August 26th, 2010
Special Notice to NuCoal Shareholders
Dear NuCoal Shareholder:
We have some exciting new developments at NuCoal. In an effort to clearly communicate what is happening and how it will potentially affect you as a NuCoal shareholder, we have prepared a series of questions and answers below. To start, we ask that you please review the communication and if you have any questions that we have not addressed, please contact us.
For NuCoal to pursue the opportunity described below, we need the support of our shareholders. Shortly, you will be receiving an information package pertaining to the upcoming annual general and special meeting of shareholders. The package will contain information on this proposal.
The NuCoal Board recommends you vote your shares in favor of the resolutions necessary to move this proposal forward.
If you are not able to attend the shareholder meeting in person, you can support this proposal by completing the proxy form enclosed in the shareholder information package and returning the completed and signed proxy form to NuCoal (at the address below) as soon as possible.
If you hold your shares through a brokerage account, you will be receiving the shareholder information package from your broker which they will want you to sign and return to them.
Additional copies of the shareholder information package can be obtained from NuCoal by contacting Allison Sherdahl - Allison@nucoalenergy.ca or 306-651-5194.
We ask that you return your proxy via:
- - Email - scanning and attaching it;
- - Fax - 306-651-5196; or
- - Dropping it off at our office on the 11th floor - Midtown Plaza Tower, Saskatoon
We sincerely hope this communication answers many of your questions.
Regards,
Jamie McIntyre
President & CEO
What is happening at NuCoal?
There has been a change in leadership at NuCoal. Jamie McIntyre, formerly a Vice-President with Cameco Corporation, has accepted the position of President and CEO. Jamie's focus, over the coming months, will be to execute a new business plan for NuCoal that you will read about below. Alan Cruickshank, former President and CEO, will remain a Director of the company and will focus his efforts on the key relationships required to capitalize on the opportunity described below.
We are happy to report that NuCoal has entered into a binding Memorandum of Understanding (MOU) with Coal-Based Investment Holdings Co. Ltd (CBI) of China. This MOU has been approved by the Board of Directors of NuCoal. It sets out the terms and conditions, on which CBI and NuCoal would incorporate, own and operate a new corporate entity for the purposes of constructing, owning and operating a coal polygeneration plant in Saskatchewan. The initial ownership in the new company will be 65% CBI and 35% NuCoal.
Who is CBI?
CBI was formed in China with the support of the National Chemical Industry Productivity Promotion Centre and has been given the mandate to promote the expansion of Chinese clean-coal technology, both domestically and internationally. CBI has secured the support of three other Chinese agencies to execute its mandate and participate with NuCoal. They are: Eastern Coal-Based Low Carbon Engineering and Technology (Jiangsu) Co. Ltd.; Jiangsu Coal Chemical Engineering Research and Design Institute Co. Ltd.; and Yankuang Cathay Coal Chemical Co. Ltd (YCCC), the operator of an existing coal polygeneration plant in Shandong Province, China. (www.yccc.cn/en.aspx) As part of the MOU, CBI has also committed to secure the support of the State or an appropriate governmental authority in China.
Under the MOU, CBI and its affiliated agencies will provide access to proprietary Chinese polygeneration technology along with significant technical support for the project including: plant and process design, engineering, procurement, major component manufacturing, construction management, commissioning and start-up.
What would a Saskatchewan polygeneration project look like?
If we are successful, the plant proposed for Saskatchewan would be modeled after the plant in Shandong Province and would be the first international deployment of this world-class Chinese polygeneration technology. The plant in China is profitable and uses established, reliable technology that meets very high environmental performance standards.
The Chinese coal polygeneration plant is capable of generating revenue through the concurrent production of a variety of products from a coal feedstock. It is both scalable and flexible and has the potential to produce various products, including: electricity, methanol, chemicals, fertilizers, heat and steam, as well as a number of other byproducts.
It is estimated that the proposed Saskatchewan polygeneration plant would require a capital investment in excess of CND $620 million and would provide long-term employment for at least 250 people.
Where would this plant be located?
The exact location has yet to be determined. There are many factors that must be considered to ensure the best location is chosen, not the least of which is the identification of a host community. NuCoal will be undertaking, over the next few months, a site options study for the plant. A final site decision will be made in consultation with CBI and other important stakeholders.
Where would the money come from to finance this project?
In addition to the extensive technical support we would receive from our Chinese partners, it is expected that the lion's share of the capital investment will also come from Chinese sources. There will be a need to raise money from other sources and all options will be considered.
What happened to NuCoal's Coal-to-Liquids (CTL) plans?
