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Buffalo Coal Secures an Additional US$4.0 Million Loan Facility

TORONTO, ONTARIO–(Marketwired – Feb 2, 2015) – Buffalo Coal Corp. (BUF.TO)(JSE:BUC) (“Buffalo” or “the Company”) announces that the Company has signed a term sheet (the “Term Sheet”) to secure an additional US$4.0 million loan facility from Resource Capital Fund V L.P (“RCF”).

Despite the restructuring initiatives which have been implemented throughout the Company during 2013 and 2014 and the financing already secured from RCF, current market conditions and operational performance have necessitated further restructuring and a requirement for additional capital in order to improve operating efficiencies, support the Company’s working capital requirements during the proposed restructuring period and return to profitability, thereby ensuring that Buffalo remains sustainable into the future.

Under the terms set out in the Term Sheet, the US$4.0 million will be advanced as a bridge loan (“the Bridge Loan”), and subject to receiving regulatory and shareholder approvals as may be required (the “Approvals”), will roll over into Buffalo’s existing US$25.0 million convertible loan with RCF (“the Existing Convertible Loan”), under the same terms and conditions except for the proposed amendments to the interest rate and conversion price as set out below and the increased amount available under the loan.

Bridge Loan

The Bridge Loan will be used for capital investments, general working capital and to implement the proposed restructuring process at Buffalo’s operations in Dundee, South Africa, as announced on December 22, 2014. Funds from the Bridge Loan will be available upon satisfaction of the conditions precedent set out in the Term Sheet and will be drawn on an as needed basis.

The Bridge Loan will bear interest at a rate of 15% per annum, payable on the maturity date which is the earlier of the date on which all Approvals are received or June 30, 2015. Subject to receipt of the Approvals, interest will be payable in common shares of Buffalo (“Common Shares”) at a price per share equal to the 20-day volume weighted average price (“VWAP”) as at the date the payment is due.

No establishment fees will be incurred on the Bridge Loan.

Upon receipt of the Approvals, the Bridge Loan will roll into the Existing Convertible Loan (as discussed below). If the Approvals are not received by June 30, 2015, the Bridge Loan and all accrued but unpaid interest due to RCF will be immediately due and payable in cash.

Convertible Loan

Subject to receipt of the Approvals, the Bridge Loan will roll over into the Existing Convertible Loan, resulting in an aggregate US$29.0 million convertible loan facility with RCF (the “Convertible Loan”). The Convertible Loan will have the same terms and conditions as the Existing Convertible Loan, except for the following changes to the interest rate, conversion price and the increased amount available under the loan. The Existing Convertible Loan bears interest at a rate of 12% per annum and is convertible into Common Shares at a price of C$0.1446. Subject to receipt of the Approvals, the interest rate on the Convertible Loan will be increased to 15% per annum and the conversion price will be decreased to C$0.0469, a 25% discount to the 5-day VWAP as at the date prior to the date of release of this announcement.

The Approvals

The issuance of Common Shares to RCF in satisfaction of interest obligations under the Bridge Loan, the conversion of the Bridge Loan, and the adjustment of the interest rate and conversion price on the Existing Convertible Facility are subject to regulatory and shareholder approvals. Buffalo intends to seek approval of its shareholders for these matters at the Annual General Meeting to be held no later than June 30, 2015. As these transactions are related party transactions under Multilateral Instrument 61-101, RCF and its affiliates holding Buffalo Common Shares will not vote on these matters at this meeting.

Other Transaction Terms

The Term Sheet provides that if Buffalo terminates the Bridge Loan or is unable to proceed with the Bridge Loan (other than in instances where Buffalo or any of its subsidiaries are unable to proceed with the Bridge Loan because of the failure to obtain regulatory approvals on the terms set out therein, including, but not limited to, any exchange control approvals or approval by the TSX), Buffalo shall promptly pay to RCF a termination fee of 5.0% of the Bridge Loan amount if the Bridge Loan is not advanced, payable in cash.

The Term Sheet provides that the Bridge Loan will be subject to a number of usual and customary conditions precedent for a transaction of this nature, including the execution of definitive transaction documents and will close on February 28, 2015 or such earlier date as the parties may agree.

