EastCoal Inc.: Anthracite Market Strong and Growing

NOT FOR DISTRIBUTION TO U.S. NEWS SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

VANCOUVER, BRITISH COLUMBIA -- (Marketwire - Dec. 5, 2011) - The Directors of EastCoal Inc. (TSX VENTURE: ECX) (the "Company" or "EastCoal") advise that the Company has received independent confirmation that there are ready, strong and growing domestic and international markets for future production of anthracitic coal products from the Verticalnaya coal mine now under development by EastCoal in Ukraine.

EastCoal engaged MinAxis Pty Ltd ("MinAxis"), an Australian company specializing in coal marketing, to undertake an independent marketing study including reviews of the coal handling and preparation plant which has been built under contract in the UK, Verticalnaya's product range and options, to undertake meetings with potential domestic customers, to review export related infrastructure and to provide information on potential export market opportunities and achievable prices.


The major conclusions of the study were:

- There are substantial opportunities for Verticalnaya's production in Ukraine which could absorb 75% to 80% of proposed production.

- It should be possible to export the balance of production mainly to potential customers in nearby markets in Russia but with opportunities in diverse markets in the Mediterranean, Europe and India.

- The long term prices that MinAxis estimates for domestic and export markets is USD$115 per tonne in 2011 real terms. This would provide a substantial profit margin based on EastCoal's estimates of production and transport costs.

The President of EastCoal, Mr. John Byrne, said the projected long term average price was slightly higher than assumed in previous studies.

"We have always targeted a USD$50 per tonne margin at full production of 3 million tonnes from Verticalnaya and the report suggests this will be achieved," Mr. Byrne said.

MinAxis notes that Ukraine ranks as the world's fourth largest producer of anthracite with output of 15.2 million tonnes in 2010 and rising under Government strategy to reduce the country's dependence on imported fuels, which includes plans to increase coal production and usage.

Ukraine production of anthracite reached 16.5 million tonnes in 2010, representing 3% of world production, and is expected to rise by greater than 30% in 2011. Most of the increased production will be sold into the fast-growing domestic market where usage was 11.9 million tonnes in 2010.

Most of Ukraine's production is utilized by the power industry, one of the few in the world to generate base load electric power using anthracite. MinAxis has identified other potential customers in the steel, other metallurgical and industrial processes and in demand for transport and domestic heating. Of particular interest is the possibility of developing a useful market in pulverized coal injection (PCI) product in a local steel industry that has attracted major world steel producers to establish new facilities in Ukraine.

MinAxis has recommended slight changes to be made on-site to the configuration of the coal handling and preparation plant as the H11 seam at Verticalnaya is developed and coal production rises significantly to exceed production from the H8 seam.

This will enable the mine to produce power station fines (PSF) up to 6mm in size, a lower value product that forms the basis of power station demand for anthracite. It will also enable Verticalnaya to produce a separate high quality product, a coarse low ash, low sulphur product 13 to 35mm in size.

MinAxis expects these two products to have a ready market domestically and internationally given changes that are taking place in the anthracite industry. Domestically, the main changes are the declining availability of low sulphur coal supplies and the increasing number of mine closures indicated over the next decade.

Broader changes are occurring in the world industry. Vietnam, the major exporter of anthracite, is reducing shipments to conserve resources. Chinese anthracite usage is exceeding domestic production. Russian policy is to focus increasingly on producing anthracite that is competitive for export to Asia. Further, the reduced availability of low sulphur anthracite is causing pressure to relax existing standards in various countries.

In the case of Russia, its policy could lead some existing anthracite users to seek alternative supplies, particularly in districts closer to Ukraine where there is familiarity with Ukraine anthracite and transport distances are not great. MinAxis suggests that there is a possibility some of these regions could develop as "a second domestic market" for Verticalnaya product.

Other markets have been accessed by Ukraine producers in the past but with world export supplies tightening, combined with localized market factors, the low sulphur lump anthracite expected from Verticalnaya's H8 seam should provide many opportunities, according to MinAxis' study.

MinAxis points out that domestic prices of anthracite in Ukraine, although rising, are influenced by prices agreed between state-owned power stations and state-owned mines. However, there are an increasing number of privately-owned producers and prices in other industries are not so heavily influenced by these factors. The prices that MinAxis regards as achievable are well above the costs indicated by EastCoal's technical studies, both in the Ukraine domestic market and in export markets.


By Order of the Board,

John Byrne
Chairman and CEO



About EastCoal Inc.

The Company changed its name to EastCoal Inc. in early 2011, to reflect its new strategy of developing coal operations. It is focused on the Donbass coal basin of Ukraine which has large coal reserves and excellent prospects.

EastCoal Inc. is currently developing its 100% owned Verticalnaya anthracite mine.


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Contact Information

EastCoal Inc.
John Byrne, Chairman and CEO
604-681-8069
604-685-4675 (FAX)
www.eastcoal.ca