Cobalt Coal to Begin Cash Flow with Coal Sales Contract.

Jan 19, 2010, 11:22 ET from Cobalt Coal Corp.

CALGARY, Jan. 19 /PRNewswire-FirstCall/ - Cobalt Coal Corp. (TSX-V: CBT) ("Cobalt" or the "Corporation") announced today that it has executed a sales contract with Riverside Energy Inc. ("Riverside"), a wholly owned subsidiary of Alpha Natural Resources Inc. (NYSE: ANR) whereby Riverside has agreed to purchase metallurgical coal from Cobalt's Westchester Coal Mine in McDowell County, West Virginia USA. Terms of the sales contract include a fixed price for 8,000 tons of coal from Westchester per month over a period of twelve months. Any production above this amount will be sold into the spot market. Cobalt has targeted March 1st, 2010 as the start date for commercial coal production into the aforementioned sales contract.

In commenting on this development, Cobalt President and CEO David M. Lewis stated: "This is a pivotal event for our company as our Westchester Coal Mine can now be returned to operational status. The completion of this sales contract is very important as it has allowed us to hedge the bulk of our production in 2010, while still permitting acceptable exposure of the Corporation to what is a rapidly strengthening spot market for metallurgical coal."

The near term cash flow from the Westchester Coal Mine will allow Cobalt to continue to aggressively pursue its growth strategy of acquiring and developing known deposits of high grade metallurgical coal in the Appalachian region of the USA.

The Westchester Coal Mine was producing high grade metallurgical coal from Q4 2008 until the end of Q2, 2009. Production at the Mine was temporarily suspended in April, 2009 due to world economic conditions.

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 release."

About Cobalt:

Cobalt Coal Corp 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. Cobalt owns a 60% after payout interest in the Westchester Coal Mine, and operates this mine through its wholly owned subsidiary Westchester Coal GP Inc.

Initially, Cobalt is concentrating its efforts on developing an asset base in the Appalachian coal producing region of the United States, and will then expand internationally as opportunities allow. The Appalachian area includes parts of West Virginia, Virginia, Kentucky, Ohio, Pennsylvania, the Carolinas, and Tennessee. Appalachia's history of producing large volumes of metallurgical coal, along with the under-utilized coal infrastructure already in place, make the area ideal for the implementation of Cobalt's business model. Coal assets in the area can be acquired and brought into production relatively quickly. The resulting cash flows are generated in the short term without the need to invest large amounts of time and capital.

All of these factors align with Cobalt's strategy to provide near term cash flow and high growth to shareholders.


Statements in this press release may contain forward-looking information including expectations of future production, operating costs, commodity prices, administrative costs, commodity price risk management activity, acquisitions and dispositions, capital spending, access to credit facilities, income taxes, regulatory changes, and other components of cash flow and earnings. 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.

SOURCE Cobalt Coal Corp.