CALGARY, ALBERTA--(Marketwire - Aug. 31, 2012) - CanAm Coal Corp. (TSX VENTURE:COE) (OTCQX:COECF) ("CanAm" or the "Company") has filed its unaudited condensed consolidated financial statements and related management discussion and analysis for the period ended June 30, 2012. As the Company has changed its year end to December 31 from January 31 in order to align year ends across all subsidiaries, the comparative prior year numbers presented are for July 31, 2011. These documents may be obtained on the SEDAR website or on the Company's website at [ www.canamcoal.com ] or on our Facebook page.

Highlights and key events for the second quarter include:

• Achieved coal sales of 76,577 tons, an increase of 14% (9,424 tons) from Q1 2012 but a decrease of 6% (4,876 tons) from Q2 2011;
• Achieved coal sales of 143,730 tons for the first half of 2012, an increase of 28% (31,622 tons) from the previous year;
• Generated revenue in Q2 of $8.2 million, up from $7.5 million in Q2 2011;
• Generated EBITDA in Q2 of $1.1 million, up from $1.0 million in Q1 2012 but down from $1.3 million in Q2 2011;
• Generated Q2 cash flow from operations of $0.6 million, down from $2.0 million in Q2 2011;
• Invested $3.3 million in Q2 in mine equipment and infrastructure;
• Refinanced, with a major US Bank, all of the Company's equipment debt for a term of 54 months at an interest rate of 3.25%;
• Acquired the remaining 2% of RAC Mining subsidiary that was not already owned; and,
• Appointed Scott Bolton, former Canadian Energy Leader at PwC, as CFO.

Summary Analysis

In the second quarter, the Company achieved revenue growth of 9% over the previous year. The increase was driven by a higher average sales price in the quarter ($106/ton vs. $92/ton in 2011), reflecting improved pricing from new long term contracts entered into late last year and early this year. In contrast, second quarter physical coal sales, while improved over the first quarter were 6% below last year. Physical sales were impacted by two of the factors that hampered Q1 sales; namely, the transitional impact of management and operational changes at the Powhatan mine and an operational incident that damaged an excavator at the Gooden Creek mine. Additionally, the Company carried out a considerable amount of grading and vegetation reclamation work in Q2, which also impacted production.

Notwithstanding revenue growth over the previous year, EBITDA was lower than the previous year as a result of higher costs. The Company's mining cost structure has been established this year to deliver a higher production level than what was achieved in the second quarter. Average production cost per ton was $12 higher than the previous year. On a positive note, Q2 EBITDA improved 11% over Q1, which was the third consecutive quarter of EBITDA growth.

The management and operational changes made at Powhatan, which produces all of CanAm's metallurgical coal began to show positive results in June where mine production and sales exceeded 12,000 tons, the best month in its history under CanAm ownership. As well, the Company has replaced the damaged excavator with another unit and impacted production is returning to normal levels. Overall, June production, sales and resultant EBITDA improved considerably.

Jos De Smedt, President and COO of CanAm commented "During the first half of the year, CanAm made significant investments in equipment, mine development, operations, and senior management. We did this while continuing to deliver reasonable financial results in the short term, despite a number of challenges. In August 2012, we completed the acquisition of an additional 30% interest in BCC. We believe these investments position the Company to realize on the full potential of our existing mines and our 3 planned new mines. In August, we received final permitting for the largest of the three new mines at Old Union 2 and production will commence in the coming weeks. We expect to receive final permitting for the other 2 mines in the near future. Overall, we look forward to improved second half results and a strong 2013."

Subsequent to Q2, the Company made a number of significant announcements including:

• In July, the Company announced the acquisition of 574 acres of coal leases adjacent to the existing Old Union mine and which will form an integral part of the Old Union 2 mine. In August, the Company acquired additional surface mining rights to two tracts of land totaling approximately 133 acres in the Old Union and Old Union 2 mining complex.
• In August, the Company acquired a permit issued by the Alabama Surface Mining Commission ("ASMC") approving mining operations at Old Union 2. First production is scheduled to commence in early Q4 2012.
• In August, the Company announced and closed the acquisition of an additional 30% interest in BCC for a purchase price of US$11,505,682. The Company funded the acquisition through a non-brokered private placement, which raised $13,165,000. The BCC vendors subscribed for US $6,000,000 principal amount in the financing.
• In August, the Company announced the addition of Steve Somerville, former President of BMO Capital Corporation to the Board of Directors.

Financial Results Analysis

Note: EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization equal income from mining operations plus depreciation, depletion, amortization and accretion minus general and administrative expenses. EBITDA is a supplemental measure that is not presented in accordance with International Financial Reporting Standards (IFRS). This non-IFRS measure may not be comparable to the calculation of similarly titled measures reported by other companies and should not be considered in isolation, as an alternative to, or more meaningful than financial measures calculated and reported in accordance with IFRS

Physical Coal Sales and Revenue

Q2 2012 coal sales were 76,577 tons, a 14% increase over Q1 but a 6% decrease from the previous year. For the six month period ended June 30, 2012, coal sales were 143,730 tons, a 28% increase over the previous year. The average sales price obtained during the quarter was $106/ton as compared to $92/ton in the prior year, an increase of 15%. This resulted in Q2 revenue exceeding the prior year by 9% despite lower production. Strong pricing for the quarter is the result of new long term off-take contracts signed by the Company towards the end of fiscal 2011 and in early 2012. The Company has substantially sold its production through the end of 2014.

