CCIC Investor Presentation - Colonial Coal International Corporation

Report
TSX-V: CAD
Colonial Coal International Corporation
Western Canada’s Leading Coking Coal Developer
August 2014 Investor Presentation
Legal Disclaimers
This presentation may contain forward-looking statements, and forward looking information under applicable securities laws including management’s
expectations of future production, cash flow and earnings. These statements are based on current expectations that involve a number of risks and
uncertainties, which could cause actual results to differ from those anticipated. These risks and uncertainties include, but are not limited to: the risks
associated with the commodity industry (e.g. operational risks in development, exploration and production; delays or changes in plans with respect to
exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating
to production, costs and expenses, and health, safety and environmental risks), commodity price, price and exchange rate fluctuation and uncertainties
resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures.
There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from
those anticipated in such statements. Colonial Coal undertakes no duty to update any of the forward-looking information herein. The reader is
cautioned not to place undue reliance on forward-looking statements.
The scientific and technical information relating to the Huguenot property has been derived from the Huguenot Technical Report dated September 4,
2012, a copy of which will be filed on sedar.com under Colonial Coal International Corp., copies of the technical report will be made available to
investors on request.
The information contained in this document has not been reviewed or approved by the U.S. Securities and Exchange Commission or any provincial or
state securities regulatory authority. Any representation to the contrary is unlawful. This document does not include a complete description of
Colonial Coal or any offering. Any offer of securities Colonial Coal will be made only pursuant to a subscription agreement and the provisions of
applicable law. Any securities to be offered for sale by Colonial Coal are not expected to be registered in the United States under the Securities Act or
under any state securities laws.
Cautionary Note to US Investors Concerning Resource Estimate:
The resource estimates in this document were prepared in accordance with National Instrument 43-101, adopted by the Canadian Securities
Administrators. The requirements of National Instrument 43-101 differ significantly from the requirements of the United States Securities and
Exchange Commission (the “SEC”). In this document, we use the terms “measured,” “indicated”, and “inferred” resources. Although these terms are
required and recognized in Canada, the SEC does not recognize them. The SEC permits US mining companies, in their filings with the SEC, to disclose
only those mineral deposits that constitute “reserves.” Under United States standards, mineralization may not be classified as a reserve unless the
determination has been made that the mineralization could be economically and legally extracted at the time the determination is made. United States
investors should not assume that all or any portion of a measured or indicated resource will ever be converted into “reserves”. Further, “inferred
resources” have a great amount of uncertainty as to their existence and whether they can be mined economically or legally, and United States
investors should not assume that “inferred resources” exist or can be legally or economically mined, or that they will ever be upgraded to a higher
category.
TSX-V: CAD
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1
Company Snapshot
Strategic Location
Experienced Management Team
David Austin
Chief Executive Officer and Chairman
John Perry
Chief Operating Officer and Director
Dawson
Creek
Chetwynd
ALBERTA
William Filtness, CA
Chief Financial Officer
Perry Braun
Business Development
Fort
Nelson
Prince
Rupert
Tumbler
Ridge
Flatbed
Huguenot
High Quality Coking Coal
BRITISH
COLUMBIA
Flatbed
Huguenot
Huguenot:
Measured and Indicated
(Mt)
277.7
Inferred
(Mt)
119.2
Key
Project
Coal Fields
City
CN Rail
Roads
Vancouver
Neptune Terminals
Westshore Terminals
Flatbed:
Est. Flatbed Resources
(Mt)
~100+
Significant Upside Potential
Huguenot HCC – Simulated Clean Coal Quality (air dried basis)
Moisture
(%)
0.91
Volatile Matter
(%)
23.89
Ash
(%)
7.83
Sulphur
(%)
0.40
Phosphorus
(%)
0.044
 Huguenot and Flatbed – great exploration upside
 Watson Island MoU – port investment opportunities
 Located in a prolific coal belt – significant M&A activities
FSI
6.5 – 7.0
CSR
60 - 65
 Proximity to Asian market – secured export market
Source: Company disclosure, FactSet
TSX-V: CAD
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2
Peace River Coalfield
Quintette (Teck)
Atrum Coal PRC Project
1
Exploration Target: 25 Mt
Anglo Coal
Anglo Pacific
Atrum Coal
Belcourt Saxon JV
Canadian Dehua
Cardero
Colonial Coal
HD Mining International
Kailuan Dehua (CKDI)
Teck
Walter Energy
Glencore
Other Coal Tenures & Apps
Railroad
Fort St John
Belcourt Saxon JV
(Walter (50%) / Anglo (50%))
Reserves: 86 Mt
Resources: 171 Mt
Target Production: 4 Mtpa
2
4
7
Hudson’s Hope
Brule (Walter)
Reserves: 20 Mt
Resources: 34 Mt
Production 2.0 Mtpa (idled)
3
16
Chetwynd
13
Carbon Creek (Cardero)
Resources: 334 Mt
Target Production: 2.9 Mtpa
Flatbed / Huguenot
(Colonial Coal)
3
4
1
11
9
10 Target Production: 3.0 Mtpa
Suska (8) & Sukunka (9)
(Glencore / JX Nippon)
11
Reserves: 61 Mt (Sukunka only)
12 Resources: 319 & 236 Mt
Target Production: 9.5 Mtpa
Target Production Start: 2016
Trefi (Anglo Pacific)
13
Resources: 90 Mt
Trend (Anglo American)
14 Reserves: 23 Mt
Resources: 45 Mt
Production: 2 Mtpa (active)
Tumbler
Ridge
5
6
Huguenot Resources: 397 Mt
Flatbed Target Resources: 100+Mt
12
Wapiti River (Canadian Dehua)
5
15
10
Gething (CKDI)
Est. Resources: 786 Mt
Target Production: 2.0 Mtpa
17
7
Est. Resource: 7,000 Mt
Est. Prod’n: 6.0 Mtpa
15
Willow Creek (Walter)
14
8
16
6
Mt. Duke (Teck)
Reserves: 30 Mt
Resources: 51 Mt
Production : 1.7 Mtpa (idled)
8
Wolverine (Walter)
Resources: 281 Mt
Ridley
Terminals
Murray River (HD Intl. Mining)
Resources: 3,180 Mt (inferred)
Target Production: 6 Mtpa
2
17
9
Reserves: 49 Mt
Resources: 70 Mt
Production : 3.0Mtpa (idled)
25 km
Note: Peace River Basin map is for illustrative purpose only
Source: BC Ministry of Energy, Company filings, Industry Publications and News Sources, Mines and Petroleum Resources
TSX-V: CAD
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3
3
Unparalleled Investment Opportunity
● Invest in one of the largest deposits of premium quality hard coking coal in western Canada

