobalt debentures outstanding such that the balance of the remaining outstanding debentures are expected to be repaid from Cobalt's cash flow by December 15 2011.
As a result of the decrease in the outstanding debt only USD 1,000,000 of the proceeds raised through the Offering will be used to retire debt, specifically the residual indebtedness to Cobalt senior lender. The remainder of the proceeds of the Offering will be used to acquire mining equipment to perform infrastructure upgrades at Cobalt Westchester/Westchester Expansion mine and for working capital purposes.
Management of Cobalt remains confident that production volumes will increase and operating costs will be materially reduced as a result of the addition of the new equipment and the completion of the proposed infrastructure upgrades.
In connection with the Offering, Cobalt will pay cash commission and grant compensation options to Mackie to purchase 8% of the number of Shares sold under the Offering with each Compensation Option entitling the holder to purchase one Share at USD 0.12 per Share for a period of 18 months from the closing of the Offering.
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