WesternZagros Announces Second Quarter 2013 Operational and Financial Results

CALGARY, ALBERTA--(Marketwired - Aug. 29, 2013) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES

WesternZagros Resources Ltd. (TSX VENTURE:WZR) ("WesternZagros" or "the Company") announced today its operating and financial results for the second quarter ended June 30, 2013, and additional key highlights and activities to date. A summary of the activities, the financial statements the accompanying Management Discussion and Analysis ("MD&A") are available at www.westernzagros.com and on SEDAR at www.sedar.com.

Commenting on the second quarter results and subsequent events, WesternZagros's Chief Executive Officer, Simon Hatfield said,

"We're continuing testing in the Kurdamir-3 well to provide valuable information on the Kurdamir Discovery as we progress towards commerciality and to help us plan future well locations. In addition, our two Garmian wells, Baram-1 and Hasira-1, are drilling with completion anticipated in late Q4 2013 and early Q1 2014, respectively. Hasira-1 will help us in our development plans for our Sarqala Discovery. The timing of declaration of commerciality and submission of development plans are actively in discussion with our partners and will represent a major step for our Company. We have also completed our first 3D seismic program at Sarqala and the second, our North Garmian, is underway. This is a busy year for WesternZagros."

Exploration and Appraisal Operations - Kurdamir Block

Testing of the Oligocene reservoir in the Kurdamir-3 well is ongoing with final results anticipated in late third quarter 2013 or early fourth quarter 2014. As operator of the Kurdamir-3 well, Talisman (Block K44) B.V. ("Talisman") has conducted two DSTs in the deepest zones of the Oligocene reservoir at Kurdamir-3. Log and sample analysis obtained from testing to date has warranted the testing of two other intervals in the upper zones of the Oligocene reservoir. Interim test results from Kurdamir-3 have increased the risk associated with the undiscovered Prospective Resource assessment that the Company carries for the Kurdamir Oligocene reservoir. The acquisition of the Kurdamir Block 3D seismic survey, which comprised 184 square kilometers, has been completed in order to define more clearly the areal extent of the Oligocene, Eocene and Cretaceous reservoirs. Processing and interpretation of the data are currently underway with completion anticipated in the first quarter of 2014. The results will be utilized to select the location of the Kurdamir-4 well to further appraise the extent of the oil discovery in the Oligocene reservoir.

Exploration and Appraisal Operations - Garmian Block

The Baram-1 well was spudded on August 13, 2013 and is preparing to drill ahead after setting 20 inch casing at 816 metres. This well is exploring whether the Baram structure is a separate structure from Kurdamir or a potential extension of the oil leg discovered in the Oligocene reservoir of the Kurdamir structure onto the northern portion of the Garmian Block. The Company expects the well to be drilled to planned total depth of 3,800 metres by the end of 2013. If successful (the extension is confirmed and it is oil bearing) the Company believes that this could be the highest impact well of the 2013 drilling program, with the potential to add substantial contingent resources in both the Garmian Block and in the Kurdamir Block. The interim results of Kurdamir-3 testing increase the risk associated with the undiscovered Prospective resource assessment for the Baram-1 well. Alternatively, the Baram structure may be separated from the Kurdamir structure by a fault, in which case the Kurdamir-3 well results have no material impact on the chance of success of Baram-1. The Hasira-1 appraisal and exploration well is currently drilling ahead at 2,886 metres after setting 16 inch casing at 2,047 metres. The next casing point is planned for approximately 3,900 metres just above the Jeribe reservoir. The well is planned to drill to a total depth of approximately 4,100 metres in the Oligocene reservoir. WesternZagros plans to complete the well either in the Jeribe or the Oligocene reservoir depending on testing results. Hasira-1 is anticipated to be completed in late fourth quarter 2013 or early first quarter 2014. The acquisition phase of the 2D seismic survey over the Chwar and Alyan prospects and the 3D seismic survey over the Sarqala and Mil Qasim oil discoveries and the Zardi Complex prospect was completed on April 8, 2013, on time and on budget. Processing and interpretation of the data are currently underway and expected to be completed in the fourth quarter, 2013. The acquisition phase of the 3D seismic survey over the northern portion of the Garmian block commenced on August 6, 2013 in order to define more clearly the areal extent of the Baram and Qulijan structures. Acquisition is anticipated to be completed in the third quarter with processing and interpretation completed by the end of the year. The Company is also beginning to prepare for future exploration wells, with the Qulijan well site prepared and long lead items ordered. Preliminary interpretation and technical evaluations are underway of the Chwar Prospect in the southwest of the Garmian Block, the Alyan Prospect in the west of the Block and the Qula Prospect on the southeast of the Block, Qula is in close proximity to Genel Energy plc's Chia Surkh oil discovery on the adjacent block. The Company will determine its 2014 drilling program in the fourth quarter 2013.