The only Canadian listed, publicly traded pure-play coking coal company in western Canada

Targeted open pit and underground mineable resource of 397 Mt at Huguenot Project (“Huguenot”)

Potential for large tonnage deposit at Flatbed Project (“Flatbed”) in proximity to Trend and Quintette mines
● The only junior coal company in western Canada to have a stake in a port development project

Recent MoU regarding potential development of port facility at Watson Island
● Gain exposure to one of the most active coal basins in a mining friendly jurisdiction with excellent infrastructure in place

Recent acquisitions by Walter Energy (“Walter”), Anglo American (“Anglo”), Glencore, and Winsway/Marubeni amongst others

Capacity expansion underway at western Canadian ports
● Strategically located coal properties adjacent to major projects provide logical buyers and partnership opportunities

Huguenot located between Anglo’s and Walter’s Belcourt Saxon JV

Flatbed located adjacent to Anglo’s producing Trend mine and Teck’s proposed Window open pit (Quintette)
● Highly experienced management team with a proven track record in the Peace River Coalfield

Highly capable management team with significant prior experience advancing other development projects to production in the
region
● Provides exposure to long-term Asian growth story whilst staying invested in a safe jurisdiction

Increasing demand for high quality coking coal driven by long term Asian growth

Western Canadian coal projects have cost advantaged access to East Asian markets
TSX-V: CAD
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4
Experienced Management and Board
Management Team and Board of Directors
David Austin
Chairman, President & CEO
● Founder of Western Coal, NEMI and now CCIC
William Filtness
CFO
● Over 25 years experience as a director or officer for mining companies
● Director of Lions Gate Metals Inc. – former CFO of Sprott Resources, South
American Silver, and NEMI
John Perry
COO & Director
● Over 38 years experience as a geologist (over 35 years as a consultant):
worked on many coal projects in northeastern BC
Wayne Walters
Director
● Geological consultant and former director of Running Fox Resources and
NEMI
Tony Hammond
Director
● Chairman and MD of Great Orme Mines and a former director for NEMI
Ian Downie
Director
● Professional negotiator with an established mediation and dispute resolution
consulting company
Perry Braun
Corporate Development
● Over 25 years of Capital Markets experience in Toronto, London, New York
and Vancouver
TSX-V: CAD
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5
One of the Largest Premium Hard Coking Coal Deposits
in the Region
● Huguenot's metallurgical coal
quality ranks as a premium coal
product
■
Contains low sulfur and low
phosphorus
■
Similar composition to
Anglo's nearby Trend mine
(premium product exported
to Asia)
Metallurgical Coal Reserve / Resource Size Benchmark
Select Peace River Coalfield Based Peers
Huguenot Resource Estimate (mm tonnes)
1400
Surface
Underground
Total
Measured
96.2
18.9
115.1
Indicated
35.8
126.9
162.6
0.5
118.7
119.2
132.5
264.4
396.9
7,000
1200
3,180
Millions Tonnes Met Coal
● Huguenot has a contained
resource of 397 million tonnes,
making it one of the largest
deposits in the region
■
Deposit at the resource
stage
1000
786
Inferred
800
Total
600
397
400
334
319
281
236
171
200
90
70
51
45
34
0
Canadian
HD
CKDI
Dehua
International
(Wapiti
(Murray
(Gething)
River)
River)
Colonial
Coal
(Huguenot)
Cardero
Xstrata & JX
Nippon
Teck
Xstrata & JX
Nippon
Belcourt
Walter
&
*
Anglo(1)
Saxon
Anglo Pacific
(Suska)
(Mt. Duke)
(Sukunka)
(Belcourt)
(Trefi)
(Carbon
Creek)
Walter (2)
(Wolverine
Mine)
Source: CCIC, company reports
1. Joint venture between Anglo American and Walter
2. Represent contained reserves
Walter (2) Anglo Coal (2) Walter (2)
(Willow
Creek
Mine)
(Trend
Mine)
(Brule
Mine)
Coking Coal Quality Benchmark (Product Coal)
Select Benchmarks
Canadian Range
25
80
20
60
40
HCC Benchmark
15
10
5
20
0
0
TM
Ash
VM
CSR
Source: WoodMac
TSX-V: CAD
Colonial Coal
100
% / kcal
% / kcal
Global Range
www.ccoal.ca
Sulfur
x10
Phos
x100
FSI
Ro max
x10
Fluidity
(log)
6
Strategic Location With Significant Partnership Opportunities
●
Sharing in the development of joint infrastructure (roads / rail)
with other potential operators in the region would lower initial
capital costs at Huguenot
■
■
●
Potential to Jointly Develop Shared Infrastructure
PEA contemplates a third party built railway used by other
potential producers in the region
85 km rail spur (+/- overland conveyer) to connect the
project to the existing main rail line
Tumbler Ridge
(Rail Head)
(Trend)
If not built by an independent third party, the railway could be
constructed on a shared basis with other coal producers and
rail providers in the region.
■
■
Huguenot is adjacent to the Belcourt Project (Anglo
American / Walter Energy)
Other nearby properties are owned by Teck Resources
and Canadian Dehua (private joint venture including major
Chinese state-owned steel producers)
(Flatbed)
Ridley
Terminal
(Wolverine)
(Belcourt Saxon)
●
Rail access by other projects would reduce costs and provide
practical benefits
■
■
Development / operating costs would be distributed across
all operators in the region for greater scale and lower per
tonne cost
While rail is the preferred mode of transportation in the
region, trucking coal is viable but more expensive on a per
tonne basis
(Window Pit Area)
(Wapiti River)
(Huguenot)
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7
Available Rail and Port Capacity to Access Export Markets
●
Production from Huguenot would be shipped
via rail to export terminals on the west coast of
British Columbia
Canada
Dawson
Creek
Chetwynd
