TSX-V TRADING SYMBOL: CEC
VANCOUVER, Sept. 2 /PRNewswire-FirstCall/ - Compliance Energy Corporation (the 'Company') is pleased to announce that it has signed definitive agreements with West Fraser Mills Ltd. ('WFM') and with I-Comox Coal Inc,. a wholly owned subsidiary of ITOCHU Corporation and LG International Investments (Canada) Ltd. a wholly owned subsidiary of LG International Corp. ('the Parties') to complete the purchase of approximately 29,000 hectares of WFM's freehold coal, mineral, and gas interests on Vancouver Island and to provide the funding necessary to reach a production decision on its Raven Coal Project which is within the WFM option lands.
The definitive Purchase and Sale Agreement with WFM requires a lump sum payment to complete the remaining payments, excluding royalties, which were due under the terms of the original purchase option agreement. The purchase is subject to full registration in BC's Land Title Office of the undersurface rights associated with the Raven Coal Project which is expected to complete within the next few weeks, but no later than November 30, 2008.
The Company has also signed a Sale and Purchase Agreement ('SPA') with the Parties to fund a total of $11.25 million which includes a) the lump sum payment to WFM, b) the refund to the Company of two prior option payments, and c) up to $7.0 million for all the activities necessary to reach a production decision on the Raven Coal Project including public consultation, additional drilling, environmental assessment and transportation studies, and a feasibility study. Through their funding payments, the Parties will earn a 40% interest in the undersurface rights excluding gas interests, and a 40% interest in the Company's crown coal licences at the Bear and Raven Coal Projects (collectively the 'Comox Basin Holdings').
The SPA also includes a detailed Joint Venture Agreement ('JVA') term sheet ('JVA Term Sheet') that provides for the Company or its subsidiaries to be the Manager and the Operator of any joint venture mining project located within the Comox Basin Holdings and for the Parties to have exclusive global marketing rights to sell coal from the Comox Basin Holdings. The JVA Term Sheet contemplates that subject to satisfactory results of a feasibility study and approval by the Parties' Boards of Directors, the Parties would provide debt financing for the development of the Raven Coal Project. The parties have agreed to use their best efforts to execute the JVA on the terms outlined in the JVA Term Sheet by October 31, 2008.
