“Over the past decade, Xstrata Coal has evolved, as has our business strategy, and core to that is a focus on larger volume mining complexes,” said Peter Freyberg, CEO, Xstrata Coal. “We believe the Donkin coal project is a valuable asset to a qualified partner and remain positive about its viability. We will continue to work closely with Erdene and the Province of Nova Scotia to secure an operating partner to advance the project to production.”

“The Donkin coal project has unique attributes including its location on tidewater, its production readiness and its ability to deliver both a very high energy thermal coal and metallurgical grade coal with a proven track record of use in global steel manufacturing,” said Peter Akerley, president and CEO, Erdene.

It is anticipated that the sale process will be concluded during 2012, with the selection of an entity with the mining experience, technical expertise and financial capability to operate this underground mine safely and efficiently. Erdene has a 60-day right of first refusal on the sale by Xstrata Coal of its interest in the Donkin project.

It’s estimated the Donkin mine will produce 2.75 million metric tons (mt) per year of washed coal. Coal production could begin by mid-2014. The Donkin project is based on a multiple continuous miner underground operation with potential to advance to a longwall operation. Mine infrastructure includes twin 3.6-km tunnels to the coal face with plans for a coal processing plant and marine or rail transportation options that allow for loading of Cape Size vessels proximal to the project site. The Harbour Seam coal has previously been marketed to domestic power utilities and steel manufacturers as well as steel plants in Europe, Brazil and Asia while regional electrical utilities consume greater than 2.5 million mt, largely imported.