Sales for the second quarter were characterized by:

• Coal sales of 55,000 tons from the Company's 50% ownership in BCC's three operating mines, Bear Creek, Old Union and Gooden Creek, a 14% increase over Q1. All of BCC's mines produce high quality thermal coal. Notwithstanding the improvement over Q1, Q2 production from these mines was below the previous year (by 6%) and originally planned levels, mostly as a result of equipment damage to an excavator at the Gooden Creek mine. The incident, which occurred in March necessitated equipment reconfigurations at both the Gooden Creek and Old Union mines to compensate. Production is returning to planned levels, however, the transition had a significant impact on Q2 production. Additionally, the Company graded and revegetated over 400 acres in the quarter to take advantage of the spring growing season. A certain amount of mining labour and equipment resources was utilized in this program. The benefit is that planned reclamation for the remainder of the year will be significantly lower. On a positive note, the Q1 mine reconfiguration at Bear Creek was successfully completed and Q2 production exceeded targeted levels.
• Coal sales at the Powhatan mine were 22,000 tons, a 17% increase over Q1. Notwithstanding this improvement, production was below planned levels in April and May as the Company completed the process of integrating Powhatan's mine operations under the responsibility of the BCC team. April and May production was maintained at minimal levels (below 5,000 tons in each month) as a new mine plan and operating structure were put in place. The transition was completed in April/May and the benefits started to be realized in June with production and sales in that month exceeding 12,000 tons, the best results in the mine's history under Company ownership.
• The production shortfall from these factors impacted revenues by an estimated $2 to $3 million. Similar to Q1, this shortfall impacted our margins as our mining cost structure has been established to deliver a higher production level, which we expect to begin achieving in the second half of the year. Also, as part of the changes made at Powhatan, the Company undertook a full review of the mine's operating equipment package and a significant investment was made in upgrades and repairs to a number of components, which were necessary to sustain higher production levels going forward. The mix of metallurgical/thermal coal for the second quarter at the Powhatan mine was 75/25%. The Company's target coal mix for the Powhatan mine is 60/40%.

Production costs and EBITDA

Q2 production costs averaged $65/ton compared to$53/ton in Q2 2011 as a result of higher direct mining costs and increased operating expenses associated with reduced production levels mainly resulting from the mine management transition at Powhatan and equipment damage at Gooden Creek. Royalties, transportation and other ("RTO") costs were on average $21/ton as compared to $16/ton in the previous year. The increase relates to higher royalties, which correlates to a higher average sales price per ton realized this quarter. Q2 EBITDA was $1,080,304, an 11% improvement over Q1 but below the $1,339,418 in EBITDA achieved in the previous year.

Other Expense (income)

Other expenses in Q2 were $1,632,127, as compared to $2.0 million in the prior year. The prior year's results included $508,525 of costs associated with the acquisition of 50% of BCC as well as higher associated debenture issue and accretion expenses (+$240,000). This variance is partially offset by a $291,613 loss recorded in the current quarter, which was realized on the sale of 3 pieces of mining equipment. Q2 general and administrative costs were $523,540, virtually unchanged from the $525,130 in G&A costs incurred in the previous year.

The Company's overall financial position remains stable as a result of cash flow generated from mining operations as well as cash received from the exercise of warrants, options and a private placement during the first six months of the year. Cash on hand at June 30, 2012 was $1.5 million as compared to $2.6 million at December 31, 2011. In addition, the Company has $0.9 million in cash as security for reclamation bonds. Subsequent to June 30, 2012, the Company completed a debenture financing as part of its acquisition of an additional 30% of BCC. The financing exceeded the purchase price by approximately $1.6 million with the excess funds available for general corporate purposes, which is in addition to the Company's cash position at June 30, 2012.

Outlook

Over the last three years, the Company has grown production from 4,700 tons in 2009 to 256,000 tons in 2011. Likewise, EBITDA has grown from ($0.5) million in 2009 to $4.6 million in 2011. It is the Company's intention to continue a strong growth trajectory.