AB
●
Rail lines out of the Peace River Coalfield are
operated by a Class I Canadian carrier (CN
Rail, largest railway company in Canada) and
have available capacity to support future
production from Huguenot
■
●
Coal is hauled vial rail approximately 1,000
km to the Ridley Terminal in Prince Rupert
The Ridley Terminal is a deep water port with
2014 targeted capacity of 25 mtpa (expansion
to be completed 2014, current capacity is 12
mtpa)
■
One of the deepest, ice free natural
harbours in the world
■
100% owned by the Government of Canada
■
Capable of supporting capesize vessels
(250,000 DWT)
■
An additional 13 mtpa of capacity will be
available in 2014 (post expansion)
■
Potential expansion to an additional 30
mtpa (option is currently under review)
TSX-V: CAD
Peace River
Coalfield
Tumbler
Ridge
85 km from rail loadout facility
Flatbed
Huguenot
FORT NELSON
HAY RIVER
ALBERTA
Ridley Terminals
SASKATCHEWAN
Flatbed
FORT MCMURRAY
Huguenot
PRINCE
RUPERT
PRINCE
GEORGE
BRITISH
COLUMBIA
EDMONTON
SASKATOON
CALGARY
Neptune Terminals
Westshore Terminals
VANCOUVER
Infrastructure
REGINA
Coal Rank
Port Facility / Coal
Terminal
CN Railway
Bituminous
CP Railway
Lignite
www.ccoal.ca
Sub-bituminous
8
Western Canadian Coal Poised for Growth
Canadian Met Coal Supply by Project
Met Coal Supply
Western Canadian Coal Overview
40
20
30
15
20
10
10
5
0
0
Number of Operating Mines
Supply (million tonnes)
● Western Canada has vast coal resources including some
of the world’s highest quality coking coals
No. of Operating Mines
■
■
● The region enjoys access to low-cost power, high-quality
road and rail networks and major deep water seaports
● British Columbian ports provide the closest port of entry
on the west coast of North America to Asia
● Western Canada has seen significant M&A activities
■ Walter Energy acquires Western Coal - $3.3bn
Access to East Asian Markets
■
Tianjin
13.8
14.2
British
Columbia
14.4
14.8
Shanghai
13.2
To Shanghai – 4,642 miles
To Tokyo – 3,830 miles
Dalian
14.2
To Shanghai – 5,092 miles
To Tokyo – 4,280 miles
11.9
Kolkata
23.1
24.3
Korea
Mumbai
25.2
26.4
15.0
Kobe
11.3
Chennai
22.8
24.0
■
12.6
12.7
13.0
00.0
Hong Kong
14.8
16.0
Source: AME, BC Ministry of Energy, Mines and Petroleum Resources
Note: Shipping Days calculated at vessel speed of 15 knots
TSX-V: CAD
■
Closer to Japan than Newcastle:
Newcastle to Tokyo – 4,284 miles
Pusan
16.3
■
Vancouver
Japan
China
India Guangzhou
■
Prince Rupert
Tokyo
10.6
00.0
~21 Mt of met coal exports in 2012
~26 Mt of met coal exports expected by 2015
Shipping Days
from Prince Rupert
Shipping Days
from Vancouver
Anglo American acquires 25% of Peace River Coal
held by NEMI and Hillsborough - $166mm
Xstrata(1) acquires First Coal and Lossan - $193mm
Winsway and Marubeni jointly acquire Grande Cache
Coal -$1bn
Xstrata(1) acquires Sukunka asset from Talisman
Energy - $500mm
JX Nippon acquires 25% in Xstrata(1) Coal BC JV $435mm
Note: Met coal includes all coals directed to metallurgical end markets (i.e. coking coals and PCI coals)
1. Now Glencore
www.ccoal.ca
9
World Class Infrastructure
Extensive Regional Infrastructure
● CN Rail provides access to Ridley Terminals
HAY RIVER
FORT NELSON
Ridley Terminals
ALBERT
SASKATCHEW
A MCMURRAY
FORT
AN
PRINCE
RUPERT
PRINCE
GEORGE
BRITISH
COLUMBIA
EDMONTON
SASKATOON
CALGARY
Neptune Terminals
Westshore Terminals
VANCOUVER
Infrastructure
Port Facility /
Coal Terminal
CN Railway
CP Railway
Unencumbered Access to Export Markets
REGINA
Coal Rank
Bituminous
Sub-bituminous
● Deep-water coal loading facilities at Ridley
Terminals
 Current capacity 12 Mtpa
 Terminal Modification Project underway to
increase capacity to 25 Mtpa
– $200mm project started in August 2011
– Development in four phases – P1 complete
– P4 completion by the end of 2014
– Further expansion of 30 Mtpa upon
government approval
● No port or rail capacity constraints
Lignite
Western Canadian Coal Companies
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10
Watson Island Investment Upside
Tsimpsian
Peninsula
Prince Rupert
Airport
● In 2012, Colonial Coal through its subsidiary Watson Island
Development Corp. (Watco) entered into an MoU with Lax
Kw’alaams Band and Metlakatla First Nations (“Coast
Tsimshian Nation”) for the formation of a JV for the potential
acquisition of the Watson Island
16
Kaien
Island
● Watco has an exclusive arrangement (“Exclusivity
Agreement”) with the City of Prince Rupert to purchase
Watson Island
Fairview Terminal
Digby
Island
Proposed Expansion
16
To Prince George
724 km
To Edmonton
1,461 km
To Vancouver
1,502 km
3
599
Prince Rupert Grain
Ridley Terminals (Coal)
1
2
Watson Island
Port Edward
Ridley
Island
● Watco has undertaken a feasibility investigation in relation to
the development of Watson Island
Kinahan
Islands
● Watson Island is envisioned as a multi-product bulk
commodity port and offers a potential and exciting solution to
expand coal export capacity in British Columbia in light of
increasing regional coal production
Smith Island
1
Ridley terminals is reaching its current throughput capacity of 12 Mtpa
2
Planned site for expansion of Ridley Terminals to 25 Mtpa
3
Potential site for establishment of a bulk terminal on Watson Island
TSX-V: CAD
● Watco will compensate the City of Prince Rupert for actual
land expenses in accordance with the terms of the
Exclusivity Agreement
● Watco is currently in litigation with the City of Prince Rupert
in connection with the acquisition of Watson Island
www.ccoal.ca
11
Exposure to High Growth Asian Markets
Attractive Market Outlook
Top 5 Countries by Met Coal Demand (Mt)
● Favourable global demand dynamics
110.0
● Adverse supply conditions
87.0
90.0
71.3
70.0
2013
High growth in demand driven by developing countries
such as China and India

