Cobalt Coal Corp. Westchester Expansion Phase 1 Signed

January 20, 2011 at 03:40 am IST

MarketScreener.com By

Cobalt Coal Corp. (?Cobalt? or the ?Company?) (TSX VENTURE: CBT) (OTCBB: CCCXF) is very pleased to announce that the Westchester expansion (the ?Westchester Expansion?) is proceeding. Phase 1 of the Westchester Expansion involves the signing of a lease adding new coal reserves immediately adjacent to Cobalt's current underground Westchester Metallurgical Coal Mine (the ?Westchester Mine') in McDowell County, West Virginia USA and which can be accessed from Cobalt's existing underground infrastructure.

This Phase 1 Westchester Expansion comprises approximately 121 acres and contains the same high grade low volatile metallurgical Sewell Seam Coal as is currently being mined by Cobalt at its Westchester Mine. Isopach maps, which are supported by historic core drill data on the lands, indicate that the seam thickness increases by as much as 15 inches on the Westchester Expansion such that seam heights greater than 47 inches are to be expected as mining progresses to the southwest compared to seam heights of approximately 32 inches on Cobalt's existing Westchester Mine lease. Cobalt understands that the Phase 1 Westchester Expansion represents approximately 10% of the In-Place Coal owned by the Lessor at this location and believes that with performance on Phase 1 may be able to obtain further leases from the Lessor.

The Phase 1 Expansion alone adds approximately 600,000 tons of In-Place Coal Resources to the existing 1,200,000 tons of In-Place Coal Resources currently under lease for a total of approximately 1,800,000 tons of In-Place Coal Resources. Cobalt expects that an additional 330,000 to 450,000 tons of metallurgical coal is potentially recoverable from the Phase 1 Expansion using both the room-and-pillar and the retreat mining techniques.

Cobalt has commenced the mapping and engineering work necessary to complete permitting of the Westchester Expansion. Hydrology, which includes surface and groundwater inventories of the new mining acreage, has already been completed by Cobalt. Obtaining regulatory approval and expansion for revision to an existing permit has historically taken from 30 to 120 days when no additional surface areas are disturbed, which is a significant advantage to Cobalt in this instance.

Based on a targeted production rate of 7,000 clean tons per month, the Westchester Expansion should add 4 to 5 years of mineable reserves to Westchester Mine's existing mine life of 6 to 10 years. It is anticipated that the Westchester Expansion may allow a doubling of targeted production if both leases are produced concurrently. In order for this to occur, Cobalt's mining equipment fleet would need to almost double in size. Management of Cobalt will be addressing this capital requirement in the near future.

Commenting on the Westchester Expansion, Mike Crowder, CEO of Cobalt noted ?Since recommencing operations in late 2010 we have had to overcome several challenges from a regulatory, financial and operational perspective. For example, Cobalt has been subjected to significantly greater regulatory oversight in advance of the filming of Spike TV's reality Show ?Coal?. Closing of several financings in the last half of 2010 has provided the additional capital needed to acquire the additional equipment we very much needed as well as to ensure that our day to day operating bills are paid. Cobalt is especially grateful to our various industry suppliers who have worked hand in hand with us to provide Cobalt this equipment. We've added a continuous miner, an upgraded generator, an additional battery powered hauler, feeder/crusher, conveyor belt upgrades and a state of the art communication and tracking system. All these items are necessary to operate the mine efficiently. Signing of the Westchester Expansion together with signing of the increased price contract is the icing on the cake to launch Cobalt into continuous, profitable and sustainable operations for many years to come.?

About Cobalt:

Cobalt is a publicly traded coal exploration and production company headquartered in Calgary, Alberta, Canada with a regional office in Welch, West Virginia USA. Cobalt was created in August 2007 to capitalize on the growth opportunities that exist in the modern metallurgical coal mining industry.

NEITHER TSX VENTURE EXCHANGE NOR ITS REGULATION/SERVICE PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

READER ADVISORY

Statements in this news release may contain forward-looking information including expectations of future production and cash flows from the Westchester Mine, as well as the expansion plans of Cobalt. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Corporation. These risks include, but are not limited to, the risks associated with the coal mining industry, commodity prices and exchange rate changes. Industry related risks could include, but are not limited to, operational risks in exploration development and production, delays or changes in plans, risks associated to the uncertainty of reserve estimates, health and safety risks and the uncertainty of estimates and projections of production, costs and expenses. The reader is cautioned not to place undue reliance on this forward-looking information.