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Corsa Files First Quarter Financial Results

May 3, 2012 Toronto, Ontario - Corsa Coal Corp. (TSXV: CSO) (“Corsa” or the “Company”) announces that it has filed its Condensed Interim Consolidated Financial Statements and Management’s Discussion and Analysis for the three months ended February 29, 2012 on SEDAR and has posted these documents to its website www.corsacoal.com.

Highlights for the first quarter included:

Refer to the Condensed Interim Consolidated Financial Statements and Management’s Discussion and Analysis filed for the details of the financial performance of the Company and the matters referred to in this release including the technical reports and independent qualified person.

Don Charter, President and Chief Executive Officer, stated “It has been a challenging six months in the coal industry. While the industry slowdown has affected us like everyone else, we were able to ship approximately 65,000 tons of met coal in the first quarter at an average realized price of $158 a ton and have continued to ship coal in the second quarter with expectations of doing the same or higher volumes in the second quarter. In markets such as this, coal quality is important and with our low vol met coal we are well positioned with a strong product. Sales activity appears to be increasing and we are encouraged by current indicators. We continue with property acquisitions aimed at the aggressive expansion of our resource base as evidenced by our recent purchase of the Keyser property as well as optioning a further 6,500 acres for drilling.”

Production and Sales

The Company sold 65,000 clean tons of metallurgical coal at an average realized price of $158 per ton during the three months ended February 29, 2012.

The Company produced 82,000 raw tons of metallurgical coal during the three months ended February 29, 2012 with 40,000 tons from surface mines and 42,000 from its underground mine. The cash mining costs of metallurgical coal produced (not including royalties) were $60 per raw ton. The costs were impacted by mining conditions at the Casselman Mine (see “Mine Production”). The Company purchased 55,000 raw tons and 7,000 clean tons of metallurgical coal during the three months ended February 29, 2012.

The Coal Preparation Plant processed 115,000 raw tons of metallurgical coal and produced 58,000 clean tons during the three months ended February 29, 2012.  The cash processing costs of $22 per clean ton were impacted by lower production levels resulting from lower than expected sales, double handling of raw coal while the raw coal storage area is expanding, third party refuse handling pending the start-up of the Company’s refuse site and lower recovery levels as a result of high dilution experienced from the Casselman Mine due to poor mining conditions and the flotation column performance.
The Company sold 21,000 raw tons of thermal coal at an average realized price of $41 per ton during the three months ended February 29, 2012. The Company produced 28,000 raw tons of thermal coal from its surface mines in the three months ended February 29, 2012. The cash mining costs of thermal coal produced (not including royalties) were $56 per raw ton. The thermal coal mined is ancillary to the mining of metallurgical coal.

Outlook

As a result of global economic conditions and demand for steel, the coal industry has experienced a slowdown which began in the fall of 2011 and has continued into the spring of 2012. A number of producers have announced reductions in planned metallurgical coal production for 2012 as a result of this slowdown and in many cases guidance has been reduced or suspended. The Company had expected to ship approximately 90,000 tons of metallurgical coal in the three months ended February 29, 2012, however with the slowdown sales were only 65,000 tons. The Company, as a result, reduced its surface mine production and third party coal purchases to meet these lower sales levels. The Company continued to ship coal in the second fiscal quarter and based on sales to date, purchase orders and scheduled trains, the Company expects to ship 65,000 to 70,000 clean tons of metallurgical coal in the quarter. At this time the Company is not in a position to provide production, sales and cost guidance until sales levels can be more accurately forecast. For the remainder of the fiscal year, the Company will continue to adjust its production and third party purchases to match actual demand and sales orders.

Mine Production

Surface Mines

In January 2012, the Cramer Mine ceased operations as scheduled as the coal reserves were depleted. In April 2012, the Quarry Mine was placed on temporary shutdown pending commercial analysis of costs and coal prices. The Company expects to add production from the Hastings and Ankeny Mines in fiscal 2012 if markets dictate. A portion of the anticipated production of the Hastings Mine has been permitted but the Ankeny production and the balance of the Hastings production will depend on obtaining permits to allow operations there to commence on schedule. Coal production in fiscal 2012 will be adjusted to reflect actual customer demand during the year. The Company’s thermal coal production is ancillary to its metallurgical surface coal operations and will be adjusted to reflect customer demand, but is also dependent in part on the level of metallurgical coal production at the surface operations.

