American Power Corp. (OTCBB: AMPW)

American Power Corp. (OTCBB: AMPW) was established with the focus of acquiring near term, large scale coal projects in close proximity to national transportation links.

With nearly 50% of America’s electricity needs currently provided by coal, American Power envisions developing its large coal resources to support the nation’s electricity generation.

Potential to develop in excess of 410 million tons of coal in Montana.

American Power’s Pace Coal Project includes leases of roughly 29,000 acres in Judith Basin County, Montana. With average prices for Bituminous coal in the 12,500 BTU range being roughly $65.00/ton, the scope of the Pace Coal Project is substantial.

Pace Coal Project Projections

September 2010 PowerPoint Found: AMPW Website

Pace Coal Project Financial Projections
Pace Coal Project Cash Flow Projections

These projections are taken from American Power Corp.

Financing in Place

American Power closed a financing agreement for total gross proceeds of $10 million through a 2.5 year stock issuance agreement with Black Sands Holdings, Inc. to be used to finance the Company’s ongoing exploration, development and acquisition strategies, as well as general working capital purposes.

The financing agreement will be key in executing the exploration and development of the Pace Coal Project.
The agreement includes a warrant component that could provide an additional $10 million to American Power over the coming years.

Drilling Program in Place

American Power retained Weir International Inc. of Downers Grove, Illinois (“Weir”) to prepare an exploration drilling program and to supervise its execution in order to evaluate the coal reserve potential on Pace Coal property.

The Company is currently working on the drilling permitting process with the objective to initiate drilling operations during the first quarter of 2011.

American Power’s planned drilling program consists of 61 drilling locations and would involve a total of 52,740 feet of drilling.

The program’s aim is to place a significant portion of the coal holdings in acreage in the proven and probable reserve classifications, with an ultimate goal of establishing sufficient resources to support a greater than 20 year operational mine life.

The drilling will be followed by a period of interpretation and modeling, which should lead to independent reserve and mine feasibility studies to be produced by Weir.

For Reports See:

Weir International Report 2008 Judith Basin County, Montana

Drummond Company Report – 2008

Access to existing infrastructure in surrounding area

The infrastructure required for mining the coal is in place with a federal highway, 3 pipelines, and several electrical transmission lines running through or near the property. And with America’s largest railway network, the Burlington Northern Santa Fe (BNSF) railway line, running within our acreage, coal could be supplied to both national and international customers.

Exploration Drilling Program

American Power has retained mining consulting firm Weir International to conduct an exploration drilling program to further define coal reserves and resources on the Pace Coal property. Within the next nine months, American Power will have a reserve and resource study and a mining plan. ( Weir International Report 2008 )

Strong governmental and public support to the project

Two polls in Montana in December 2006 strongly supported the efforts of Montana’s Governor to promote the development of coal and alternative energy in Montana. A total of 66% of respondents said they supported large scale coal development in Montana.

Pace Coal Project of Judith Basin, Montana

The Pace Coal Project located in the Judith Basin consists of 29,000 acres, located in Central Montana.

This acquisition was opportunistic during the economic downturn that started in late 2008, and has already delivered an attractive return on investment for shareholders.

The Powder River Basin in Wyoming and Montana is the world’s largest deposit of low sulfur coal, over 60% lower in sulfur than other US coal sources.
In 1979 Mobil Oil Co. (now ExxonMobil) drilled 30 holes and extracted 45 samples over a 14,000 acre area within the site property.
Coal production on the advanced project’s property will be established as soon as possible, continuing the substantial amount of work that has been conducted over the years in various stages on the Project.
The project’s location provides substantial in place infrastructure to support coal mining while reducing development and ongoing operation costs by millions of dollars.

Estimated Resources

Based on the 45 samples taken, five independent reports estimated there is between 172 to 410+ million tons of coal ready for extraction on the Pace Coal Project acreage.
The Walsh & Associates report estimated the Company’s second lease development area of ~15,000 acres represents a minimum of 150 million additional tons of coal.
The coal tested was found to be very high quality Bituminous B coal averaging 12,924 BTU on a dry & ash free basis and with only 3.16% sulfur content.

A report by Montana Tech in 2005 concluded that Pace Coal Project’s deposit can be physically developed for mining. The report went on to conclude that, based on the geology and surface topography, no significant mining problems are anticipated. However, the report recommended that additional exploration holes be drilled to develop additional cores, drill logs and electric logs for analysis and comparison with existing data.

In line with this recommendation, American Power has retained Weir International (“Weir”), an internationally recognized consulting company serving the mining and energy industries worldwide, as its mining consultant to conduct an exploration drilling program to further define coal reserves and resources on the Pace Coal property.

The timeline of Weir’s work is as follows:

Development of Exploration Drilling Program: 6 months
Reserve Study: 2 months
Feasibility Study: 1 month
Total: 9 months

Upon completion of the feasibility study, American Power will be able to establish a mine plan suitable to geology and production requirements as well as projections for production capacity, productivity, staffing levels, equipment and facilities, capital expenditures and operating costs for the project.

The feasibility study is expected during the third quarter of 2011.

