FORBES & MANHATTAN COAL CORP - Forbes Coal announces loan faciity and concurrent priate placing

Forbes Coal announces loan faciity and concurrent priate placing

Forbes & Manhattan Coal Corp.
(Registration number: 002116278)
(External company registration number: 2011/011661/10)
Share code on the Toronto Stock Exchange: FMC
Share code on the JSE Limited: FMC
ISIN: CA3451171050
(“Forbes Coal” or “the Company”




FORBES COAL SECURES US$6 MILLION LOAN FACILITY
AND ANNOUNCES CONCURRENT $2 MILLION PRIVATE PLACEMENT




TORONTO, ONTARIO – August 9, 2013: Forbes & Manhattan Coal
Corp.(TSX: FMC) (JSE: FMC) announces that it has entered into a
term sheet for a secured US$6 million convertible loan facility
from Resource Capital Fund V L.P (“RCF”) with a maturity date of
June 30, 2016 (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 as
well as to actively pursue the acquisition of additional South
African coal properties.


“The new convertible loan facility provides Forbes Coal with the
financial flexibility to enhance its current operations and
pursue new ones at a very opportunistic time. We are pleased to
have RCF’s continued support”, commented Stephan Theron,
President and CEO of Forbes Coal.


The issuance of common shares to RCF upon conversion of the
loan, as interest payments and for the establishment fee are
subject to shareholder approval. Forbes Coal will be seeking the
approval of its shareholders for these share issuances at the
upcoming annual and special meeting to be held on September 11,
2013 and will be filing an amended and restated management
information circular in connection therewith. 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.

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   which is 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. RCF also has the right to receive
interest payments under the loan in common shares, subject to
receipt of shareholder approval. The price that such common
shares will be issued at will be based on the 20-day VWAP prior
to the relevant interest payment date.

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

The Transaction is a related party transaction under MI 61-101
and will be subject to minority shareholder approval in
accordance with section 5.6 of MI 61-101. Forbes Coal will be
relying on the valuation exemption set forth is section 5.5(c)
of MI 61-101. Neither Forbes Coal nor, to the knowledge of
Forbes Coal, RCF, has knowledge of any material information
concerning Forbes Coal or its securities that has not been
generally disclosed.   Neither Forbes Coal nor any of its
officers or directors, after reasonable inquiry, are aware of
any prior valuations that have been completed in the past 24
months. RCF currently owns 6,867,443 (19.97%) of the issued and
outstanding common shares of Forbes Coal on a non-dilutive
basis. Assuming an exchange rate of C$1.00 = US$1.00, if RCF
converts the entire amount of the loan and chooses to receive
the establishment fee in common shares, RCF will be issued an
aggregate of 19,576,230 common shares, which would result in RCF
holding an aggregate of 26,443,673 (49%) of the issued and
outstanding common shares of Forbes Coal.

If RCF chooses to receive all interest payments under the loan
in common shares, assuming a conversion price of $0.32 (being
the 20 day VWAP as of August 9, 2013), RCF will be issued an
additional 4,340,766 common shares, which would result in RCF
holding an aggregate of 30,784,439 (52.8%) of the issued and
outstanding common shares of Forbes Coal.

If RCF chooses to receive all interest payments under the loan
facility in cash, the loan is outstanding until maturity of June
30, 2016 and Forbes Coal receives the requisite shareholder
approvals, a total of $1,389,045 of interest would be paid.

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.

The Transaction is subject to completion of definitive
agreements, approval by Forbes Coal’s senior lender and
regulatory approvals, including without limitation, Toronto
Stock Exchange approval and approval of the South African
Reserve Bank. The Transaction is expected to close on or about
August 15, 2013.


CONCURRENT PRIVATE PLACEMENT OF $2 MILLION OF COMMON SHARES


Forbes Coal also announces a 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, 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 private placement remains subject to receipt of
regulatory approval.


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”). The mines have a substantial resource base and
each mine has a projected life span in excess of 20 years.
Forbes Coal is in the process of increasing production at both
mines using existing infrastructure and capacity. The company
has in-place transportation infrastructure allowing its coal to
reach both export corridors and the growing domestic coal
market. Forbes Coal has an experienced coal-focused management
team.


Please refer to the Company's NI 43-101 compliant technical
report on the Forbes Coal Dundee Properties dated March 6, 2013
entitled "Independent Qualified Persons’ Report on Forbes Coal
Dundee Operations in the KwaZulu-Natal Province, South Africa",
available on the SEDAR profile of the Company at www.sedar.com.
Additional information is available at www.forbescoal.com.


Cautionary Notes:
Johan Odendaal, B.Sc.(Geol.), B.Sc.(Hons)(Min. Econ.), M.Sc.
(Min. Eng.), a director of Minxcon and an independent Qualified
Person, as defined in National Instrument 43-101 has reviewed
and approved the scientific and technical information contained
in this release.


The ability of Forbes Coal to increase production amounts has
not been the subject of a feasibility study and there is no
certainty that the proposed expansion will be economically
feasible.


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, future financial or operating performance of Forbes Coal
and its projects, statements regarding the anticipated
improvements in logistical support and anticipated improvements
in sales, statements made with respect to prospects for the
business of Forbes Coal, requirements for additional capital,
government regulation of the mineral exploration industry,
environmental risks, acquisition of mining licences, title
disputes or claims, limitations of insurance coverage and the
timing and possible outcome of pending litigation and regulatory
matters. 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.




FOR FURTHER INFORMATION PLEASE CONTACT:


Stephan
Theron


President and Chief Executive Officer
+1 (416) 861-
5912
Email:
stheron@forbescoal.com


Colinda Parent
VP Corporate Development
+1 (416) 861-5811
Email: cparent@forbesmanhattan.com


12 August 2013
Johannesburg


Sponsor
Sasfin Capital (a division of Sasfin Bank Limited)

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