About Buffalo Coal

Buffalo is a coal producer in southern Africa. It holds a majority interest in two operating mines through its 100% interest in Buffalo Coal Dundee (Pty) Ltd, a South African company which has a 70% interest in Zinoju Coal (Pty) Ltd (“Zinoju”). Zinoju holds a 100% interest in the Magdalena bituminous mine and the Aviemore anthracite mine in South Africa. Buffalo has an experienced coal-focused management team.

Cautionary Notes:

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements with respect to the future financial or operating performance of Buffalo and its projects. Generally, forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Buffalo to be materially different from those expressed or implied by such forward-looking information, including but not limited to: general business, economic, competitive, foreign operations, political and social uncertainties; a history of operating losses; delay or failure to receive board or regulatory approvals; timing and availability of external financing on acceptable terms; not realizing on the potential benefits of the proposed transaction; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of mineral products; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; and, delays in obtaining governmental approvals or required financing or in the completion of activities. Although Buffalo has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. Buffalo does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

[…]

Resource Capital Fund V L.P. Announces $6 Million Convertible Loan Facility with Forbes & Manhattan Coal Corp.

VANCOUVER, Sept. 4, 2013 /CNW/ – Resource Capital Fund V L.P. (“RCF V“) reports that on September 4, 2013, RCF and Forbes & Manhattan Coal Corp. (“Forbes Coal“) entered into a loan agreement (the “Loan Agreement“) for a secured US$6,000,000 convertible loan facility with a maturity date of June 30, 2016 (the “Loan“).

Pursuant to the terms of the Loan Agreement, Forbes Coal agreed to pay RCF V an establishment fee equal to 3% of the Loan, or US$180,000. This fee is payable in cash or, at the option of RCF and subject to approval by shareholders of Forbes Coal (“Shareholder Approval“), common shares of Forbes Coal (“Common Shares“) at a price of C$0.36 per Common Share (the “Fee Shares“).

Interest accrues on the Loan at a rate of 10% per annum, payable on each calendar quarter. Upon receipt of Shareholder Approval, the interest rate will decrease to 8% per annum and RCF may elect that Forbes Coal pay accrued interest in common shares (the “Interest Shares“). The Interest Shares shall be issued at the volume weighted average price of the Common Shares on the TSX Venture Exchange for the 20 trading days (the “20-Day VWAP“) prior to the interest payment date. If Shareholder Approval is not obtained, the interest rate of the Loan will increase to 15% per annum, all interest payments must be paid in cash and the Loan’s maturity date will be accelerated to June 30, 2014.

Subject to Shareholder Approval, US$2,000,000 of the Loan will automatically convert into Common Shares, such conversion to occur concurrently with the completion of a proposed private placement of Common Shares by Forbes Coal that does not involve RCF V, and the remaining amount of the Loan will become convertible into Common Shares at the option of RCF (the “Conversion Shares“). The Conversion Shares shall be issued at a price of C$0.36 per Common Share.

The Loan, and the issuance of any Common Shares pursuant to the Loan Agreement, is expected to be presented for Shareholder Approval at the annual and special meeting of Forbes Coal currently scheduled to take place on September 11, 2013.

Immediately prior to entering into the Loan Agreement, RCF owned and controlled 6,867,443 Common Shares representing approximately 19.97% of the outstanding Common Shares. Assuming the issuance of all Fee Shares, Interest Payment Shares (using a 20-Day VWAP of C$0.32) and Conversion Shares that RCF may become entitled to, and assuming a foreign exchange rate of C$1.00 to US$1.00, RCF would own and control 28,294,767 Common Shares, representing approximately 50.1% of the outstanding Common Shares.

The securities were acquired for investment purposes. RCF will evaluate its investment in Forbes Coal from time to time and may, based on such evaluation of market conditions and other circumstances increase or decrease its shareholding in Forbes Coal.

[…]

Forbes Coal Closes US$6 Million Loan Facility

TORONTO, ONTARIO–(Marketwired – Sep 4, 2013) – Forbes & Manhattan Coal Corp. (FMC.TO) (FMC.TO) has closed the secured US$6 million convertible loan facility from Resource Capital Fund V L.P (“RCF“) (the “Transaction“). The loan facility is to be used for general working capital in relation to Forbes Coal’s operations and exploration properties in Dundee, South Africa. Subject to receipt of shareholder approval, the loan facility is convertible into common shares of Forbes Coal at a price of C$0.36 per common share.

