Pacific Coal Resources Ltd. announces debt settlement agreement

TORONTO, Oct. 29, 2014 /CNW/ - Pacific Coal Resources Ltd. (TSXV: PAK) is pleased to announce that it has signed a debt settlement agreement with Pacific Power Generation Corp. ("PPG").  In the first quarter of 2013, the Company signed a memorandum of understanding ("MOU") with PPG and Proelectrica & CIA S.C.A E.S.P ("Proelectrica"), with the purpose of joining efforts for the incorporation of a company dedicated to the generation of electric power, operating with coal produced at the Company's Cerro Largo mine; as described in the Company's December 31, 2013, consolidated financial statements.  The Company received a refundable advance of US$5.0 million upon signing the MOU. On August 25, 2014, PPG advised the Company of its desire to terminate the MOU. The Company entered into a settlement agreement, effective as of October 15, 2014 ("Effective Date"), whereby the Company will issue to PPG 28,090,000 common shares in the capital of the Company, valued at the volume weighted average (market) price of the shares as of the 60 days leading up to the Effective Date (based on the Bank of Canada US-Canada closing exchange rate on the Effective Date), in exchange for forgiveness of the US$5.0 million refund of the advance owed by the Company.

The issuance of common shares pursuant to the settlement agreement will result in PPG holding more than 20% of the then issued and outstanding shares of the Company. Therefore, in accordance with TSXV policy, the Company will be seeking shareholder approval of the transaction.

The transaction is a "related party transaction" for the purposes of Multilateral Instrument 61-101 - Protection of Minority Share Holders in Special Transactions ("MI 61-101") as PPG is substantially held by Pacific Rubiales Energy Corp., a principal shareholder of the Company, and Proenergy Corp., which is wholly owned by Blue Pacific Investments Group Ltd. ("Blue Pacific Investments"). Serafino Iacono, Miguel de la Campa, José Francisco Arata and Jaime Perez Branger (directors of the Company) control, or provide investment advice to the holders of, 87% of the shares of Blue Pacific Investments, which owns approximately 23% of the issued and outstanding common shares of the Company. Proelectrica is a subsidiary of PPG.

In addition to shareholder approval, this transaction is subject to TSXV approval and is expected to close in the fourth quarter of 2014.

About Pacific Coal Resources Ltd.

Pacific Coal Resources Ltd. is a Canadian-based mining company engaged in the acquisition, exploration and production of coal and coal-related assets from properties located in Colombia. The Company's common shares are listed on the TSX Venture Exchange and trade under the symbol "PAK".

Forward Looking Information:

This news release contains "forward-looking information", which may include, but is not limited to, statements with respect to the future financial or operating performance of the Company and its projects. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or believes" or variations (including negative 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 statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Pacific Coal to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements contained herein are made as of the date of this press release and Pacific Coal disclaim, other than as required by law, any obligation to update any forward-looking statements whether as a result of new information, results, future events, circumstances, or if management's estimates or opinions should change, or otherwise. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, the reader is cautioned not to place undue reliance on forward-looking statements.

Neither 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 news release.

SOURCE: Pacific Coal Resources Ltd.

Melissa Krishna, Deputy General Counsel & Secretary, [phone]