Compliance Energy Corp (TSX-V:CEC)
Shares Issued 47,446,783
Last Close 5/30/2008 $0.62
Monday June 02 2008 - News Release
Mr. John Tapics reports
COMPLIANCE EXPANDS MOU WITH ITOCHU CORPORATION AND LG INTERNATIONAL CORP.
Compliance Energy Corp. has expanded the memorandum of understanding (MOU) whichwas originally signed with ITOCHU Corp. and LG International Corp. on Jan. 31, 2008. The expanded MOU includes additional lands,outlines specific joint venture participating interests and increases thefinancial consideration. The original MOU, which provided for the developmentof the Raven coal project encompassing approximately 3,100 hectares, has beenexpanded to include the Bear coal project and the remainder of the WestFraser Mills Ltd. (WFM) option lands on Vancouver Island, B.C. (Comox basin holdings), for a total of approximately29,000 hectares.
Under the terms of the expanded MOU, the parties have agreed to increasetheir financial contribution. They will now finance up to $12-million to earn a40-per-cent interest in the Comox basin holdings subject to the favourable outcome ofdue diligence and the execution of final agreements. Of this total,$600,000 has already been paid to secure exclusivity. The remaining$11.4-million will be used to finance:
- All the activities necessary toreach a production decision on the Raven coal project including publicconsultation, additional drilling, environmental assessment and transportationstudies, and a feasibility study;
- Payments to WFM to secure thetransfer of title to the option lands. The expanded MOU also contemplates thatsubject to satisfactory results of the feasibility study the parties wouldprovide debt financing for the development of the Raven coal project.
ITOCHU is a major Japanese trading house and, among otherthings, has extensive experience in the development of coal mines and themarketing and sale of coal globally, and has investments in coal mines inAustralia and Indonesia. ITOCHU had annual revenues of $22-billion (U.S.) and netincome of $1.5-billion in the fiscal year ended March, 2007.
LG International is a leading general trader in Korea with aworldwide overseas branch network and has abundant experience in coal miningdevelopment, and the marketing and sales of coal worldwide. LG Internationalhas annual revenues of $5.8-billion (U.S.) and investments in coal mines inRussia, Australia and Indonesia.
The Raven coal project located in the Comox coal basin of VancouverIsland, B.C., has 39,093,000 tonnes of measured and indicated and59,004,000 tonnes of inferred coal resources as reported in the company'stechnical report prepared by O.R. Cullingham Resource Consultant Ltd. (seepress release in Stockwatch on May 29, 2007). The coal is classified as high-volatile Abituminous and would be suitable in a metallurgical coal blend or as a thermalcoal. The Bear coal project, which is located 10 kilometres from Raven, isestimated to hold approximately 8.5 million tonnes of high-volatile Abituminous coal resources, which exhibit good coking characteristics. Thisresource estimate is not 43-101 compliant and readers are cautioned that thisresource estimate should not be relied upon.
