FORBES & MANHATTAN COAL CORP - Forbes Coal closes remainder of US$25 million loan facility and restructures senior debt

Forbes Coal closes remainder of US$25 million loan facility and restructures senior debt

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”)


FORBES COAL CLOSES REMAINDER OF US$25 MILLION LOAN
FACILITY AND RESTRUCTURES SENIOR DEBT

TORONTO, ONTARIO – July 3, 2014: Forbes & Manhattan Coal Corp. (“Forbes Coal” or the
“Company”) (TSX: FMC) (JSE: FMC) has closed the remainder of the previously announced
secured convertible loan facility from Resource Capital Fund V L.P (“RCF”), in the aggregate
principal amount of US$25 million (the “Facility”). The Facility consists of the US$4 million
bridge loan advanced to the Company on February 5, 2014 (the “Bridge Loan”), a convertible
loan in the principal amount of US$15 million to be advanced in a number of tranches (the
“Convertible Loan”), and a refinancing of the existing US$6 million convertible loan facility
completed between the Company and RCF on September 6, 2013 (the “Refinancing”). The
Bridge Loan was converted into a loan on the same terms as the Convertible Loan upon closing
of the Convertible Loan and the Refinancing.

In connection with the Convertible Loan, RCF will receive an establishment fee equal to 5% of
the value of the Convertible Loan, which amount will be satisfied through the issuance of
common shares in the capital of Forbes Coal (“Common Shares”), at a price of C$0.1446 per
Common Share.

The Facility will bear interest at a rate of 12% per annum, payable monthly. Interest payment
obligations under the Facility will be satisfied through the issuance of Common Shares valued at
the 20-day volume-weighted average trading price of the Common Shares on the Toronto Stock
Exchange prior to the relevant interest payment date, or may be satisfied in cash in certain
circumstances. The Facility will mature on June 30, 2019.
As a condition of entering into the Facility, Forbes Coal also restructured its existing senior debt
facilities with Investec Bank Limited (“Investec”). As partial consideration for the restructuring,
the Company issued warrants to purchase 34,817,237 Common Shares to Investec (the
“Warrants”), each of which are exercisable at a price of C$0.1446 per Common Share until July
3, 2019. Any proceeds received upon the exercise of the Warrants will be applied to the loan
facilities with Investec as a mandatory prepayment. RCF will have the right to, at its option,
purchase the Warrants from Investec.

The issuance of Common Shares to RCF upon conversion of the Facility, in satisfaction of
interest obligations under the Convertible Loan and the Refinancing, and in satisfaction of the
establishment fee payable in connection with the Convertible Loan, as well as the issuance of
the Warrants to Investec, were approved by shareholders of the Company at an annual and
special meeting held on June 27, 2014. Pursuant to the policies of the TSX and Multilateral
Instrument 61-101 – Protection of Minority Shareholder in Special Transactions, RCF did not
vote on the resolutions approving the issuances of the Common Shares to RCF under the
Facility nor on the issuance of the Warrants to Investec.

The Company intends to use the proceeds of the Convertible Loan primarily for necessary
capital investment, as well as to enact strategies for operational improvements. Additional
details with respect to the Facility and the restructuring of the Investec loans may be found in
the Company’s amended management information circular dated May 27, 2014.

Forbes Coal is also pleased to announce the appointment of Ms. Lorraine Harrison to the
position of Corporate Secretary of the Company in connection with the transfer of head office
functions to South Africa undertaken as part of the Company’s restructuring process. Ms.
Harrison replaces Mr. Neil Said in the position. The Board of Directors of Forbes Coal is thankful
to Mr. Said for his services to the Company and wishes him success in his future endeavours.

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
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. 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 use of proceeds from the Facility, 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 forward-looking information. The Company does not undertake to
update any forward-looking information, except in accordance with applicable securities laws.

FOR FURTHER INFORMATION PLEASE CONTACT:

Craig Wiggill                                             Malcolm Campbell
Non-Executive Chairman                                    Chief Executive Officer
Email: crwiggill@gmail.com                                Email : mcampbell@forbescoal.com


4 July 2014

Sponsor
Sasfin Capital
(a division of Sasfin Bank Limited)

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