Emerging coal basins facing severe infrastructure
challenges

32.0
30.0
13.0
10.0
China
Established coal producing regions suffering from
transportation capacity constraints

42.6
50.0
Japan
India
South Korea
Brazil
112.8
110.0
● Current pricing environment is expected to lead to
further industry consolidation and will provide coal
producers with increased pricing power
90.0
2017E
Natural disasters and chronic weather related disruptions
frequently exacerbate the situation

58.9
50.0
35.4
30.0
Increasing demand, limited supply and constrained
infrastructure will support higher prices in the future

76.6
70.0
16.9
10.0
China
Japan
India
South Korea
Brazil
120.7
7.0%
(%)
6.1%
4.9%
6.0%
5.0%
110.0
2020E
Top 5 Countries Met Coal Demand CAGR
(1)
4.2%
80.0
90.0
68.2
70.0
37.5
50.0
4.0%
2.0%
3.0%
2.0%
1.4%
19.1
30.0
1.0%
0.0%
10.0
India
Brazil
China
South Korea
Japan
China
Japan
India
South Korea
Brazil
Source: AME
1. CAGR based on 2013 and 2020E met coal demand
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12
Huguenot Coking Coal Project – 100% Interest
Project Location
Project Summary
● Located adjacent to the proposed Belcourt South open
pit (owned by Belcourt Saxon Coal Ltd. – Anglo/Walter
JV)

Similar coal characteristics
● Amenable to open pit and underground mining
● 1.5% royalty FOB port
● Located ~120 road-km from Quintette and PRC loadouts
● Requires an 85 km rail (or combination of a rail and
overland conveyer) to link with existing rail line as per
Colonial Coal’s PEA
● Proposed production of clean coal from combined
surface and underground mining operations averages
approximately 3Mtpa, and ranges from 1.4 Mtpa to 5.9
Mtpa over 31 year LOM
Source: Company disclosure
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13
Huguenot – Premium Coking Coal Characteristics
● Premium product clean coal product with low ash, low sulfur, low phosphorus, and High FSI
● Weight averaged theoretical yield of 74%
Clean Coal Quality Summary (dry basis)
Seam
Ash
%
VM
%
FC
%
S
%
FSI
%P
(in coal)
Theoretical
Yield %
% RoMax
10
9
8
6D
6B
6L
5
4U
4
3D
3B/3BL
2EF
2A
2Z
1
8.58
7.49
7.76
5.03
6.82
7.97
7.90
5.11
5.63
4.97
8.74
9.15
8.02
8.56
7.86
27.22
26.82
26.20
25.87
24.78
23.23
23.68
23.70
22.91
27.82
23.07
22.43
24.95
22.34
22.57
64.20
65.69
66.04
69.10
68.40
68.80
68.41
71.19
71.46
67.21
68.19
68.42
67.03
69.09
69.57
0.93
0.83
0.51
0.84
0.50
0.48
0.34
0.73
0.61
1.21
0.51
0.41
1.04
0.46
0.39
8.0
7.6
6.4
7.3
6.7
6.7
6.5
7.4
7.5
9.0
7.7
8.0
9.0
8.2
6.5
0.187
0.106
0.034
0.043
0.084
0.091
0.034
0.093
0.030
0.098
0.029
0.158
0.017
0.067
0.027
67.93
74.85
66.76
59.94
70.37
63.71
81.84
91.93
86.81
76.66
57.01
51.34
65.27
44.36
90.85
1.06
1.05
1.07
1.13
1.12
1.19
1.19
1.19
1.28
1.16
1.24
1.24
1.22
1.31
1.22
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14
Flatbed Coking Coal Project – 100% Interest
Project Location
Project Summary
● Property adjacent to Trend and
Quintette mines
● Potential for large tonnage
deposit
 100+ Mt coking coal
resource target
● Property located 15 Km from
Quintette load out
● Potential for a 3rd pipeline
crossing of Rocky Mountains to
bring further infrastructure into
the area of the property
TSX-V: CAD
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15
Development Timeline
Key Milestones Achieved
Initial 43-101 Resource Estimate – Huguenot (North Block)
Q3 – 2010
Commenced Environmental Baseline Studies – Huguenot
Q2 – 2011
Applied For Additional Coal Licenses (16,425 ha) – Huguenot
Q2 – 2011
Commenced Drilling Program – Huguenot (Middle & South Blocks)
Q3 – 2011
Secured MoU With First Nations In Relation To Watson Island
Q4 – 2011
Released Updated NI 43-101 Compliant Resource Estimate – Huguenot
Q3 – 2012
Initiated Preliminary Economic Assessment – Huguenot
Q1 – 2013
Complete Preliminary Economic Assessment – Huguenot
Q3 – 2013
Granted 9,077 hectares of Flatbed Coal Licenses
Q2 – 2014
Granted Additional 16,426 hectares of Huguenot Coal Licenses
Q2 – 2014
TSX-V: CAD
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16
Financial Snapshot
Capital Structure
Price - Volume Chart
(C$)
$0.18
Basic Shares Outstanding
(mm)
65.1
FD ITM Shares Outstanding
(mm)
65.1
(C$ mm)
$11
52-Week High
(C$)
$0.55
52-Week Low
(C$)
$0.15
20-Day VWAP
(C$)
$0.16
Avg. Daily Vol (3 mo.)
(000)
52.9
(C$ mm)
$2.6
Gross Equity Value
Cash Balance
Current Cash Balance
$1.00
2.0
$0.75
1.5
$0.50
1.0
$0.25
0.5
Volume (millions)
Share Price (August 5, 2014)
Share Price (C$)
Share Capital
Options Outstanding
Number of Options
(mm)
5.0
Weighted Average Strike Price
(C$)
$0.77
Ownership
Management Ownership
(%)
21.8%
Institutional Ownership
(%)
10.0%
Reserves and Resources
43-101 Compliant Resource (M+I)
(mm tonnes)
278
43-101 Compliant Resource (Inferred)
(mm tonnes)
119
43-101 Total Resources
(mm tonnes)
397
$0.00
Aug-12
Dec-12
Apr-13
Aug-13
Dec-13
Apr-14
0.0
Aug-14
Source: Company disclosure, FactSet
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Unparalleled Investment Opportunity
● Invest in one of the largest deposits of premium quality hard coking coal in western Canada