Planning and Development (Garmian and Kurdamir Blocks)

Design work is underway on future development plans for the WesternZagros oil discoveries in the Sarqala and Kurdamir areas. On the Garmian Block, the preliminary engineering design of the Sarqala-1 first phase central processing facility with 20,000 bbl/d capacity is advancing. WesternZagros is in active discussions with its co-venturer Gazprom Neft Middle East B.V. ("Gazprom Neft") regarding the timing of the Declaration of Commerciality for the Sarqala discovery. WesternZagros and Gazprom Neft have formed a dedicated team to plan the phased development of the Sarqala Discovery. On the Kurdamir Block, Talisman has staffed a dedicated team which has commenced development planning and the joint venture has created a sub-committee to focus on designing the development plan for the Kurdamir Discovery. Subject to the extended test results from the Kurdamir-3 well and the interpretation of the 3D seismic, the Kurdamir Joint Venture is contemplating a Declaration of Commerciality for the Kurdamir structure by the second quarter of 2014. The Company and its co-venturers continue discussions with the Kurdistan Regional Government ("KRG") to advance plans for the utilization of natural gas from both the Garmian and Kurdamir Blocks. Gas conservation studies are ongoing for pipeline routing, gas re-injection options to maximize oil recovery, and options for temporary and permanent power generation.

Financing

On April 4, 2013 the Company completed a marketed private placement of 11,431,422 common shares with Crest Energy International LLC ("Crest") of Houston, USA, and Jasmine Capital (a wholly-owned subsidiary of Richard Chandler Corporation) at Cdn$1.25 per common share for gross proceeds of $14.1 million. This followed the non-brokered private placement of 51 million common shares at Cdn$1.25 per common share and the entering of a loan agreement with Crest for $57.5 million. The net proceeds of the marketed private placement of $13.5 million were used to repay $13.3 million of the principal amount of the loan from Crest plus $0.2 million of accrued interest. On June 18, 2013, the Company completed a non-brokered private placement of Cdn$70 million aggregate principal amount of 4.00% Convertible Senior Unsecured Notes of WesternZagros ("Convertible Notes") to investment funds managed by Paulson & Co. Inc. Effective June 28, 2013 the Company completed a second non-brokered private placement of Cdn$30 million aggregate principal amount of Convertible Notes. A portion of the proceeds from the private placements were used to repay the remaining Crest debt of $44.5 million plus accrued interest as per the terms of the loan agreement with the balance to be used to fund the Company's capital and operating activities. All of the Convertible Notes issued in the second quarter of 2013 have a face value of Cdn$1,000 per note, a coupon of 4 percent per annum, a maturity date of December 31, 2015 and are convertible into common shares of the Company ("Common Shares") at the option of the holder at a conversion price of Cdn$1.45 per share (subject to adjustment in certain events), representing a conversion premium of approximately 27 percent to the thirty day average price for the Common Shares prior to issuance of the Convertible Notes. As at June 30, 2013, WesternZagros had $167.4 million in working capital, excluding the $16.9 million additional non-current portion of the deposit held in trust pertaining to the drilling contract. The Company is fully funded for its currently planned activities.

Corporate

The Company is considering the optimal timing to pursue admittance to the Standard Listing segment of the Official List of the London Stock Exchange ("LSE") in order to provide access to an alternate market with a strong understanding of the Middle East and particularly Kurdistan focused companies. On June 3, 2013, Ms. Mary Benassi was appointed to the position of Vice President Human Resources with responsibility for WesternZagros's overall Human Resources function.