Coal polygeneration and coal-to-liquids plants are similar, as they are both based on coal gasification. We believe coal polygeneration is a better alternative and so does CBI. These plants are designed to be flexible and capable of producing diverse, multiple product streams.
How will this transaction work?
Subject to receiving shareholder approval, NuCoal will transfer its assets (consisting primarily of coal exploration permits and available cash) into the new company, in exchange for shares which will constitute 35% ownership of the new company. The value of NuCoal's assets will be determined by an independent valuator in consultation with NuCoal and CBI. Concurrent with the transfer of NuCoal's assets to the new company, CBI will in consultation with NuCoal, contribute assets and/or capital, on a dollar for dollar basis, sufficient to account for its 65% ownership of the new company.
Once the assets of NuCoal have been transferred into the new company it is contemplated in the MOU that the following will occur:
- - NuCoal will be wound up and dissolved. The dissolution of NuCoal will be subject to shareholder approval and will be undertaken at an appropriate time, as determined by the Board of NuCoal, when it appears prudent and in the best interests of NuCoal shareholders.
- - On dissolution of NuCoal, the shares held by NuCoal shareholders in the new entity will be transferred to them such that NuCoal shareholders will become shareholders directly in the new company.
Essentially, the resulting entity will be much larger, better financed and better structured to carry forward with the proposed polygeneration plant in Saskatchewan as well as other opportunities that may flow from that.
A new Board of Directors will be formed for the new company, consisting of five directors, three to be appointed by CBI and two by NuCoal.
Will NuCoal become publicly traded?
One of NuCoal's objectives has always been to seek out a liquidity event that will facilitate the public trading of its shares. While the current proposal will see NuCoal ceasing to exist, the desire to provide liquidity to NuCoal's shareholders continues. It is contemplated under the MOU with our Chinese Partner that the parties will pursue a public offering or other transaction that could see the shares of the new company becoming publicly traded.
Why should I support this proposal?
If we are successful and this project becomes a reality, you will be a shareholder in a project expected to be valued in excess of CDN $620 million.
You will participate in what could be a brand new industry in the province of Saskatchewan, with Chinese partners who are recognized as global leaders in clean coal technology and have a proven operational success record.
You will be an early entrant into environmentally friendly, clean-coal polygeneration in Canada and North America. As part of our agreement with our Chinese partner, the new company will have the exclusive rights to market CBI's Chinese coal polygeneration technology anywhere in North America.
What is the timeline for this transaction?
NuCoal will be calling a special meeting of the shareholders concurrent with its Annual General Meeting (AGM) to be held at 11:00am on Thursday, September 23, 2010, at the Saskatoon Club in the Main Dining Room Saskatoon, Saskatchewan. We will be formally presenting this proposal to shareholders and seeking their approval at that time, in conjunction with the AGM.
What do you need me to do?
You will be receiving from NuCoal an information package pertaining to the upcoming annual general and special meeting of shareholders. The package will contain information on this proposal.
The NuCoal Board recommends you vote your shares in favor of the resolutions necessary to move this proposal forward.
If you are not able to attend the shareholder meeting in person, you can support this proposal by completing the proxy form enclosed in the shareholder information package and returning the completed and signed proxy form to NuCoal (at the address below) as soon as possible.
If you hold your shares through a brokerage account, you will be receiving the shareholder information package from your broker and your broker will send you voting instructions which they will want you to sign and return to them.
Additional copies of the shareholder information package can be obtained from NuCoal by contacting Allison Sherdahl - Allison@nucoalenergy.ca or 306-651-5194.
We ask that you return your proxy via one of the following options:
- - Email - scanning and attaching it;
- - Fax - 306-651-5196; or
- - Dropping it off at our office (11th floor - Midtown Plaza Tower, Saskatoon)
Comments, Questions or Concerns?
For further information or to ask questions or comment on the proposal, please contact either:
Jamie McIntyre, President and CEO; or
Allison Sherdahl, Manager Corporate Services
NuCoal Energy Corp.
1103 Tower at Midtown
Saskatoon SK S7K 1J5
Phone: (306) 651-5191
Fax: (306) 651-5196
Email: Allison@nucoalenergy.ca
- 2010-10-06 Prof. Frank Clemente, "the world is turning to coal," by 2030, coal consumption will have increased by 53% and coal-fired power generation by 85%. Coal will account for 48% of global incremental electricity generation over the next 20 yrs.
- 2010-10-07 According to a report by China's Xinhua News Agency, China is expected to have the world's largest coal-conversion industry by 2020.
- 2010-10-19 October 19, 2010 Notice to Shareholders available under Investors (News Releases).