The only Canadian listed, publicly traded pure-play coking coal company in western Canada

Targeted open pit and underground mineable resource of 397 Mt at Huguenot Project (“Huguenot”)

Potential for large tonnage deposit at Flatbed Project (“Flatbed”) in proximity to Trend and Quintette mines
● The only junior coal company in western Canada to have a stake in a port development project

Recent MoU regarding potential development of port facility at Watson Island
● Gain exposure to one of the most active coal basins in a mining friendly jurisdiction with excellent infrastructure in place

Recent acquisitions by Walter Energy (“Walter”), Anglo American (“Anglo”), Glencore, and Winsway/Marubeni amongst others

Capacity expansion underway at western Canadian ports
● Strategically located coal properties adjacent to major projects provide logical buyers and partnership opportunities

Huguenot located between Anglo’s and Walter’s Belcourt Saxon JV

Flatbed located adjacent to Anglo’s producing Trend mine and Teck’s proposed Window open pit (Quintette)
● Highly experienced management team with a proven track record in the Peace River Coalfield

Highly capable management team with significant prior experience advancing other development projects to production in the
region
● Provides exposure to long-term Asian growth story whilst staying invested in a safe jurisdiction

Increasing demand for high quality coking coal driven by long term Asian growth

Western Canadian coal projects have cost advantaged access to East Asian markets
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Rights of Action for Purchasers
Ontario, Nova Scotia, New Brunswick, Newfoundland and Labrador, Price Edward Island, Manitoba and Saskatchewan:
Securities legislation in Ontario, Nova Scotia, New Brunswick, Newfoundland and Labrador, Prince Edward Island, Manitoba and
Saskatchewan provides investors in securities of the Company with certain rights of action where an offering memorandum and any
amendment to it contains a misrepresentation. These remedies, or notice with respect thereto, must be exercised or delivered, as the
case may be, by the investor within the time limits prescribed by the applicable securities legislation.
The following are summaries of these rights. Such summaries are subject to the express provisions of applicable securities legislation,
and the rules, regulations and other instruments thereunder, and reference is made to the complete text of such provisions contained
therein. Such provisions may contain certain limitations and statutory defences on which the Company and others may rely. These
rights are in addition to, and without derogation from, any other right the investor may have at law. Investors should refer to the
applicable provisions of the securities legislation of their province for the particulars of these rights or consult with a legal
adviser.
For purposes of the following summaries, “Misrepresentation” means an untrue statement of a material fact or an omission to state a
material fact that is necessary in order to make a statement not misleading in light of the circumstances in which it was made.
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Rights of Action for Purchasers, continued
Ontario. If this presentation, together with any amendment to this presentation, contains a Misrepresentation, an investor in the
Province of Ontario will have, without regard to whether the Misrepresentation was relied upon by the investor, a statutory right of
action against the Company for damages or, at the election of the investor, against the Company, for rescission (in which case the
investor will cease to have a right of action for damages), provided that:
1.
no action may be commenced to enforce a right of action
a)
for rescission, more than 180 days after the date of the transaction that gave rise to the cause of action; or
b)
for damages, more than the earlier of (i) 180 days after the investor first had knowledge of the facts giving rise to
the cause of action, and (ii) three years after the date of the transaction that gave rise to the cause of action;
2.
the Company will not be liable if it proves that the investor purchased the securities of the Company with knowledge of the
Misrepresentation;
3.
in an action for damages, the Company will not be liable for all or any portion of the damages that it proves do not
represent the depreciation in value of the securities of the Company as a result of the Misrepresentation relied upon; and
4.
in no case shall the amount recoverable exceed the price at which the securities of the Company were offered to the
investor.
The foregoing rights do not apply if the investor purchasing in reliance upon the "accredited investor" prospectus exemption in
Section 2.3 of National Instrument 45-106 Prospectus and Registration Exemptions ("NI 45-106") is:
a)
a Canadian financial institution (as defined in NI 45-106) or a Schedule III bank, meaning an authorized foreign
bank named in Schedule III of the Bank Act (Canada);
b)
the Business Development Bank of Canada incorporated under the Business Development Bank of Canada Act
(Canada); or
c)
a subsidiary of any person referred to in paragraphs (a) and (b), if the person owns all of the voting securities of the
subsidiary, except the voting securities required by law to be owned by directors of that subsidiary.
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Rights of Action for Purchasers, continued
Nova Scotia. If this presentation, together with any amendment to this presentation or any advertising or sales literature (as defined in the Securities Act (Nova
Scotia) (the “Nova Scotia Act”)), contains a Misrepresentation and it was a Misrepresentation at the time of purchase, the investor resident in Nova Scotia will be
deemed to have relied upon the Misrepresentation and will have a right of action against the Company and, subject to certain additional defences, every director
of the Company at the date of this presentation for damages or, alternatively, while still the owner of the purchased securities, for rescission against the Company
(in which case the investor shall have no right of action for damages against the Company or its directors), provided that:
1.
no action may be commenced to enforce a right of action more than 120 days:
a)
after the date on which payment was made for the securities of the Company; or
b)
after the date on which the initial payment was made where payments subsequent to the initial payment are made pursuant to a
contractual commitment assumed prior to, or concurrently with, the initial payment;
2.
no person or company is liable if the person or company proves that the investor purchased the securities of the Company with knowledge of the
Misrepresentation;
3.
no person or company (other than the Company) is liable if the person or company proves that (i) the presentation was sent or delivered to the
investor without the person’s or company’s knowledge or consent and that, on becoming aware of its delivery, the person or company gave
reasonable general notice that it was delivered without the person’s or company’s knowledge or consent, (ii) after delivery of the presentation and