Underground Mine

The Company did not significantly reduce production at the Casselman Mine as it continues the mine expansion. The Company’s initial plans were to add a second continuous mining unit in the second quarter of fiscal 2012 and a third unit in the fourth fiscal quarter. The Casselman Mine continues to experience poor mining conditions due primarily to the seam thinness currently being experienced together with floor and roof conditions. Drill holes indicate that the seam height is expected to increase in between two to three months of operations at current levels. The Company continues to review its expansion plan of adding a second unit and by end of the year a third unit based on coal markets. Coal production in fiscal 2012 will be adjusted to reflect actual customer demand during the year.

Purchased Coal

The Company has the capacity to purchase raw metallurgical coal from third parties which increases the amount of raw coal available for blending and processing at the Coal Preparation Plant. The Company’s actual purchases will be adjusted to reflect actual customer demand during the year. The level of purchased coal is also impacted by the coal qualities of the purchased coal and the Company’s coal due to blending requirements. The cost of purchased metallurgical coal is typically based on a formula so that the price paid is dependent on the actual sale price realized by the Company.

Processing

The Coal Preparation Plant is operating below designed capacity. The Company expects its average recovery in the plant in fiscal 2012 to be below its long term targets due to the out of seam dilution from the low seam coal area in the initial phase of the Casselman mine and continued lower than expected recovery from fines in the flotation column. The Company’s production in fiscal 2012 will be adjusted to reflect actual customer demand during the year which will also affect the processing cost per ton. 

Sales

The Company had a one year 500,000 ton sales contract for metallurgical coal which expired March 31, 2012. With the market slowdown discussed, the Company has sold less than the expected tonnage under this arrangement to date. The Company is in discussions with the customer with respect to the purchase of the “roll over” tons in the 12 month contract period ending March 31, 2013. While the Company has sold, and continues to sell, metallurgical coal to other customers on a spot basis in 2012, the Company has not entered into any longer term contracts.  The Company’s production in fiscal 2012 will be adjusted to reflect customer demand during the year and will be dependent on the sales orders received. Sales are expected to be less than the Company’s capacity to produce as a result of weak demand.

The estimated coal production, purchases, sales and mining cash costs per ton of coal and processing costs per ton of coal sold disclosed in this MD&A are considered to be forward looking information. Readers are cautioned that actual results may vary from this forward looking information. Actual production, purchases, total cash costs, sales and processing costs are subject to variation based on a number of risks and other factors referred to under the heading “Risk Factors” and “Forward-Looking Statements” below as well as demand and sales orders received. Costs will be impacted by production levels actually achieved.

Appointment of Director

Charles Pitcher has been appointed a director of the Company.  Mr. Pitcher is currently acting as interim President and Chief Operating Officer of Wilson Creek.  Mr. Pitcher has four decades of experience in civil and mining operations, engineering, management and project development. He holds a B.Sc. Mining Engineering degree (1979) from the Colorado School of Mines and a Mining Technologist diploma from the British Columbia Institute of Technology (1969) and is a member of the Professional Engineers of Ontario and the Canadian Institute of Mining & Metallurgy.

Caution

The estimated coal production, purchases, sales and cash costs per ton of coal and processing costs per ton of coal sold disclosed in this press release are considered to be forward looking information. Readers are cautioned that actual results may vary from this forward looking information. There can be no assurance as to when or if the required permits will be issued. Actual production, sales, shipments, purchases, total cash costs and sales and processing costs are subject to variation based on a number of risks and other factors referred to under the heading “Forward-Looking Statements” as well as actual demand and sales orders received. Costs will be impacted by production levels actually achieved.

