HENDERSON, Nev., Aug. 26, 2008 (GLOBE NEWSWIRE) -- Consolidation Services, Inc. ("CNSV" or the "Company") (OTCBB:CNSV) announces its acquisition of approximately one thousand acres of land in eastern Kentucky (the "Owsley Property") for a purchase price of $1 million, which closed on August 25, 2008. In connection with the acquisition, the Company simultaneously entered into a coal development agreement with an experienced energy and timber development group (the "Development Group").
CNSV paid the purchase price as follows: (i) $500,000 in cash; and (ii) $500,000 by a promissory note due on or before October 15, 2008 which is secured by a mortgage on the Owsley Property. As previously reported in CNSV's public filings, the Development Group had received $100,000 in cash from the release of such amounts from escrow prior to the closing, and at closing received: (i) $400,000 through CNSV's issuance of restricted common stock (200,000 shares) valued at $2.00 per share; and (ii) the right to receive fifty percent (50%) of any coal royalty revenues regarding the Owsley Property (subject to filing of the mineral deed covering such rights), as consideration to handle the coal permitting process, prepare all reclamation plans, contract for coal mining and oversee the actual mining and reclamation process, with the remaining fifty percent (50%) retained by CNSV.
The Development Group believes that total royalty revenues from surface mineable coal could potentially reach between $30-40 million based upon royalty revenues generated from comparable sized coal producing properties in the Central Appalachian region and other information, however, there are no assurances that the Owsley Property will have coal resources that are marketable or that can be extracted in economically feasible amounts and the information provided by the Development Group has not been independently verified. Management believes, based on their knowledge of the industry, that royalty rates are typically ten percent or approximately fourteen dollars per ton based on the current average weekly coal spot prices for the Central Appalachian region, as reported by the Energy Information Administration. The Development Group anticipates mining activities to commence in calendar year 2008, with receipt of royalties anticipated in the first quarter of 2009, assuming coal is extractable in marketable or economically feasible amounts.
The reclamation process, following the proposed mining of the coal, is expected to enhance and benefit the Company's planned organic farming operations through the anticipated construction of an estimated $1 million in infrastructure on the property. The coal mining reclamation efforts will develop pastures of specific sizes, good roads to pastures and to proposed natural gas/oil well drilling sites, establish ponds and watering sites throughout the property, reshape steep relatively inaccessible slopes to gentle slopes by lowering peaks and filling the hollows and seeding the pastures with Company selected species and varieties to maximize organic production.
"The acquisition of this sizable tract of land enables CNSV to continue to meet its strategic objectives to acquire property for future organic farming operations, as well as generate cash flow from the energy resources believed to be situated on the subject property, for the long term benefit of our shareholders," said Dr. Johnny R. Thomas, President/CEO of CNSV.
About CNSV
CNSV is currently engaged in acquiring land for its proposal organic farming operations and developing potential energy resources on some of its acquired properties in the near-term. CNSV's proposed organic farming operations will include organic certification and grazing of beef, dairy, and wild game on grass fed pastures, while continuing to utilize the land in connection with the CNSV's energy development plans. The CNSV business model is unique because it focuses on acquiring land to produce both food and energy. CNSV intends to make energy resource recovery and organic/natural food farming work synergistically because modern recovery methods not only avoid damage to the land but also enhance arability.
Additional information concerning these and other risk factors of CNSV can be found in the Company's periodic filings with the Securities and Exchange Commission (the "SEC"), including the Company's Annual Report on Form 10-K, as amended by Form 10-K/A, for the year ended December 31, 2007 filed on March 27, 2008 and June 6, 2008, respectively, with the SEC.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included in this press release are forward-looking statements. Without limiting the foregoing, the words "believe," "anticipate," "project," "plan," "expect," "seek," "potential," "estimate," and similar expressions are intended to identify forward-looking statements. These statements relate to future events or to the Company's future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Investors should not place any undue reliance on forward-looking statements since they involve known and unknown uncertainties and other factors which are, in some cases, beyond the Company's control which could, and likely will, materially affect actual results, levels of activity, performance or achievements.
Any forward-looking statement reflects the Company's current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to operations, results of operations, growth strategy and liquidity. Such risks, uncertainties and other factors which could impact the Company and the forward-looking statements contained herein are included in the Company's filings with the Securities and Exchange Commission. The Company assumes no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.