Outlook

In accordance with the Kurdamir and Garmian PSCs, the end of the exploration periods are September 1, 2014 and December 31, 2014, respectively, after which the development periods begin. On the Kurdamir Block, the Company's focus will continue to delineate the existing 943 MMBOE of unrisked gross contingent resources (combined mean estimate ("Gross Mean Contingent Resources") and an estimated 1.6 billion BOE of unrisked gross prospective resources (combined mean estimate) ("Gross Mean Prospective Resources"). On the Garmian Block, the Company's focus will be on exploration and appraisal drilling to delineate the following estimated Gross Mean Prospective Resources: 527 MMBOE on the Baram prospect and 463 MMBOE on the Sarqala Discovery. In addition, WesternZagros's work program on the Garmian Block over the next 18 months will also include exploration activities to rank, prioritize and drill the highest ranked additional prospects prior to the end of the exploration period. This ranking will be based on the results of the North and South Garmian Seismic Programs (2D and 3D), the 2013 drilling results from the Company's planned wells on the Garmian and Kurdamir Blocks and other operators' well results on neighbouring blocks. Possible prospects for future exploration drilling in 2014 include Qulijan, Qula, Chwar, and Alyan. At the same time, the Company has started discussions with its respective co-venturers with respect to timing of declaring commerciality and submitting development plans. Subject to the completion of the exploration and appraisal programs, WesternZagros anticipates issuing Declarations of Commerciality before the end of the Exploration period on the Kurdamir and Garmian Blocks of September 1, 2014 and December 31, 2014, respectively.

Kurdamir Block

The Company continues to work with the operator, Talisman, to appraise the giant Kurdamir discovery. Activities in the second half of 2013 will focus on further testing at Kurdamir-3, the processing and interpretation of the 3D seismic, analysis and integration into reservoir models of the data from Kurdamir-3 acquired to date (including cores, log data, oil samples, and water samples), and the preparation and planning required for a declaration of commerciality in 2014 and the start of field development. The remaining tests at Kurdamir-3 will be conducted on the upper part of porous zone of the Oligocene reservoir which was oil-bearing in Kurdamir-2 and which is more than 87 meters below the depths of the gas-oil contact as seen in Kurdamir-2. This testing is anticipated to be completed early in the fourth quarter.

Planned expenditures for the remainder of 2013 include approximately $12-$17 million for the Kurdamir-3 testing program (including the costs of DST#1 and #2 estimated at $7-8 million), $4 million for the remainder of Kurdamir 3D seismic program and processing costs, and $4-8 million for preparation and planning for declaration of commerciality and field development. Contingent projects during 2013 may also include $9 million for a potential Kurdamir-3 sidetrack.

Garmian Block

Sarqala-1 Extended Well Test ("EWT")

WesternZagros expects to recommence the EWT at Sarqala upon KRG approval to gain additional information in order to appraise the discovery for future development. Upon receipt of KRG approval, and the procurement of a suitable rig and tubular equipment, the Company also plans to complete a workover of the Sarqala-1 well in the first half of 2014 in order to allow future EWT production capability to increase beyond the current 5,000 bbl/d. Long lead items have been ordered for this workover.

Engineering work is also underway for permanent facilities to increase EWT production capability at Sarqala including gas conservation measures. In particular, preliminary engineering design of the Sarqala first phase permanent facilities with 20,000 bbl/d capacity is underway in readiness to request engineering procurement and construction tenders at the appropriate time. Work is continuing on opportunities to utilize the associated natural gas from any future crude oil production to minimize the flaring of natural gas.

Hasira-1 Exploration and Appraisal Well

The Hasira-1 appraisal and exploration well was spudded on June 6, 2013 and is currently drilling ahead at 2,886 metres after setting 16 inch casing at 2,047 metres. WesternZagros plans to complete the well either in the Jeribe or the Oligocene reservoir depending on drilling and testing results. Hasira-1 will appraise the extent of the oil leg previously encountered in the Jeribe reservoir, targeting 25-50 MMBOE of Gross Mean Prospective Resources, at the Sarqala-1 well and also to explore the deeper Oligocene reservoir, targeting a further 25-50 MMBOE of Gross Mean Prospective Resources. Significant oil shows were encountered in the Oligocene interval at Sarqala-1 but the Company was unable to evaluate them at that due to wellbore conditions. The Company expects Hasira-1 to take approximately seven months to drill.

Baram-1 Exploration Well

The Baram-1 well was spudded on August 13, 2013 to explore the potential extension of the oil leg discovered in the Oligocene reservoir of the Kurdamir structure onto the northern portion of the Garmian Block. The Company expects the well to reach the planned total depth of 3,800 metres by the end of 2013. If successful and it is oil bearing, the Company believes that this could be the highest impact well of the 2013 drilling program with the potential to add substantial contingent resources in both the Garmian Block and in the Kurdamir Block. The interim results of Kurdamir-3 testing increase the risk associated with the undiscovered Prospective resource assessment for the Baram-1 well. Alternatively, the Baram structure may be separated from the Kurdamir structure by a fault, in which case the Kurdamir-3 well results have no material impact on the chance of success of Baram-1.

The completion of either Baram-1 or Hasira-1 in 2013 would fulfill the Company's obligations under the second exploration sub-period of the Garmian PSC, prior to any extension of such sub-period.

Garmian Seismic Programs

WesternZagros has completed the acquisition phase of a 3D seismic appraisal survey over the Sarqala, Mil Qasim and adjacent Zardi Complex structures as well as the 2D seismic survey at the Chwar and Alyan prospects which are to the north and west-northwest of Sarqala to elevate these low risk, Jeribe oil opportunities to drill ready status. The Company will utilize the 3D information to optimize the number and placement of future appraisal and development well, improve its understanding of fracturing within these structures and further evaluate the Jeribe, Oligocene, Eocene and Cretaceous reservoirs on the southern portion of the Block.

The Company is conducting a 3D seismic program in the second half of 2013 over the northern portion of the Garmian Block targeting the Baram and Qulijan structures utilizing the seismic crew from the Kurdamir/Tophkana program. The 3D data over Baram will assist in determining whether Baram is an extension of the existing Kurdamir Oligocene discovery or a separate structure.

Planned expenditures for the remainder of 2013 include $20 million for the Hasira-1 well, $20 million for the Baram-1 well $4 million for the Sarqala planning and predevelopment activities, $ million for long leads for future wells, $10 million for the planned North Garmian 3D seismic program and $3 million for other costs.

This news release contains certain forward-looking information relating, but not limited, to operational information, future drilling and testing plans, seismic programs and the timing and costs associated therewith. Forward-looking information typically contains statements with words such as "anticipate", "plan", "estimate", "expect", "potential", "could", or similar words suggesting future outcomes. The Company cautions readers not to place undue reliance on forward-looking information as by its nature, it is based on current expectations regarding future events that involve a number of assumptions, inherent risks and uncertainties, which could cause actual results to differ materially from those anticipated by WesternZagros. In addition, the forward-looking information is made as of the date hereof, and the Company assumes no obligation to update or revise such to reflect new events or circumstances, except as required by law.

Forward-looking information is not based on historical facts but rather on management's current expectations and assumptions regarding, among other things, plans for and results of drilling activity and testing programs, future capital and other expenditures (including the amount, nature and sources of funding thereof), continued political stability, and timely receipt of any necessary government or regulatory approvals. Although the Company believes the expectations and assumptions reflected in such forward-looking information are reasonable, they may prove to be incorrect. Forward-looking information involves significant known and unknown risks and uncertainties. A number of factors could cause actual results to differ materially from those anticipated by WesternZagros including, but not limited to, risks associated with the oil and gas industry (e.g. operational risks in exploration; inherent uncertainties in interpreting geological data; changes in plans with respect to exploration or capital expenditures; interruptions in operations together with any associated insurance proceedings; the uncertainty of estimates and projections in relation to costs and expenses and health, safety and environmental risks), the risk of commodity price and foreign exchange rate fluctuations, the uncertainty associated with negotiating with foreign governments and risk associated with international activity. For further information on WesternZagros and the risks associated with its business, please see the Company's Annual Information Form dated March 22, 2013, which is available on SEDAR at www.sedar.com.

In addition, statements relating to "resources" contained herein are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions that the resources described can be economically produced in the future. Terms related to resource classifications referred to herein are based on the definitions and guidelines in the Canadian Oil and Gas Evaluation Handbook which are as follows. "Prospective resources" are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery (geological chance of success) and a chance of development (economic, regulatory, market, facility, corporate commitment or political risks). The chance of commerciality is the product of these two risk components. The estimates referred to herein have not been risked for either the chance of discovery or the chance of development. There is no certainty that any portion of the prospective resources will be discovered. If a discovery is made, there is no certainty that it will be developed or, if it is developed, there is no certainty as to the timing of such development or that it will be commercially viable to produce any portion of the prospective resources. "Contingent resources" are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingent resources have an associated chance of development (economic, regulatory, market and facility, corporate commitment or political risks). The estimates referred to herein have not been risked for the chance of development.

There is no certainty that the contingent resources will be developed and, if developed, there is no certainty as to the timing of such development or that it will be commercially viable to produce any portion of the contingent resources. All resource estimates presented are gross volumes for the indicated reservoirs, without any adjustment for the Company's working interest or encumbrances. A barrel of oil equivalent (BOE) is determined by converting a volume of natural gas to barrels using the ratio of 6 million cubic feet (Mcf) to one barrel. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf:1 BOE is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value. The Company's Statement of Oil and Gas Information contained in its Annual Information Form dated March 22, 2013 ("AIF") filed on SEDAR at www.sedar.com contains additional detail with respect to the resource assessments and includes the significant risks and uncertainties associated with the estimates and the recovery and development of the resources, and, in respect of contingent resources, the specific contingencies which prevent the classification of the resources as reserves. In addition, combined mean estimates of resources which are presented in this MD&A are an arithmetic sum of the mean estimates for individual reservoirs and each such individual mean estimate is the average from the probabilistic assessment that was completed for the reservoir. Readers should refer to the AIF for a detailed breakdown of the high (P10), low (P90) and best (P50) estimates for each of the individual reservoir assessments.

NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

WESTERNZAGROS RESOURCES WAS RECOGNIZED AS A TSX VENTURE 50® COMPANY IN 2012 AND 2013. TSX VENTURE 50 IS A TRADE-MARK OF TSX INC. AND IS USED UNDER LICENSE.

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Hanwei Energy Services Announces Results of Annual General Meeting

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Aug. 30, 2013) - Hanwei Energy Services Corp. (TSX:HE) ("Hanwei" or the "Company"), held its Annual General Meeting of Shareholders (the "Meeting") in Vancouver, British Columbia on August 29, 2013. During the course of the Meeting, all proposed resolutions were approved including the election of directors, the re-appointment of MNP LLP, Chartered Accountants as auditor of the Company, and the continuation of the incentive Stock Option Plan of the Company. A total of 22,070,223 shares were voted in person or by proxy at the Meeting.

The shareholders elected each of the Company's nominees for director as follows:

As of the close of the Meeting, the Company's board is constituted of a majority of independent directors, namely Joanne Yan, Malcolm Clay, William Paine, and Randall Smallbone.

At the first meeting of the newly constituted Board of Directors held immediately after the Meeting, the following individuals were re-appointed as officers of the Company: (a) Fulai Lang as Chairman of the Board, President and Chief Executive Officer, (b) Yucai (Rick) Huang as Chief Financial Officer, (c) Graham Kwan as Executive Vice President, Strategic Development and Corporate Affairs, and Corporate Secretary.

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CanAm Reports Record Revenue of $15.6 Million and Delivers $2.6 Million of EBITDA from Operations, an Increase of 40% Over Q1 2013

TORONTO, ONTARIO--(Marketwired - Aug. 30, 2013) - CanAm Coal Corp. (TSX VENTURE:COE)(OTCQX:COECF) ("CanAm" or the "Company") has filed its condensed interim consolidated financial statements and related management discussion and analysis for the period ended June 30, 2013. These Q2 2013 financial statements include a restatement of the comparative Q2 2012 financials which is discussed at the end of this press release. Definitions of commonly used non-IFRS financial measures (EBITDA from operations and Free Cash Flow) are also included at the end of this press release.

Second Quarter 2013 Highlights

The Company announced today its second quarter 2013 financial results for the period ending June 30, 2013. Revenue, EBITDA from operations and loss for the quarter were $15.6 million, $2.6 million and ($1.5) million respectively as compared to $13.3 million, $1.9 million and ($1.6) million in the prior year. Sales for the quarter were 168,500 tons as compared to 130,500 tons in Q2 2012 or an increase of nearly 30%.

For the six month period ended June 30, 2013, revenue, EBITDA from operations and loss were $29.5 million, $4.5 million and ($3.4) million respectively as compared to $26.1 million, $3.8 million and ($2.8) million in the prior year. Sales for the six month period were 318,000 tons compared to 248,000 tons in the prior year, an increase of 28%.

During the second quarter of 2013, the Company continued its transition and mine development activities at the Old Union 2, Knight and Posey Mill 2 mines. The Old Union 2 mine reached steady state production levels early in Q2, the Knight mine started production in April and the Posey Mill 2 mine had first mine production in May. Toward the end of Q2, steady state production was achieved at all mines and this translated into increased production and sales for Q2. Average monthly coal sales for Q2 were 56,000 tons as compared to 50,000 tons for Q1 and June sales were a record 61,400 tons or an increase of 23% over the average monthly sales for Q1.

