CALGARY, Jan. 28 /PRNewswire-FirstCall/ - (GCE-TSX) Grande Cache Coal
Corporation ("Grande Cache" or the "Company") has recently completed its first
quarter of operations following the reactivation of mining operations in the
Smoky River Coalfield and is now in a position to provide the following
update:

    -  For the fiscal year ended March 31, 2005, coal sales volume is
       estimated at 0.4 million tonnes, cost of sales is expected to be
       approximately $115 per tonne and capital expenditures are anticipated
       to be $32 million.

    -  Coal sales volume for the fiscal year ended March 31, 2006 ("FY 2006")
       is estimated to be 2.0 million tonnes, consisting of 0.2 million
       tonnes of metallurgical coal contracted at US$64 per tonne,
       1.5 million tonnes of metallurgical coal at US$125 per tonne and
       0.3 million tonnes of non-metallurgical coal at prices yet to be
       determined.

    -  Average cost of sales for FY 2006 is anticipated to be $65 to $70 per
       tonne. Higher costs are anticipated during the first half of FY 2006
       as the development of the No. 12S B2 surface mine and the
       refurbishment of the process plant are completed. Sustaining capital
       expenditures for FY 2006 are estimated at $10 million for further
       process plant enhancements, underground equipment and resource
       definition drilling.

    -  The anticipated operating performance for FY 2006 recognizes that the
       Company along with the Canadian resource industry is facing increasing
       cost pressures due to higher wage rates, increased energy and material
       costs and competition for the services of contractors and consultants.

    -  The Board of Directors has approved the preparation of a comprehensive
       feasibility study for the staged expansion of metallurgical coal
       production to four million tonnes per year. It is anticipated that
       the feasibility study will be completed before the end of FY 2006 at
       an estimated cost of $5 million.

    "Grande Cache continues to make progress in establishing a viable,
long-term operation," said Robert Stan, President and Chief Executive Officer
of Grande Cache. "We expect to be operating at an annualized production rate
of two million tonnes in fiscal 2006 and believe that our resource and
customer demand will support the expansion of our operation".
    Mr. Stan continued, "The start-up process has taken longer and cost more
than first anticipated. Rail transportation shortfalls have resulted in a
build-up of mine site inventories and delays in the delivery of coal to our
customers. Improvement of rail service will be critical to meeting our sales
targets. Our surface mine contractor has also experienced start-up
difficulties during the development phase of the surface operations. I am
confident that these rail and operational issues will be resolved as we build
a long-term mine development based on our significant coal resource".
    Grande Cache is an Alberta based metallurgical coal mining company whose
experienced team of coal professionals is developing a long-term mining
operation to produce metallurgical coal for the export market from Grande
Cache's coal leases covering over 15,000 hectares in the Smoky River Coalfield
located in west-central Alberta. Grande Cache's common shares are listed on
the Toronto Stock Exchange under the trading symbol "GCE".

    This news release contains certain forward-looking statements, which are
based on Grande Cache's current internal expectations, estimates, projections,
assumptions and beliefs, which may prove to be incorrect. Some of the
forward-looking statements may be identified by words such as "expects",
"anticipates", "believes", "projects", "plans" and similar expressions. These
statements are not guarantees of future performance and undue reliance should
not be placed on them. Such forward-looking statements necessarily involve
known and unknown risks and uncertainties, which may cause Grande Cache's
actual performance and financial results in future periods to differ
materially from any projections of future performance or results expressed or
implied by such forward-looking statements. These risks and uncertainties
include, among other things, changes in general economic, market and business
conditions; uncertainties associated with estimating the quantity and quality
of coal reserves and resources; commodity prices, currency exchange rates,
capital expenditures and debt service requirements; dependence on a single
rail system; changes to legislation; liabilities inherent in coal mine
development and production; competition for, among other things, capital,
acquisitions of reserves, undeveloped lands and skilled personnel; geological,
mining and processing technical problems; ability to obtain required mine
licenses, mine permits and regulatory approvals required to proceed with
mining and coal processing operations; ability to comply with current and
future environmental and other laws; actions by governmental or regulatory
authorities including increasing taxes and changes in other regulations; and
the occurrence of unexpected events involved in coal mine development and
production. Many of these risks and uncertainties are described in Grande
Cache's 2004 Annual Information Form, Grande Cache's Management's Discussion
and Analysis and other documents Grande Cache files with the Canadian
securities authorities. Copies of these documents are available without charge
from Grande Cache or may be accessed on Grande Cache's website
(http://www.gccoal.com) or on the website maintained by the Canadian securities
regulatory authorities (http://www.sedar.com).

     The Toronto Stock Exchange has neither approved nor disapproved the
information contained herein.

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