Printer Friendly

International Reef Resources Ltd. - company update.

CALGARY, Alberta--(BUSINESS WIRE)--May 17, 1996--International Reef Resources Ltd. (ASE:IRF) announces the following transactions:

A. The Company has sold all of the oil and gas assets held by its two Alberta Limited Partnerships on May 13, 1996 with an effective date of April 1, 1996. Net sale proceeds to IRF for its interest in the two Partnerships amounted to $3,355,562.

The sale proceeds were utilized to retire the Company's current bank debt of $600,000 and the balance was added to the Company's working capital. These funds will ensure the continued funding of the commercial development of the Company's Coal Oil Agglomeration Pyrolysis (COAP) process.

B. With respect to the COAP process, a joint venture has been entered into with Mineral Development Corporation, a subsidiary of Greenfields Coal Company of Melbourne, Australia. The following announcement has been made by Greenfields Coal to the Australian Stock Exchange today:

"Directors advise that a shareholders agreement has been signed with International Reef Resources Ltd. (IRL) of Canada, which will accelerate development of the two companies' US coal reclamation and environmental rehabilitation business.

Under the terms of the agreement, the Company and IRL will invest in an equally owned company, Resources Recovery II LLC ("RRII") to own and manage the two companies' interests and involvement in US coal reclamation.

RRII is presently wholly owned by IRL and has pre-qualified for credits under Section 29 of the US Internal Revenue Code of 1986, which allows tax credits of about US $25 per ton for production of alternative fuels.

The Company's wholly owned subsidiary, Mineral Development Corporation (MDC) will contribute $1 million in equity capital, certain assets associated with its reclamation project at US Steel Mining's Gary, West Virginia, coal plants, its technology and data base on approximately 120 coal waste ponds to RRII.

IRL will contribute its coal agglomeration and pyrolysis technology to the 50/50 owned RRII as well as the tax credit status already established by RRII with the US Internal Revenue Service.

The technologies of the two companies are complementary. MDC' evaluation methods, its dredging methods and licenced gravity recovery technology for coarser coal will be enhanced by IRL's agglomeration and pyrolysis technology which enables recovery of the fine coal as a marketable product.

The combined technologies provide a number of benefits. They will:

1. Greatly improve coal recovery from the Alpheus and other coal-waste ponds MDC has identified and evaluated in the US.

2. Accelerate environmental rehabilitation of the ponds.

3. Produce a marketable product recognized by the US Internal Revenue Service as a "synthetic fuel" and, thus, qualify the project now in an advanced stage of planning, for substantial tax credits.

MDC will continue to use its own licenced gravity technology. Coal-bearing material too fine to yield marketable product with these techniques will be agglomerated with oil. This intermediate product will be subject to pyrolysis to produce marketable coal.

Previous proposals to complete the gravity recovery plant will now be complemented by construction of an agglomeration plant at Alpheus. Completion cost of both plants is estimated at US $2.8 million. It is planned to construct a number of regional pyrolysis plants to treat material from Alpheus and nearby waste ponds. Initial capacity of the first pyrolysis plant is planned at 1 million tons annually. Approximately 40 percent of feedstock is expected to be supplied by Alpheus. Construction schedules envisage that the gravity and agglomeration plants will be commissioned by September 1996, and the pyrolysis plant by the fourth quarter of 1996.

Capital costs of the pyrolysis plant is expected to be US $25 million. It is planned to finance this separately, utilizing available tax credits. This may reduce MDC's overall interest in the Alpheus project, but such a reduction is expected to be compensated by independent financing of an accelerated business development schedule and access to funding that will minimize further need for equity financing.

Directors welcome the arrangement. In the case of Alpheus, as much as 80 percent of what previously has been regarded as waste may be recovered as marketable coal. As a result:

1. Unit costs of coal reclamation will be greatly reduced;

2. The anticipated high coal reclamation rate will facilitate environmental rehabilitation;

3. The combination of technologies should enable 90 percent or more, of oil used in the agglomeration process to be recycled.

4. Combined, the technologies offer the potential to avoid or minimize the necessity to establish, or enlarge, environmentally damaging coal waste ponds.

Directors believe that the tax credits attached to the total process will enable far more rapid development of the Company's US business that was previously envisaged. Developments will be advised to the shareholders as and when they occur."

C. International Reef has signed an agreement with Ormes Capital Markets Inc., a New York based merchant banking and investment house, to act as investment and financial advisor in all phases of the transactions related to the COAP projects. Included is the agreement for Ormes to raise up to $100,000,000 in funds for building COAP processing facilities. Ormes Capital Markets is well regarded for its expertise in the coal industry.

The Agreement with Ormes Capital Markets includes a fee structure that is success driven. Subject to regulatory approval, International Reef could issue up to 450,000 shares at $1.50 each to Ormes Capital upon successful completion of all financing required by the Company.

CONTACT: International Reef Resources Ltd.

Dr. Malcolm T. Jacques, 416/350-3528
COPYRIGHT 1996 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1996, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
Printer friendly Cite/link Email Feedback
Publication:Business Wire
Date:May 17, 1996
Words:910
Previous Article:Cartaway Resources - Results Holes 1 and 2, Cirque Property Drilling, Labrador.
Next Article:Boston Acoustics announces common stock repurchase program.
Topics:


Related Articles
THREATENED REEFS.
SOS FOR REEFS.
Stressed Reefs May Get Relief.
A Worldwatch Addendum.
Reef Madness.
CLINTON SNORKELS OFF GREAT BARRIER REEF.
Frogs in peril, bug zapper mayhem, and the artificial reef debate.
Ocean resources: in search of blue water.
NSTA and NOAA take teachers online and underwater.

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters