Cline gets positive feasibility for Lossan coal (January 13, 2006)

Vancouver — Cline Mining (CMK-T, CLNMF-O) has received the feasibility study on its Lossan project in northwestern British Columbia’s Peace River coalfields.

The independent report, by engineering consultants Norwest, reviews a potential one million tonne-per-year operation producing medium volatile bituminous pulverized coal injection (PCI) and metallurgical coking coal over 14 years. Proven and probable clean saleable, surface mineable coal reserves were calculated at 13.93 million tonnes.

Norwest’s study also shows measured and indicated coal resources of 186 million tonnes plus an additional 53.5 million tonnes in the inferred category.

The proposed operation comes in with a pre-tax net present value of $29.1 million after repayment of invested capital, using a 10% discount factor. Lossan’s estimated pre-tax internal rate of return is pegged at 19.8%.

The study assumes a 74% production yield in the open pit operation and an initial 8.4-to-1 waste to clean coal stripping ratio in the first two years. Over the 14-year mine-life, the stripping ratio is expected to rise to an average of 10.2 bank cubic metres per tonne of clean coal.

Project capital costs are anticipated at about $57 million. The feasibility study also assumes average prices of US$80 per tonne and US$90 per tonne for PCI and metallurgical grade coal product.

Cline is now focused on permitting the planned operation and pending approvals and sales contracts, anticipates commencing mine development in early-2007 with a mid-year start up.

In addition to its Lossan coal property, Cline hold the advanced stage Lodgepole PCI coal project and the Sage Creek metallurgical-grade coal project in southeastern B.C. The company also holds the Bekisopa iron ore project in Madagascar and the past producing Cline Lake gold mine (75,000 oz. from 1938-42) near Wawa in northern Ontario.

With its 54.8 million shares outstanding, Cline Mining posts a $36 million market capitalization based on its recent 65 per share trading level. The stock has a 52-week range of 65 to $1.90.