VANCOUVER, BRITISH COLUMBIA, April 13, 2004 ? Pine Valley Mining Corporation (TSX-VE: PVM; NASD OTC: PVMCF) (the ?Company? or ?Pine Valley?) is delighted to announce that the Company’s Willow Creek coal mine is scheduled to commence commercial production in June of this year. Pine Valley has signed an agreement in principle for a $10 million CAD ($7.6 million USD) debt facility to provide capital requirements for mine-site construction and working capital required to begin shipments and to ramp up production to a rate of 95,000 tonnes per month by September of this year (an annualized rate of 1.1 million tonnes). The agreement is subject to the parties settling final agreements and the approval of both companies? Board of Directors. Management expects to increase the currently permitted 900,000 tonnes per year level by mid-2005. To management?s knowledge, this will be the first new major export metallurgical coal mine to begin production in North America in nearly 20 years.
The Company is excited about the prospect of being able to take advantage of the worldwide strength in metallurgical coal prices and to establish itself as a major new unhedged producer of low volatile pulverized coal injection (?PCI?) and coking coal. Management expects the Company to be solidly profitable in the third and fourth quarters of 2004.
Pine Valley?s PCI is a high quality, low sulphur, low ash product used in steel production. Over the past year samples have been sent to steel mills in Japan, China, Brazil, Europe and other parts of the world. The quality of the coal?s specifications has resulted in extensive expressions of interest in purchasing the coal upon commencement of production. Pine Valley is currently finalizing further contracts for coal sales.
Pine Valley currently has measured and indicated coal reserves upon which the mine plan is based as well as coal resources the Company plans to develop further. The table below details the reserve and resource tonnages that comprise the Willow Creek Coal Project. More detailed information on Pine Valley and the Willow Creek Coal Project are available on the Company?s web site: www.pinevalleycoal.com.
SUMMARY OF SURFACE RESERVES AND RESOURCES
(North and Central only)Measured and Indicated15.2
Pine Pass Measured and Indicated9.5
(1)These historical resources calculations were prepared by Gulf Canada from work in the 1980s and do not conform to Canadian National Instrument 43-101 and are available through the British Columbia Ministry of Energy and Mines.
Supplies of metallurgical coal are reportedly tight in Europe, South America and the US. Contract PCI prices have appreciated by approximately 35% and in some cases up to 50% this year due largely to increased Asian demand generally and Chinese demand in particular. Over the last two years, China has gone from being a large net exporter of metallurgical coal to a net importer. The Chinese government recently severely restricted the export of all types of coal. Leading economists project this trend of significantly increased demand for steel and its input factors to continue for the foreseeable future as China builds its internal infrastructure.
Pine Valley has signed a non-binding letter of intent with a leading coal trading company with extensive experience in the coal industry. Subject to the negotiation and execution of final agreements, they will provide a $10,000,000 CAD loan repayable over a maximum of three years.
The proceeds of this new debt financing will be used to bring the Willow Creek coal mine into production, for working capital and mine site improvements. The letter of intent includes a provision that requires the Company to raise a minimum of a further $3 million, to secure a total of $13 million, which is the forecasted amount to complete the initial mine construction and begin operations. Mining of PCI is expected to begin in June with the existing facilities at a rate of approximately 45,000 tonnes per month. The planned construction will expand and improve the facilities to increase the capacity to up to a monthly rate of 95,000 by September 2004. Cumulative production for calendar 2004 is projected at approximately 515,000 tonnes.
The letter of intent includes a provision under which the trading company intends to purchase 600,000 tonnes of coal over the next two years, 200,000 tonnes of which will be supplied by March 2005 and 400,000 tonnes by March 31, 2006. The trading company will also be appointed the Company?s exclusive agent for sales of Willow Creek coal into Japan, Korea and Taiwan. Pricing will be negotiated on a yearly basis and will be consistent with the then prevailing world prices. Based on discussions Pine Valley has had it believes it could sell its entire production in Asia. However the Company will diversify its market to ensure the best combination of price and ongoing purchase commitment is achieved. The proposed terms call for the loan to be collaterized by a security interest in the Company?s assets that will rank pari passu with the current security interest held by Mitsui Matsushima Canada Ltd.
Graham Mackenzie, President of Pine Valley, commented, ?We are very excited about entering this new financing and marketing opportunity, as it will allow Pine Valley to establish itself as a major new metallurgical coal producer. Pine Valley is reviewing plans to expand production to at least 2 million tonnes per year by mid 2005 to take advantage of the very strong demand for our coal products. The company has a very large coal lease area and I believe, based on the extensive database, that there is a good opportunity to increase the annual production rate to an even higher level in the future?.
Mark Smith, Chairman of the Board, stated, “All of us at Pine Valley appreciate the support of our long-term, loyal shareholders during what has been an arduous task–bringing a major new mine into production. We hope that the financing will permit a rapid ramp up to commercial production, which with growing demand and strong pricing, should make the Company increasingly profitable over the next several years and result in major benefits to both our existing and future shareholders.”
PINE VALLEY MINING CORPORATION
President and Chief Executive Officer
Pine Valley Mining Corporation web site: www.pinevalleycoal.com
Graham MackenzieMark Fields
President & CEOExecutive Vice President
(604) 682-4678(604) 682-4678
Vancouver, British Columbia, Canada Vancouver, British Columbia, Canada
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