PAK

TORONTO, June 29, 2015 /CNW/ - Pacific Coal Resources Ltd. (TSXV: PAK) has filed its unaudited consolidated financial statements for the three months ended March 31, 2015, together with its management's discussion and analysis ("MD&A") for the corresponding period. All financial figures contained herein are expressed in U.S. dollars unless otherwise noted. These documents will be posted on the Company's website at www.pacificcoal.ca and under the Company's profile at www.sedar.com.

Hernan Martinez, Executive Chairman, commented: "In the first quarter of 2015, the Company was able to negotiate a favourable operating cost at La Caypa and work towards maintaining a low G&A. The Company should be able to improve its cash position going forward as a result of the cash stream generated by the agreement with Sloane. We aim to begin underground mining at La Caypa to maximize its coal production and strengthen our focus on core assets by disposing of the remaining interest in the Barranquilla port."

Financial and Operating Summary

A summary of the financial and operating results for the first quarter of 2015 is as follows:

Q1 2015 Highlights

• Coal production: The Company produced 221,909 tonnes of coal in the first quarter of 2015, which represents a decrease of 19% compared to the first quarter of 2014 (274,421 tonnes). In the first quarter of 2015, the total stripping ratio for La Caypa mine increased by 141% compared to the fourth quarter of 2014 (28.21 vs 11.73). These results were due to a change in the mine development plan as a result of adverse geographical conditions found in the mine and is expected to be lower in the second half of 2015.
  
  
• Revenues: Coal revenues for the first quarter of 2015 were $20.9 million (first quarter 2014 - $35.6 million), from 246,771 tonnes (first quarter 2014 - 371,716 tonnes) of coal sold at an average realized price of $85.45 per tonne.
  
  
• Earnings (loss) from operations: In the first quarter of 2015, the earnings from operations were $1.8 million, compared to $1.9 million and $1.2 million in the fourth quarter of 2014 and the first quarter of 2014, respectively.
  
  
• Adjusted Earnings Before Interests, Taxes, Depreciation and Amortization ("EBITDA") and operating margin: Adjusted EBITDA for the first quarter of 2015 was a gain of $4.6 million against $3.1 million for first quarter of 2014. See 'Non-GAAP and Additional GAAP Financial Measures' for a definition and reconciliation of Adjusted EBITDA and operating margin per tonne sold in the first quarter MD&A filed on www.sedar.com.
  
  
• Operation of Cerro Largo mine: The Company continued with the development of the multi-year joint operation agreement ("Sloane JOA") for thermal coal production at the Cerro Largo mine signed October 1, 2014 with Sloane Mining Services Sucursal Colombia ("Sloane"), whereby Sloane took over operation of the Cerro Largo mine. The final conditions required for the agreement to take effect are expected to be fulfilled by the third quarter of 2015, resulting in the payment of $6.5 million advance by Sloane to the Company pursuant to the Sloane JOA.
  
  
• General and administrative ("G&A") expenses: The Company recorded $1.2 million in G&A expenses, excluding DD&A and impairment of non-current assets, in the first three months of 2015, which was slightly higher than forecasted due to tax penalties that were required to be paid in the quarter, compared to $1.2 million in the same period of 2014.

Outlook

In the first quarter of 2015, production at the La Caypa mine was 176,840 tonnes and production at the Cerro Largo mine was 45,069 tonnes, of which 3,718 belong to the Company as part of the Sloane JOA. Regarding La Caypa, the Company maintains its forecast of open pit production of 1.1 million tonnes for 2015 with a stripping ratio throughout the year of 13.36:1. The Company continues negotiating a potential long term sales contract with its main customer whose current contract expires in July 2015. The new contract is expected to be for the purchase of 3.4 million tonnes of open pit production (including production from the second half of 2015, 2016, 2017 and 2018). Since spot prices are currently lower than the price in the existing contract, there can be no certainty that the Company will be able to negotiate a new contract at the same price as the existing contract.

During 2015, management continues to prioritize its efforts to lower operating costs. The Company continues to explore opportunities with third parties with respect to underground mining at La Caypa with the goal of finalizing a contract in the third quarter of 2015. Currently, two companies have expressed interest in providing their services to the Company in this regard.

Management has been working to complete certain conditions in order to effect the Sloane JOA completely, hence reducing the amount owed to Chipalo Resources, formerly owed to Masering S.A.S.

In terms of G&A expenses, total G&A expenses were $1.2 million in the first quarter of 2015. The Company anticipates G&A expenses in 2015 will be approximately $4.2 million ($1.0 million quarterly), which would be an 18% of reduction as compared to 2014.

About Pacific Coal Resources Ltd.

Pacific Coal Resources Ltd. is a Canadian-based mining company engaged in the acquisition, exploration and production of coal and coal-related assets from properties located in Colombia. The Company's common shares are listed on the TSX Venture Exchange and trade under the symbol "PAK".

Forward Looking Information:

This news release contains "forward-looking information", which may include, but is not limited to, statements with respect to the future financial or operating performance of the Company and its projects. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or believes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Pacific Coal to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements contained herein are made as of the date of this press release and Pacific Coal disclaim, other than as required by law, any obligation to update any forward-looking statements whether as a result of new information, results, future events, circumstances, or if management's estimates or opinions should change, or otherwise. 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. Accordingly, the reader is cautioned not to place undue reliance on forward-looking statements.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

SOURCE Pacific Coal Resources Ltd.