Main assumptions:

Reserves: 410 million tonnes of coal
Bituminous coal price: USD 65 per tonne
Production cost ( excl. D&A): USD 23.5 per tonne
Production capacity: 11 million tonnes per year
SG&A expenses: USD 0.50 per tonne
Initial capex: USD 495 million
Organic capex: 4.2 $/t
Discount rate (WACC): 14%
Mine Life: 37 years

Results:

Net present value @ 14% = USD 1,304 million
Equivalent to USD 3.2 per tonne of coal reserve

Existing Infrastructure Includes:

A main line of the BNSF railroad running through the property.
Major eastwest highway Route 87 running through the property.
Two electric transmission power lines running through the property.
Cenex crude oil pipeline running through the property to a refinery at Laurel, Montana.
Conoco crude oil pipeline running through the property.
A large interstate natural gas pipeline running eastwest along Interstate 90 (150 miles south of the property).
Other natural gas pipelines running 140 miles and 60 miles from the property respectively.
A ready workforce exists in Great Falls, Montana.

Outlook for Coal

American Power, a member of the Montana Mining Association, envisions developing the large coal resources of the Pace Coal Project to support the nation’s electricity generation with nearly 50% of America’s electricity needs currently provided by coal.

America has the world’s largest recoverable coal reserves1 – 29.8% of the world’s total proved coal reserves at 238,308 million tons (source: BP Statistical Review of World Energy, 2009).

Montana has the largest reserve base in the United States of 119.1 billion tons and was ranked 5th by production in 2008 with 44.8 million tons of coal produced from six major mines (source: National Mining Association).

The US produces 1+ billion tons of coal each year, equivalent to 35% of total global demand (source: ConocoPhillips website, Apr. 12, 2010) and consumed 565 million tons of oil equivalent of coal in 2008, equivalent to 17.1% of total global consumption (source: BP Statistical Review of World Energy, 2009).

America’s primary energy consumption (i.e., oil, natural gas, coal, nuclear energy and hydroelectricity combined) was 2,299 million tons oil equivalent in 2008. That amount exceeded primary energy consumption in Europe and and Eurasia combined while accounting for over 20% of global primary energy consumption.

According to the US Energy Information Administration (EIA), by 2035 the US population will have grown 28% from its 2008 level, increasing primary energy consumption over that same period by 14.4% (from 100.1 quadrillion Btu in 2008 to 114.5 quadrillion Btu in 2035).

The EIA also maintains that despite the inevitable expanded use of renewable energy sources such as wind and solar power in the foreseeable future, by 2035 coal will not only continue to dominate as the leading fuel used to generate electricity in the US, but will have also increased in use.

Management and Advisory Team

Al Valencia, CEO

Mr. Valencia’s mining industry expertise is matched by his experience in investment banking and corporate finance. Having earned an M.A. in Economics from Syracuse University, New York, he has held positions of increasing seniority in New York, Washington, D.C. and Latin America, and has worked on major corporate and government miningrelated projects, including working in association with Credit Suisse on the privatization of two International mining units (copper, zinc and lead) in the mid1990’s, and currently advising the Peruvian government on the valuation and sale of the Quiulacocha tailings facility and the Excelsior waste rock dump. Additional executive and strategy experience was gained through such roles as participating in the valuation and sale of the $130 million company, Camposol S.A., among others.

Johannes Petersen, CFO

Mr. Petersen has worked as director and CFO of several public and private resource companies. Over the past few years he successfully worked to raise over $17 million toward funding the activities of resource projects. He received a Bachelor of Science in Economics from Universidad del Pacifico and an MBA degree from the London Business School.

Russell Pace, Strategy Advisor

Mr. Pace is a former law partner of Hogan & Hartson in Washington, D.C.; founder of Internet financial services company Financial Passport, Inc. (acquired by Ameritrade in 2000); and current Chairman and CEO of MontanaPace Energy Associates and JBM Energy Company. In 2004, he initiated a coal gasification project in Montana utilizing vast coal reserves he owned (acquired by American Power Corp. in 2010). Mr. Pace majored in Political Science and Public Administration at the University of Virginia (UVA), served three years in the Air Force during the Korean War, and then graduated from the UVA Law School in 1956.

American Power Corp. Fact Sheet: http://stockguru.com/lt/AMPW/AmPower_factsheet.pdf

American Power Corp.
16 Market Square Centre
1400 16th Street,
Suite 400
Denver CO 80202
Tel: 720.932.8389
Fax: 720.932.8189
Email: [email protected]

Website: americanpowerco.com

Investor Relations
Toll Free: 18005371110
Email: [email protected]

Forward Looking Statements in this release that are not historical facts are forwardlooking statements that are subject to risks and uncertainties. Forwardlooking statements in this news release include that American Power Corp.’s 29,000 acre leases in Judith Basin County, Montana, have high volatile bituminous B coal in the range of 172 million and up to 410+ million tons, and that the Company will proceed to kick start the development of its advanced Pace Coal Project in Judith Basin County, Montana. Readers should also refer to the risk disclosures outlined in the Company’s quarterly reports on Form 10QSB, annual reports on Form 10KSB, and the Company’s other disclosure documents filed from timetotime with the Securities and Exchange Commission available at www.sec.gov. Cautionary Note to U.S. Investors: The United States Securities and Exchange Commission (“SEC”) permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this document that SEC’s guidelines may prohibit us from including in filings with the SEC.

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