Prior to receipt of shareholder approval, the loan will bear interest at a rate of 10% per annum, payable on each calendar quarter. Upon receipt of shareholder approval, the interest rate will decrease to 8% per annum. If shareholder approval is not obtained, the interest rate of the loan will increase to 15% per annum and the maturity date will be accelerated to June 30, 2014.

If Forbes Coal receives the requisite shareholder approval, a total of US$1,363,397 of interest will be payable under the loan and RCF will have the right to receive interest payments under the loan in common shares. Such common shares will be priced and issued based on the 20-day VWAP prior to the relevant interest payment date.

In connection with the Transaction, RCF will receive a 3% establishment fee payable in cash or, at the option of RCF, common shares, subject to shareholder approval. Any common shares issued in lieu of the establishment fee will be issued at a price of C$0.36 per common share.

The issuance of common shares to RCF upon conversion of the loan, interest payments and for the establishment fee are subject to shareholder approval which will be sought at the upcoming annual and special meeting to be held on September 11, 2013, in preparation for which the Company has mailed an amended and restated management information circular to its shareholders. Pursuant to the policies of the TSX and Multilateral Instrument 61-101 (“MI 61-101“), RCF will not vote on the resolution approving the issuances of the common shares to RCF under the Transaction.

Provided that the loan is outstanding and RCF holds common shares or the right to acquire common shares equal to at least 15% of the issued and outstanding common shares of Forbes Coal, RCF has the right to participate in any future financings by Forbes Coal on a pro rata basis to its partially diluted shareholding.

In addition, provided that the loan is outstanding or if RCF holds common shares or the right to acquire common shares equal to at least 15% of the issued and outstanding common shares, RCF will have the right to nominate one individual to the board of directors.

Forbes Coal also continues to market its non-brokered private placement of common shares at a price of $0.36 per common share for gross proceeds of up to $2 million. RCF will not be participating in the private placement. However, if shareholder approval is received for the conversion feature of the loan, concurrent with the closing of the private placement of common shares, RCF will convert up to $2 million of the loan into common shares at a price of $0.36 per common share. The private placement is expected to close on or about September 18, 2013.The closing of the private placement remains subject to receipt of regulatory approval.

RCF currently owns 6,867,443 (19.97%) of the issued and outstanding common shares of Forbes Coal on a non-diluted basis. Assuming an exchange rate of C$1.00 = US$1.00 and a 20-day VWAP of C$0.32 (being the 20 day VWAP as of August 9, 2013), if RCF converts the entire amount of the loan, receives the establishment fee in common shares, and receives all interest payments under the loan in common shares, RCF will be issued an aggregate of 21,427,284 common shares. Should other shareholders not elect to participate in the private placement, this would result in RCF holding an aggregate of 28,294,767 (50.1%) of the issued and outstanding common shares of Forbes Coal.

About Forbes Coal

Forbes Coal is a growing coal producer in southern Africa. It holds a majority interest in two operating mines through its 100% interest in Forbes Coal (Pty) Ltd., a South African company (“Forbes Coal Dundee”) which has a 70% interest in Zinoju Coal (Pty) Ltd. (“Zinoju”). Zinoju holds a 100% interest in the Magdalena bituminous mine and the Aviemore anthracite mine in South Africa (collectively, “the Forbes Coal Dundee Properties”). Forbes Coal has an experienced coal-focused management team.

Cautionary Notes:

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements with respect to the convertible loan facility with RCF and future financial or operating performance of Forbes Coal and its projects. Generally, forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Forbes Coal to be materially different from those expressed or implied by such forward-looking information, including but not limited to: general business, economic, competitive, foreign operations, political and social uncertainties; a history of operating losses; delay or failure to receive board or regulatory approvals; timing and availability of external financing on acceptable terms; not realizing on the potential benefits of the proposed transaction; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of mineral products; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; and, delays in obtaining governmental approvals or required financing or in the completion of activities. Although Forbes Coal has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forwardlooking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

Contact:

Forbes & Manhattan Coal Corp.

Stephan Theron

President and Chief Executive Officer

+1 (416) 861-5912

stheron@forbescoal.com

Forbes & Manhattan Coal Corp.

Colinda Parent

VP Corporate Development

+1 (416) 861-5811

cparent@forbesmanhattan.com […]