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Energybuild Group Plc

Monday, February 25th, 2008

Energybuild Group Plc, the Welsh anthracite producer, has signed a joint venture agreement with Coal Recovery Investments Limited in relation to tip based coal recovery operations in South Wales. It is estimated that the JV will yield 270,000 tonnes of coal over a 2.5 year period. The Company also reports significant progress in developing and increasing production at its opencast and underground operations in South Wales.
Joint venture
Energybuild has entered into a JV agreement with CRI to recover coal from disused coal tips in South Wales, which will be sold into the industrial coal market. Primary coal deposits that can be accessed from surface may exist adjacent to these tips and where feasible will be mined as an ancillary operation.
CRI specialises in the prospecting, analysis, engineering and operation of coal recovery schemes and is effectively the successor company to the coal recovery business developed by the Ryan group of companies.
CRI, whose current operations are primarily in Poland, now has a fully permitted and evaluated tip recovery scheme in South Wales and is ready to initiate operations and commence production. This JV scheme is estimated by CRI to yield 270,000 tonnes of coal over a 2.5 year period. The adjacent opencast site is likely to produce additional coal, once the relevant permission to extract is granted. This is expected in Q2 2008. CRI will assign the benefits of this scheme to the joint venture company.
CRI has also investigated and analysed the engineering data on a further seven prospective tips which have the potential to be developed to produce an ongoing long term supply. In addition, Energybuild has a potential tip recovery prospect at its Aberpergwm mine.
Coal produced by Energybuild’s current mining operations is an ideal blend for the tip recovery coal and the Company has agreed to make available to the JV its dispatching facilities and tonnage from the Aberthaw contracts, while negotiating further contracts when needed.
Energybuild and CRI each have a 50% interest in the JV Company and will work exclusively together to promote tip recovery schemes within South Wales and elsewhere in the UK. The management of the company will be a four Director board, consisting of two Directors from each party.
Opencast activities
As an extension of the Nant y Mynydd opencast mine, Energybuild has commenced production of coal from its Forest Quarry site for which planning consent was obtained in November 2007. Production from the area has now reached 1,500 tonnes of saleable coal per week and it is forecast to increase to 2,000 tonnes per week by Q2. It is expected that the majority of this coal will be sold into Aberthaw power station at a price linked to the API II index.
Aberpergwm drift mine
The Company has completed work on the development of the air circuit in the 18ft seam west of the Pentreclwydau fault and has set up three development headings in preparation for road heading machines, which will be utilised in blocking out the seam. The first road heading machine is scheduled to arrive at the colliery in approximately 8 weeks time. After commissioning, development production is expected to increase to 3,000 tonnes of saleable coal per week. It is anticipated that 85% of this production will be sold into Aberthaw power station at a price linked to the API II index, with the remainder sold into the sized coal market at premium prices. Target production for the year to 30 June 2008 stands in line with the business plan set out in the Company’s admission document at 20,200 tonnes.
Energybuild has also significantly increased its workforce following the recent closure of nearby Tower Colliery, employing a further 27 former Tower miners in addition to the 30 who were already on contract with the Company.
Managing Director Rhidian Davies said, “We are extremely happy with our progress since listing. The agreement with CRI for coal recovery schemes is another exciting step in the development of the Company and it is anticipated that the JV will generate significant profit and cashflow going forward. The return to production at our opencast operations is good news for cashflow and the technical advancements at our drift mine operations brings us closer to at the targeted production of 20,200 tonnes p.a. to 30 June 2008 and 265,000 p.a. tonnes to 30 June 2009.
“In addition, I would like to welcome the latest miners from Tower Colliery who have joined Energybuild and we look forward to continuing to support the Welsh coal industry by maintaining and building the local workforce.”
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