Xinergy Ltd. announces early contract termination and payment from major customer

Toronto Stock Exchange: XRG

KNOXVILLE, TN, Feb. 27, 2012 /CNW/ - Xinergy Ltd., (TSX:XRG and XRG.WT) ("Xinergy" or the "Company"), a US Central Appalachian producer of high quality thermal and metallurgical coal, today announced that it has reached an agreement with a major customer for the early termination of a thermal coal supply agreement (the "Contract"). The Contract was terminated under terms negotiated between the parties and included payment to Xinergy from the customer for the cancellation of committed but undelivered tonnage.

"We are pleased to inform our stakeholders that we have been able to negotiate a payment related to the termination of this thermal coal agreement," said Jon E. Nix, Xinergy's Chairman and CEO.  "We are taking extensive steps to exercise cost cutting measures at our thermal operations that include decreasing our work force with intentions of lowering production to better match current production with committed sales. These efforts are intended to preserve our permitted reserves that are continuing to increase and position the company for the future as market conditions allow.  The decision to idle certain portions of our thermal coal mining operations was a difficult one in light of our high growth trajectory and the effects these cuts have on our employees and their families.  Given the current industry landscape, we have determined that the foregoing actions best position the Company to maximize the value of our thermal coal operations.  We believe that our low cost operations and strong balance sheet provides us with a competitive advantage relative to most Central Appalachian producers and positions us well to shift our near term focus to our met coal business while we await a normalization of market conditions for thermal coal."

"We are committed to optimizing our higher margin metallurgical business and will utilize idled equipment from these thermal coal mines in our met mines," said Bernie Mason, Xinergy's President.  "Expansion of reserves, permitted reserves and acreage base has been underway for several months at our South Fork and True Energy met projects and we will elaborate on those details in the coming weeks."

The Company is currently assessing the effects of these actions on production, sales, and other operations and will provide updated guidance along with fiscal year 2011 and fourth quarter 2011 financial results in the next few weeks.

About Xinergy Ltd.

Headquartered in Knoxville, Tennessee, Xinergy Ltd., through its wholly owned subsidiary Xinergy Corp. and its subsidiaries, is engaged in coal mining in eastern Kentucky, West Virginia and Virginia. Currently, Xinergy sells high quality thermal coal to electric utilities and industrial companies throughout the south-eastern United States as well as metallurgical coal. For more information, please visit www.xinergycorp.com.

Chris Halouma
Director, Investor Relations

Michael R. Castle
Chief Financial Officer

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