In spite of these improved production/sales levels, the Company continued to work through transition and mine development activities in Q2 which still resulted in less than optimal operating conditions. As such the Company was not able to achieve its normal production level efficiencies and the average production cost per ton was $55/ton, slightly lower than Q1 production cost and significantly lower than the prior year cost of $62/ton. Once the Company reaches steady state production at all of its mines, starting in Q3 2013, average production cost should be approximately $50/ton.

Key statistics for Q2 2013 and 2012 and Q1 2013 are as follows:

Note: Operating cash flow is before changes in non-cash working capitalSales for the quarter were 168,488 tons, an increase of 13% over Q1 2013 sales and 29% over Q2 sales of the prior year. Record sales were achieved in June of 61,400 tons. Long term off-take contracts continue to enable the Company to achieve better than market pricing for our high quality coals. Average sales price per ton for Q2 was consistent with Q1 but lower than Q2 2012. The lower average price as compared to last year is a result of our changing coal mix (i.e. a higher ratio of thermal coal versus metallurgical coal) and the termination of a met coal contract in early 2013. All of our production is currently sold into our off-take contracts with our customers and we are fully contracted for the remainder of the year. Average production cost per ton of $55/ton was significantly better than Q2 2012 as a result of operational improvements implemented throughout 2012 and was on par with the average of Q1 2013. With all mines at steady state production, we anticipate our average cost per ton to be approximately $50/ton. Operating cash flow of $2.5 million was five times the cash flow achieved in the comparable quarter of 2012 and 67% better than in Q1 2013. Investment in equipment and mine development was $2.4 million as compared to $3.9 million in the comparable period last year. Mine development expenditures were down significantly, $0.5 million in Q2 as compared to $1.3 million in Q1 2013, as mine transition and development was substantially completed during Q2. On a year to date basis, capital expenditures were $4.9 million through the end of June or almost half of the $9.3 million in expenditures in the comparable prior year period. We anticipate capex for the second half of 2013 to be lower compared to the first half which should contribute significantly to free cash flow. Free cash flow at $0.2 million, compared to ($2.0) million in Q2 of 2012, continues to improve and will accelerate in the second half of 2013. Repayment of equipment financing obligations continues at a healthy pace and through June 30, 2013, the Company repaid $2.8 million of these obligations. All mines are now operating at steady state production levels and in July the Company set a new sales record and shipped approximately 67,500 tons to its customers, a further 10% improvement over its June sales record.

Company President and CEO, Jos De Smedt commented: "Completion of the second quarter was a major milestone for the Company as by the end of Q2 we had transitioned all of our mines to a steady state level of production. As we accomplished this, the results of our hard work became evident in our June production/sales level of over 61,400 tons and, more importantly, in our July numbers of approximately 67,500 tons of sales. With a mine complement in place that has the ability to produce between 60,000 to 80,000 tons on a monthly basis, the second half of 2013 should see significant growth in sales and production. From a financial perspective, Q2 showed definitive improvement; operating cash flow was 5 times better than in the prior year, free cash flow was slightly positive compared to a deficit of $2.0 million in the prior year and first half 2013 capex was half of capex in the prior year. This combined with expected sales levels of between 60,000 to 70,000 tons on a monthly basis, should improve free cash flow significantly in the second half of 2013 and in 2014."

Operating Results Summary

The table below sets out operating results for the past six quarters. Q1 and Q2 2012 comparatives reflect full consolidation accounting of the Company's investment in BCC.

Note: Please refer to the definition of EBITDA on the last page of this MD&A.

During Q2 2013, the Company completed its mine transition started in Q4 2012, which included closing down mines, performing reclamation activities and building infrastructure for its new mines at OU2, Knight and Posey Mill 2. This transition continued into Q2, mainly at the Knight and Posey Mill 2 mines. Notwithstanding the continued investment in time and materials in completing the transition, the Company made considerable progress towards its goal of achieving a production/sales level of between 180,000 to 210,000 tons per quarter. Q2 coal sales were 168,000 tons, up 13% over the 149,000 tons sold in Q1 and highlighted by June sales of 61,400 tons, a record for the Company. Compared to Q2 2012, sales are up 29%. Average pricing was consistent with the first quarter.

Operating costs per ton for Q2 were on par with Q1 and significantly better than production costs in Q1 and Q2 of 2012.

Sales Volume and Pricing

Summary

Three month Q2 2013 revenue was 17% ($2.3 million) higher than Q2 2012. The increase is attributable to a 29% increase in tons sold offset by a lower average overall realized price. The lower average realized price is mainly the result of a change in the overall coal mix which in 2013 included a larger proportion of thermal coal versus metallurgical coal. Compared to Q1 2013, revenue was 12% higher. The increase was entirely due to higher volumes. Quarter on quarter average coal price realized was consistent.

