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Atlantic Coal

Atlantic Coal raises £400,000 following Pagnotti settlement and Maple Carpenter Creek acquisition

Atlantic Coal (AIM: ATC) has completed a placing of 80 million new ordinary shares at a price of 0.5p per share, raising £400,000. The placing which represents 5.5% of the enlarged share capital is within the company’s current authorities and the proceeds will be used for working capital purposes, in particular to complete the company’s capital reinvestment plans at the Stockton Colliery,

Atlantic has made considerable progress in recent months with the termination of a restrictive legacy supply agreement and December’s acquisition of Montana-based clean coal developer Maple Carpenter Creek (MCC). "We are pleased to have been able to complete this placing to provide the company with additional working capital following our termination and settlement of the Pagnotti supply agreement”,  Atlantic MD Steve Best commented, “It will also allow us to continue our work with Maple Carpenter Creek".

The company recently agreed the termination of a legacy supply contact, which it inherited as part of the Stockton mine acquisition in November 2000. The supply deal with Pagnotti previously committed Atlantic to sell up to 100,000 tons of coal below current market prices. The Pennsylvanian coal miner is set to make a saving of approximately US$10 million over Stockton’s mine life as a result of the settlement.

Part of the new funds raised will be apportioned to the final instalment of the hydraulic excavator at Stockton, scheduled to arrive in March 2010, which should immediately impact production levels, through raised input into the on-site washery.

Managing Director Steve Best said commented: “We are nearing the final phases of redeveloping the Stockton Colliery, which we believe will significantly improve the economics of the operation, already enhanced by the settlement of the Pagnotti supply agreement, and lead to a deserved re-rating of our stock.  Our aim is to produce up to 400,000 tons of run of mine coal at Stockton over an initial 10 year mine life, which should generate significant cashflow for the Company, something we can utilise to implement our regional Pennsylvanian consolidation strategy as well as identify other synergistic high quality coal projects.”

The whole Carpenter Creek coal area covers approximately 70,000 acres and contains an estimated 1.2 billion tons of high quality thermal coal. Previous business models developed by MCC targeted production for 2012. Providing modelling with a potential mine life of over 30 years, with production at 6 million tons per annum of washed coal. MCC has access to existing transportation infrastructure including a direct line to key coal markets in the US and Asia.

The placing was arranged by Allenby Capital and it is expected to be effective on London’s AIM market on or around 15 February 2010.