To date in 2012, the Company has undertaken a number of key initiatives, which include:

• Acquiring an additional 30% of BCC, effective July 1, 2012, financed by a non-convertible, unsecured debenture issue. This transaction is now closed.
• Signing two new long term off-take contracts that secure significant sales of metallurgical and thermal coal at strong pricing through 2014.
• Announcing an agreement with a major US bank to refinance the substantial portion of its equipment debt for a term of 54 months at an interest rate of 3.25%.
• Continuing the execution of our plan to open three new mines in the second half of 2012. The Old Union 2 permit was received in August 2012 and mining will start shortly. Final permitting for the Knight and Posey Mill 2 mines is expected in the near future. Both mine plans are completed and upon receipt of the permits, mining will commence.
• Substantially completed a significant capital investment program in both equipment and mine development to prepare for the opening of the three new mines in the second half of 2012.
• Completing our operational realignment strategy, which placed all of our mines under the direct management of the BCC team. These changes have been implemented and are expected to bring operational and cost efficiencies as well as improved production performance in future quarters, as already evidenced by improved June production results achieved at Powhatan.
• Strengthening the management and board team with the additions of Steve Somerville (former President of BMO Capital Corporation) to the board (started August 2012), Scott Bolton (former Canadian Energy Leader at PwC) as CFO (started June 2012) and Eric Hallmark (20 plus years of accounting experience) as BCC controller, in Alabama.

Further expansion and growth will continue to be pursued by either adding adjacent lands to our reserve portfolio or by pursuing accretive acquisitions with a focus on high quality thermal or metallurgical coal in markets that we understand. The Company also has an option to purchase the remaining 20% of BCC before 2016.

In addition, the Company continues to pursue the development of the Buick Coal Property which holds significant coal resources, 188 million tons of indicated and 103 million tons of inferred coal resources, in Colorado, USA. In this context, CH2M HILL, an independent major engineering firm recently completed a study to identify alternative development opportunities for this resource and have recommended that the Company pursue two alternatives: the production of activated carbon or the gasification of the coal resource to produce liquid motor and/or jet fuels.

About CanAm Coal Corp.

CanAm is a coal producer and development company focused on growth through the acquisition, exploration and development of coal resources and resource-related technologies. CanAm's main activities and assets include its four operating coal mines in Alabama and the Buick Coal Project which holds significant coal resources, 188 million indicated and 103 million inferred resources, in Colorado, USA (see the technical report entitled "Limon Lignite Project, Elbert County, Colorado, USA," dated October 26, 2007 and filed on SEDAR on November 2, 2007). Other coal and related opportunities continue to be evaluated on an ongoing basis.

Forward-Looking Information and Statements

This press release contains certain forward-looking statements and forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of applicable Canadian securities laws. All statements other than statements of present or historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "could", "should", "can", "anticipate", "estimate", "expect", "believe", "will", "may", "project", "budget", "plan", "sustain", "continues", "strategy", "forecast", "potential", "projects", "grow", "take advantage", "well positioned" or similar words suggesting future outcomes. In particular, this press release contains forward-looking statements relating to: the future production of the Powhatan mine; the permitting of the Davis mine; and the potential production at the Davis mine. This forward looking information is based on management's estimates considering typical strip mining operations, equipment requirements and availability and typical permitting timelines.

In addition, forward-looking statements regarding the Company are based on certain key expectations and assumptions of the Company concerning anticipated financial performance, business prospects, strategies, the sufficiency of budgeted capital expenditures in carrying out planned activities, the availability and cost of services, the ability to obtain financing on acceptable terms, the actual results of exploration projects being equivalent to or better than estimated results in technical reports or prior exploration results, and future costs and expenses being based on historical costs and expenses, adjusted for inflation, all of which are subject to change based on market conditions and potential timing delays. Although management of the Company consider these assumptions to be reasonable based on information currently available to them, these assumptions may prove to be incorrect.

By their very nature, forward-looking statements involve inherent risks and uncertainties (both general and specific) and risks that forward-looking statements will not be achieved. Undue reliance should not be placed on forward-looking statements, as a number of important factors could cause the actual results to differ materially from the Company's beliefs, plans, objectives and expectations, including, among other things: general economic and market factors, including business competition, changes in government regulations or in tax laws; the early stage development of the Company and its projects; general political and social uncertainties; commodity prices; the actual results of current exploration and development or operational activities; changes in project parameters as plans continue to be refined; accidents and other risks inherent in the mining industry; lack of insurance; delay or failure to receive board or regulatory approvals; changes in legislation, including environmental legislation, affecting the Company; timing and availability of external financing on acceptable terms; conclusions of economic evaluations; and lack of qualified, skilled labour or loss of key individuals. These factors should not be considered exhaustive. Many of these risk factors are beyond the Company's control and each contributes to the possibility that the forward-looking statements will not occur or that actual results, performance or achievements may differ materially from those expressed or implied by such statements. The impact of any one risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as these risks, uncertainties and factors are interdependent and management's future course of action depends upon the Company's assessment of all information available at that time.

Forward -looking statements in respect of the future production of the Powhatan and BCC mines may be considered a financial outlook. These forward-looking statements were approved by management of the Company on August 30, 2012. The purpose of this information is to provide an operational update on the company's activities and strategies and this information may not be appropriate for other purposes.

The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this press release are made as of the date of this press release and the Company does not undertake and is not obligated to publicly update such forward-looking statements to reflect new information, subsequent events or otherwise unless so required by applicable securities laws.

Contributing Sources

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