Technical Report and Qualified Person

The mineral resource estimates for the Keyser Property have been prepared under the supervision of, and the technical information in this press release was verified and approved by, Dennis Noll of Earthtech Inc., a qualified person, as such term is defined in NI 43-101 – Standards of Disclosure for Mineral Projects. Dennis Noll is independent of Corsa and Wilson Creek Energy. This deposit meets the definition of an indicated coal resource as per National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”). A technical report (within the meaning of NI 43-101) has not been filed in respect of the Keyser Property. The effective date of the estimate of this mineral resources is October 14, 2011. The estimate of mineral resources reflects known environmental, permitting, title and other relevant matters. The footprint will require further definition in the following areas in order to achieve the classification of a coal reserve: surface and mineral control, mineability related to geologic conditions, and economic viability. The mineral resources referred to in this press release have not been classified as mineral reserves and a feasibility study has not been completed.  Accordingly the economic viability of the Keyser Property has not yet been demonstrated.


Information about Corsa

Corsa’s main operating subsidiaries are Wilson Creek Energy LLC and Maryland Energy Resources LLC based in Somerset County, Pennsylvania.  Its primary business is the mining, processing and selling of metallurgical coal, as well as actively exploring,   acquiring   and   developing   resource   properties consistent with its coal business.

For further information please contact:

Corsa Coal Corp.:
Don Charter,
President and Chief Executive Officer
416-214-9800
communication@corsacoal.com
www.corsacoal.com

Forward-Looking Statements

Certain information set forth in this press release contains “forward-looking statements” and “forward-looking information” under applicable securities laws. Except for statements of historical fact, certain information contained herein constitutes forward-looking statements which include management’s assessment of future plans and operations and are based on current internal expectations, estimates, projections, assumptions and beliefs, which may prove to be incorrect. Some of the forward-looking statements may be identified by words such as “estimates”, “expects” “anticipates”, “believes”, “projects”, “plans”, “outlook”, “capacity” and similar expressions. These statements are not guarantees of future performance and undue reliance should not be placed on them. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause the Company’s actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: risks that transactions referred to will not be completed; risks that the actual production or sales for the 2012 fiscal year will be less than projected production or sales for these periods; risks that the prices for coal sales will be less than projected; liabilities inherent in coal mine development and production; geological, mining and processing technical problems; inability to obtain required mine licenses, mine permits and regulatory approvals or renewals required in connection with the mining and processing of coal; risks that the Company’s coal preparation plant will not operate at production capacity during the relevant period, unexpected changes in coal quality and specification; variations in the coal mine or coal preparation plant recovery rates; dependence on third party coal transportation systems; competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel; incorrect assessments of the value of acquisitions; changes in commodity prices and exchange rates; changes in the regulations in respect to the use, mining and processing of coal; changes in regulations on refuse disposal; the effects of competition and pricing pressures in the coal market; the oversupply of, or lack of demand for, coal; inability of management to secure coal sales or third party purchase contracts; currency and interest rate fluctuations; various events which could disrupt operations and/or the transportation of coal products, including labour stoppages and severe weather conditions; the demand for and availability of rail, port and other transportation services; the ability to purchase third party coal for processing and delivery under purchase agreements; and management’s ability to anticipate and manage the foregoing factors and risks. The forward-looking statements and information contained in this press release are based on certain assumptions regarding, among other things, future prices for coal; future currency and exchange rates; the Company’s ability to generate sufficient cash flow from operations and access capital markets to meet its future obligations; the regulatory framework representing royalties, taxes and environmental matters in the countries in which the Company conducts business; coal production levels; and the Company’s ability to retain qualified staff and equipment in a cost-efficient manner to meet its demand. 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. The reader is cautioned not to place undue reliance on forward-looking statements. The Company does not undertake to update any of the forward-looking statements contained in this press release unless required by law. The statements as to the Company’s capacity to produce coal are no assurance that it will achieve these levels of production or that it will be able to achieve these sales levels.

The TSX Venture Exchange has neither approved nor disapproved the contents of this press release.  Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.