before the purchase of the securities of the Company by the investor, on becoming aware of any Misrepresentation in the presentation, the person or
company withdrew the person’s or company’s consent to the presentation and gave reasonable general notice of the withdrawal and the reason for it,
or (iii) with respect to any part of the presentation purporting to be made on the authority of an expert or to be a copy of, or an extract from, a report,
an opinion or a statement of an expert, the person or company had no reasonable grounds to believe and did not believe that (A) there had been a
Misrepresentation, or (B) the relevant part of the presentation did not fairly represent the report, opinion or statement of the expert, or was not a fair
copy of, or an extract from, the report, opinion or statement of the expert;
4.
no person or company (other than the Company) is liable with respect to any part of the presentation not purporting to be made on the authority of an
expert, or to be a copy, or an extract from, a report, opinion or statement of an expert unless the person or company (i) failed to conduct a reasonable
investigation to provide reasonable grounds for a belief that there had been no Misrepresentation, or (ii) believed that there had been a
Misrepresentation;
5.
in an action for damages, no person or company is liable for all or any portion of the damages that it proves do not represent the depreciation in value
of the securities of the Company as a result of the Misrepresentation;
6.
in no case will the amount recoverable in any action exceed the price at which the securities of the Company were offered to the investor; and
7.
if a Misrepresentation is contained in a record incorporated by reference into, or deemed incorporated by reference into, this presentation, the
Misrepresentation is deemed to be contained in this presentation.
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Rights of Action for Purchasers, continued
New Brunswick. If this presentation, together with any amendment to this presentation, delivered to an investor resident in New
Brunswick contains a Misrepresentation that was a Misrepresentation at the time of purchase, the investor will be deemed to have
relied on the Misrepresentation and will have a right of action against the Company for damages or, alternatively, while still the owner
of the purchased securities, for rescission, provided that:
1.
no action may be commenced to enforce a right of action:
a)
for rescission more than 180 days after the date of the transaction that gave rise to the cause of action; or
b)
for damages more than the earlier of (i) one year after the investor first had knowledge of the facts giving rise to the
cause of action, and (ii) six years after the date of the transaction that gave rise to the cause of action;
2.
the Company is not liable if it proves that the investor purchased the securities of the Company with knowledge of the
Misrepresentation;
3.
in an action for damages, the Company will not be liable for all or any portion of the damages that it proves do not represent
the depreciation in value of the securities of the Company as a result of the Misrepresentation relied upon; and
4.
in no case shall the amount recoverable exceed the price at which the securities of the Company were offered to the
investor.
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Rights of Action for Purchasers, continued
Newfoundland and Labrador. If this presentation, together with any amendment to this presentation or any record incorporated by reference in, or considered to
be incorporated into this presentation contains a Misrepresentation and it was a Misrepresentation at the time of purchase, an investor in the Province of
Newfoundland and Labrador has, in addition to any other right that the investor may have under law and without regard to whether the investor relied on the
Misrepresentation, a right of action for damages against the Company and, subject to certain additional defences, every director of the Company at the date of
this presentation for damages or, alternatively, while still the owner of the purchased securities, for rescission against the Company (in which case the investor
will cease to have a right of action for damages against any other person), provided that:
1.
no action shall be commenced to enforce the foregoing rights:
a)
in the case of an action for rescission, more than 180 days after the date of the transaction that gave rise to the cause of action; or
b)
in the case of any action, other than an action for rescission, the earlier of: (i) 180 days after the investor first had knowledge of the facts
giving rise to the cause of the action; or (ii) three years after the date of the transaction that gave rise to the cause of the action;
2.
no person or company is liable if the person or company proves that the investor purchased the securities of the Company with knowledge of the
Misrepresentation;
3.
no person or company (other than the Company) will be liable if it proves that:
a)
b)
this presentation was sent to the investor without the person’s or company’s knowledge or consent and that, on becoming aware of its being
sent, the person or company promptly gave reasonable notice to the Company that it was sent without the knowledge and consent of the
person or company;
``
the person or company, on becoming aware of any Misrepresentation
in this presentation, withdrew the person’s or company’s consent to
this presentation and gave reasonable notice of the withdrawal to the Company and the reason for it;
c)
with respect to any part of this presentation purporting to be made on the authority of an expert or to be a copy of, or an extract from, a
report, statement or opinion of an expert, the person or company had no reasonable grounds to believe and did not believe that: (i) there had
been a Misrepresentation; or (ii) the relevant part of this presentation did not fairly represent the report, statement or opinion of the expert, or
was not a fair copy of, or an extract from, the report, statement or opinion of the expert; or
d)
with respect to any part of this presentation not purporting to be made on the authority of an expert and not purporting to be a copy of, or an
extract from, a report, statement or opinion of an expert, unless the person or company (i) failed to conduct a reasonable investigation to
provide reasonable grounds for a belief that there had been no Misrepresentation; or (ii) believed that there had been a Misrepresentation;
4.
in an action for damages, the defendant is not liable for any damages that it proves do not represent the depreciation in value of the securities of the
Company as a result of the Misrepresentation; and
5.
in no case shall the amount recoverable exceed the price at which the securities of the Company were offered to the investor under this presentation.
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Rights of Action for Purchasers, continued
Prince Edward Island. A “Misrepresentation” for purposes of the Securities Act (Prince Edward Island) also includes an omission to state a material fact that is required to be