Six month 2013 revenue was 13% higher than 2012. The increase is attributable to a 28% increase in volumes offset by a lower average overall realized price.

Volumes

Q2 2013 sales volumes were 168,488 tons compared to 130,517 tons sold in Q2 2012 and 149,453 tons sold in Q1 2013. Despite Q2 2013 being a period of transition, volumes were significantly higher than both comparative quarters. In Q2 2012, the Company was impacted by difficult mining conditions, management transition issues and other operational challenges (e.g. a damaged excavator), which impacted production. During Q1 2013, the Company was winding up production at Bear Creek and was still building out Knight and Posey Mill 2. Additionally, sales to two new customers had been curtailed as they burned off inventory from their previous suppliers. During Q2, volumes to these customers resumed back to contracted levels. Additionally, both Knight and Posey Mill 2 were opened and Q2 production and sales were realized from both mines during the quarter.

Six month sales volumes were 317,941 tons compared to 247,709 tons realized in 2012. 2012 production and sales were negatively impacted by mining conditions, management transition issues and the other operational challenges previously described.

Pricing

Overall Q2 2013 average pricing was $92 per ton compared to $102 per ton realized in Q2 2012 and $93 per ton in Q1 2013. In 2012, the Company's overall coal mix included a larger proportion of metallurgical versus thermal coal and in early 2013 the Company terminated a metallurgical coal contract. Since then, the Company has been blending its metallurgical grade coal into other products for other customers and is realizing a lower price for this blended product. Pricing realized on the Company's other contracts are comparable to the prior year and/or quarter.

Overall six month 2013 pricing was $93 per ton compared to $105 per ton realized in 2012. The explanation of the three month change described above explains the six month difference, as well.

Cost of Production Sold and Royalties, Transportation and Other (RTO)

Average cost of production soldNote: Please refer to the definition of EBITDA on the last page of this MD&A.

Q2 2013 cost of production sold was $55 per ton compared to $62 per ton in Q2 2012 and $56 per ton in Q1 2013. Q2 2012 costs were high due to the operational challenges previously described. As a result of these challenges, the Company made important operational changes in mid-2012, which remain in place and substantially and permanently improved operational efficiency. These changes were described in our 2012 MD&A.

Consistent with Q1 2013 cost of production sold was still relatively high due to the inefficiencies associated with the mine transition. Q2 coal production was 176,000 compared to 148,000 tons produced in the previous quarter. Despite the increase, the Company's new mines had not yet achieved full scale planned production and efficiency. Going forward, the Company's objective is to increase production significantly, which is expected to reduce average production cost per ton sold in future quarters.

Q2 royalty, transportation and other (RTO) costs were $17 per ton sold, which was slightly lower than Q2 2012. The Company's royalty structure and trucking costs on certain hauls are lower than the previous year. The Company expects RTO to trend in the range of $17 to $19, on average.

Six month period ended cost of production was $56 per ton compared to $65 per ton in 2012. The decrease related to the operational challenges in the comparative period previously described.

EBITDA from operations

Second quarter 2013 EBITDA from operations was $2.61 million, a 35% improvement over the $1.93 million earned in Q2 2012 and 40% better than the $1.87 million realized in Q1 2013. Please refer to the definition of EBITDA on the last page of this press release. Loss for the period is discussed in the next section.

Detailed Financial Results Analysis

The table presents financial results for the six month period ended June 30, 2013.

Royalties, Transportation & OtherOther expenses (excluding G&A)Loss attributable to owners of the parentLoss attributable to non-controlling interestNote: Please refer to the definition of EBITDA on the last page of this press release.

Loss for the Period

In Q2 2013, the Company recorded a loss of $1.5 million compared to a loss of $1.6 million in the previous year. For the six months ended, the Company recorded a loss of $3.4 million compared to a loss of $2.8 million in 2012.

In addition to the operational factors described in the previous sections, a number of other factors contributed to the increased six month 2013 loss including increased depreciation, amortization and depletion arising from a larger asset base, increased financing charges related to additional equipment financing and debenture issuances in 2012, increased debenture issue amortization and accretion expenses and an unrealized foreign exchange loss on the Company's US$ denominated debenture.