stated by the Securities Act (Prince Edward Island). If this presentation, together with any amendment to this presentation, delivered to an investor resident in Prince Edward
Island contains a Misrepresentation and it was a Misrepresentation at the time of purchase, the investor will, without regard to whether the investor relied on the
Misrepresentation, have a right of action against the Company and, subject to certain additional defences, every director of the Company at the date of this presentation for
damages or, alternatively, while still the owner of the purchased securities, for rescission against the Company (in which case the investor shall have no right of action for
damages against the persons described above), provided that:
1.
no action shall be commenced to enforce the foregoing rights:
a)
in the case of an action for rescission, more than 180 days after the date of the transaction that gave rise to the cause of action; or
b)
in the case of any action, other than an action for rescission, more than the earlier of (i) 180 days after the date the investor first had
knowledge of the facts giving rise to the cause of the action, or (ii) three years after the date of the transaction that gave rise to the cause of
the action;
2.
no person or company is liable if the person or company proves that the investor purchased the securities of the Company with knowledge of the Misrepresentation;
3.
no person or company (other than the Company) is liable if it proves that (i) the presentation was sent to the investor without the person’s or company’s knowledge or consent
and that, on becoming aware of its being sent, the person or company had promptly given reasonable notice to the Company that it was sent without the person’s or
company’s knowledge and consent (ii) on becoming aware of any Misrepresentation in the presentation, the person or company withdrew the person’s or company’s consent
to the presentation and gave reasonable notice to the Company of the withdrawal and the reason for it, or (iii) with respect to any part of the presentation purporting to be
made on the authority of an expert or purporting to be a copy of, or an extract from, a report, an opinion or a statement of an expert, the person or company had no
reasonable grounds to believe and did not believe that there had been a Misrepresentation, or the relevant part of the presentation did not fairly represent the report, opinion
or statement of the expert, or was not a fair copy of, or an extract from, the report, opinion or statement of the expert;
4.
no person or company (other than the Company) will be liable with respect to any part of the presentation not purporting to be made on the authority of an expert or to be a
copy of, or an extract from, report an opinion or a statement of an expert unless the person or company (i) failed to conduct a reasonable investigation to provide reasonable
grounds for a belief that there had been no Misrepresentation or (ii) believed that there had been a Misrepresentation
5.
no person or company is liable with respect to a Misrepresentation in forward looking information if (i) the presentation containing the forward looking information also
contains, proximate to the forward looking information, reasonable cautionary language identifying the forward looking information as such and identifying material factors that
could cause actual results to differ materially from a conclusion, forecast or projection in the forward looking information, and a statement of the material factors or
assumptions that were applied in drawing a conclusion or making a forecast or projection set out in the forward looking information; and (ii) the person or company had a
reasonable basis for drawing the conclusions or making the forecast or projections set out in the forward looking information. This paragraph does not relieve a person of
liability respecting forward looking information in a financial statement required to be filed under Prince Edward Island securities laws.
6.
in an action for damages, the defendant is not liable for any damages that is proves do not represent the depreciation in value of the securities of the Company resulting from
the Misrepresentation; and
7.
in no case shall the amount recoverable exceed the price at which the securities of the Company purchased by the investor were offered.
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Rights of Action for Purchasers, continued
Manitoba. If this presentation or any amendment hereto contains a Misrepresentation, an investor is deemed to have relied on the Misrepresentation and has a
right of action for damages against the Company and, subject to certain additional defences, every director of the Company at the date of the presentation, or
alternatively, while still the owner of the purchased securities, a right of rescission against the Company (in which case, the investor shall have no right of action
for damages against the persons described above), provided that:
1.
no action may be commenced to enforce a right of action:
a)
for rescission, more than 180 days after the date of the transaction that gave rise to the cause of action; or
b)
for damages, more than the earlier of (i) 180 days after the day that the investor first had knowledge of the facts giving rise to the cause of
action, or (ii) two years after the date of the transaction that gave rise to the cause of action;
2.
no person or company is liable if the person or company proves that the investor purchased the securities of the Company with knowledge of the
Misrepresentation;
3.
no person or company (other than the Company) will be liable if the person or company proves that (i) the presentation was sent to the investor without the person’s
or company’s knowledge or consent, and that, after becoming aware of its delivery, the person or company promptly gave reasonable notice to the Company that it
was sent without the person’s or company’s knowledge and consent, (ii) on becoming aware of the Misrepresentation, the person or company withdrew their
respective consent to the presentation and gave reasonable notice to the Company of the withdrawal and the reason for it, or (iii) with respect to any part of the
presentation purporting to be made on the authority of an expert or to be a copy of, or an extract from, an expert’s report, opinion or statement, the person or
company did not have any reasonable grounds to believe and did not believe that there had been a Misrepresentation, or the relevant part of the presentation did not
fairly represent the expert’s report, opinion or statement, or was not a fair copy of, or an extract from, the expert’s report or statement;
4.
no person or company (other than the Company) will be liable with respect to any part of the presentation not purporting to be made on the authority
of an expert and not purporting to be a copy of, or an extract from, an expert’s report, opinion or statement, unless the person or company (i) did not
conduct an investigation sufficient to provide reasonable grounds for a belief that there had been no Misrepresentation or (ii) believed that there had
been a Misrepresentation;
5.
in the case of an action for damages, the defendant is not liable for all or any part of the damages that the defendant proves do not represent the
depreciation in value of the securities of the Company as a result of the Misrepresentation; and
6.
in no case shall the amount recoverable exceed the price at which the securities of the Company were offered to the Investor under this presentation.
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Rights of Action for Purchasers, continued
Saskatchewan. If this presentation, together with any amendment to this presentation, is sent or delivered to an investor resident in Saskatchewan and contains a Misrepresentation at the time of
purchase, the investor is deemed to have relied upon that Misrepresentation and will have a right for damages against the Company, every promoter and director of the Company, every person or
Company whose consent has been filed respecting the offering, but only with respect to reports, opinions or statements that have been made by them, and every person or company who sells
securities on behalf of the Company under the presentation, or alternatively, while still the owner of the purchased securities, for rescission against the Company (in which case the investor shall have
no right of action for damages against the persons described above), provided that:
1.
no person or company will be liable if the person or company proves that the investor purchased the securities of the Company with knowledge of the Misrepresentation;
2.
no person or company (other than the Company) will be liable if the person or company proves that (i) the presentation or amendment was sent or delivered without the person’s or
company’s knowledge or consent and that, on becoming aware of it being sent or delivered, the person or company gave reasonable general notice that it was sent or delivered without
the person’s or company’s knowledge, or (ii) with respect to any part of the presentation purporting to be made on the authority of an expert or purporting to be a copy of, or an extract
from, a report, an opinion or a statement of an expert, the person or company had no reasonable grounds to believe and did not believe that there had been a Misrepresentation, or the
relevant part of the presentation did not fairly represent the report, opinion or statement of the expert, or was not a fair copy or extract from the report, opinion or statement of the
expert;
3.
no person or company (other than the Company) will be liable with respect to any part of the presentation not purporting to be made on authority of an expert, or to be a copy of or an
extract from a report, opinion or statement of an expert, unless the person or company (i) failed to conduct a reasonable investigation sufficient to provide reasonable grounds for a
belief that there had been no Misrepresentation or (ii) believed there had been a Misrepresentation;
4.
in the case of an action for damages, no person or company will be liable for all or any portion of the damages that it proves do not represent the depreciation in value of the securities
of the Company as a result of the Misrepresentation; and
5.
no case shall the amount recoverable exceed the price at which the securities of the Company were offered to the investor.
Not all defences upon which the Company or others may rely are described herein. Please refer to the full text of the Securities Act (Saskatchewan) for a complete listing.
Similar rights of action for damages and rescission are provided to residents in Saskatchewan in respect of a Misrepresentation in advertising and sales literature disseminated in connection with an
offering of securities of the Company.
Where an individual makes a verbal statement to a prospective purchaser resident in Saskatchewan that contains a Misrepresentation relating to the securities of the Company purchased and the
verbal statement is made either before or contemporaneously with the purchase of such securities of the Company, the purchaser has a right of action for damages against the individual who made
the verbal statement if it was a Misrepresentation at the time of purchase, regardless of whether the purchaser relied on the Misrepresentation.
An investor resident in Saskatchewan to whom this presentation or any amendment hereto was not sent or delivered prior to or at the same time as the purchaser enters into an agreement to
purchase the securities of the Company has a right of action for rescission or damages.
No action shall be commenced to enforce the foregoing rights:
a)
the case of action for rescission, more than 180 days after the date of the transaction that gave rise to the cause of action; or
b)
in the case of any action, other than action for rescission, more than the earlier of (i) one year after the investor first had knowledge of the facts giving rise to the cause of action, or (ii)
six years after the date of the transaction that gave rise to the cause of the action;
An investor resident in Saskatchewan who has entered into an agreement for the purchase of securities, which has not yet been completed, and who receives an amendment to the presentation that
discloses (i) a material change in the affairs of the Company, (ii) a change in the terms or conditions of the offering as described in this presentation or (iii) securities to be distributed that are in
addition to the securities of the Company described in this presentation, that occurred or arose before the investor entered into the agreement for the purchase of the securities of the Company, may
within two business days of receiving the amendment deliver a notice to the Company or the agent from whom the securities of the Company are being purchased indicating the investor’s intention not
to be bound by the purchase agreement.
If the securities of the Company are sold in Saskatchewan in contravention of Saskatchewan securities legislation or a decision of Saskatchewan Financial Services Commission, a purchaser resident
in Saskatchewan may elect to void the purchase agreement, and if the purchaser so elects, the purchaser is entitled to recover all money and other consideration paid by such purchaser for the
securities of the Company.
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Rights of Action for Purchasers, continued
Rights for Purchasers in Alberta, British Columbia and Quebec
By purchasing the securities of the Company hereunder, purchasers in the provinces of Alberta, British Columbia and Quebec who
are not entitled to the statutory rights described above, in consideration of their purchase of securities of the Company and upon
accepting a purchase confirmation in respect thereof, are hereby granted a contractual right of action from damages or rescission that
is substantially the same as the statutory right of action, if any, provided to residents of Ontario who purchase securities of the
Company.
General
The foregoing summaries are subject to the express provisions of the applicable securities law of each jurisdiction, and the
regulations, rules and policy statements thereunder and reference is made thereto for the complete text of such provisions.
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