Other Key Financial Metrics

Capital Expenditures

Q2 2013 net capital expenditures on equipment, capital repairs and mineral property development totalled $2.4 million, compared to $3.9 million in Q2 2012 and $2.5 million in the previous quarter. During Q2, the Company invested $0.5 million in new mine development (including engineering, permitting, pond building, road construction and general site preparation) primarily at Posey Mill 2 and additional incremental infrastructure at Old Union 2. The Company capitalized major repairs to existing equipment in the amount of $1.3 million. The Company also financed a $1.2 million purchase of two tractors whose rental agreements had expired. Offsetting these expenditures were asset sales of $0.7 million. The Company does not anticipate any significant new equipment purchases for the remainder of the year.

Through June 2013, capital expenditures were $4.9 million or almost half of the $9.3 million expenditures incurred in the prior year. In 2012, the Company was investing significantly in order to position itself for growth in 2013. Also, additional expenditures were incurred in 2012 at the Powhatan mine as a result of a repositioning of the mine and the introduction of a new management team.

Liquidity

As at June 30, 2013, the Company had a working capital deficit of $19.4 million. The substantial majority of this deficit relates to debt repayments due in 2014 including unsecured debentures due in May 2014.

With production at steady state levels at all of our mines since late June, monthly sales in excess of 60,000 tons and significantly reduced capital expenditures, the Company expects to generate free cash flow in order to manage its working capital obligations and to start accumulating cash. In addition, at June 30, 2013, the Company had undrawn credit facilities of $1.4 million. Also, liquidity indicators started to improve in Q2 as evidenced by an improvement in operating cash flow by 67% as compared to Q1 and positive free cash flow as compared to a deficit in Q1.

Respecting the Company's $1.1 million debenture due August 31, 2013, the Company expects to repay a portion of the principal and refinance the remainder until May 2014, at an interest rate of 10%.

Outlook for the remainder of 2013

The Company has now opened all of its new mines each of which is close to operating at or near planned efficiency. In July 2013, the Company booked sales of 67,500 tons, far and away the best month in the Company's history. The Company believes that it can sustain production and contracted sales above 60,000 tons a month for the foreseeable future.

In addition to the improved sales profile, the Company believes its existing equipment fleet is sufficient for the foreseeable future with its existing mine plan. On this basis, no significant new equipment purchases are planned for the rest of 2013 and well into 2014. As well, expenditures on new mine development will be significantly lower.

On the basis of the forgoing and the fact that all of 2013 production and the majority of 2014 production has been sold into off-take contracts with its customers, the Company expects to consistently generate free cash flow for the remainder of 2013 and 2014.

Restatement of 2012 Comparative Financial Information

The comparative financial information included in the unaudited condensed interim financial statements for the three month period ended June 30, 2013 and the MD&A has been restated.

The Company has determined that it should have fully (100%) consolidated the financial results of BCC starting at the time of the original 50% acquisition in May 2011. At that time, the Company acquired not only a 50% interest in BCC but also the option, at the Company's sole discretion to acquire the remaining 50% interest along with control of BCC's board, before May 2016. In accordance with IAS 27, the Company's ownership position and sole discretion option constituted effective control of the Company.
The Company has restated the comparative financial information in the 2013 first quarter unaudited condensed interim financial statements to reflect consolidation accounting. Additionally, the Company has restated the comparative financial information to correct an error in the calculation of mineral property amortization.

About CanAm Coal Corp.

CanAm is a coal producer and development company focused on growth through the acquisition, exploration and development of coal resources. 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.

EBITDA from operations and Free Cash Flow

Statements throughout this MD&A make reference to EBITDA from operations and Free Cash Flow which are non-IFRS financial measures commonly used by financial analysts in evaluating financial performance of companies, including companies in the mining industry. Accordingly, management believes EBITDA from operations and Free Cash Flow may be a useful metric for evaluating the Company's performance as it is a measure management uses internally to assess performance, in addition to IFRS measures. As there is no generally accepted method of calculating EBITDA from operations and Free Cash Flow, the terms used herein are not necessarily comparable to similarly titled measures of other companies. The items excluded from EBITDA from operations and Free Cash Flow are significant in assessing the Company's operating results and liquidity. EBITDA from operations and Free Cash Flow have limitations as an analytical tool and should not be considered in isolation from, or as an alternative to, net income or other data prepared in accordance with IFRS. EBITDA from operations is calculated as income from mining operations plus depreciation, depletion, accretion and amortization less general and administrative costs. Free Cash Flow is calculated as EBITDA from operations less financed and non-financed capital expenditures. Other financial data has been prepared in accordance with IFRS.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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 27, 2013. 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.

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