TORONTO, Aug. 27, 2014 /CNW/ - Corsa Coal Corp. (TSXV:
CSO) ("Corsa" or the "Company") reports financial results for the
three and six months ended June 30,
2014. The Company has filed its unaudited Condensed Interim
Consolidated Financial statements for the three and six months
ended June 30, 2014 and 2013 and
related Management's Discussion and Analysis on www.sedar.com and
has posted these documents to its website www.corsacoal.com.
All amounts are in United
States dollars. References to "Second Quarter 2014" means
the three months ended June 30, 2014
and to "First Half 2014" means the six months ended June 30, 2014.
Financial Highlights
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For the three
months ended
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For the six months
ended
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June
30,
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June
30,
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2014
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2013
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2014
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2013
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Revenue
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$
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24,319,000
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$
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21,121,000
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$
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44,162,000
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$
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42,342,000
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Net and comprehensive
income
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$
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692,000
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$
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361,000
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$
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119,000
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$
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1,170,000
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Earnings per
share
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$
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(0.00)
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$
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0.00
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$
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(0.01)
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$
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0.00
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Adjusted
EBITDA(1)
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$
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502,000
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$
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4,326,000
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$
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712,000
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$
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8,794,000
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(1)
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This is a non-GAAP
measure. See "Non-GAAP Measures".
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Operations Highlights
- Completed the acquisition of PBS Coals Limited ("PBS") on
August 19, 2014. See the Corsa news
release titled "Corsa Announces Completion of Acquisition of PBS
Coals" dated August 20, 2014 and the
recent investor presentation uploaded to the Corsa website.
- Sales of 315,000 tons of coal in Second Quarter 2014 and
582,000 tons in First Half 2014.
- Sales guidance of 1,700,000 tons of coal for the year ended
December 31, 2014, including
additional tons as a result of the PBS Transaction. See
"Outlook".
- Increased production from the Casselman Mine as a result of the
start-up of a continuous haulage system in January 2014 and the recent addition of a second
unit of production.
Operating Results: Overview
All dollar amounts are presented in thousands of dollars.
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For the three
months ended
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For the six months
ended
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June 30,
2014
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June 30,
2013
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June 30,
2014
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June 30,
2013
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Clean tons
sold
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315,000
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281,000
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582,000
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567,000
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Clean tons produced
and purchased
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325,000
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283,000
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612,000
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587,000
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Coal sales
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$
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24,319
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$
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21,121
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$
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44,162
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$
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42,342
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Operating
Expenses
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28,311
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18,543
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51,270
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37,153
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(Loss) income from
operations
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(3,992)
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2,578
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(7,108)
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5,189
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Other income
(expense)
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2,999
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(1,224)
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4,078
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(2,331)
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Income (loss) for the
period before tax
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(993)
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1,354
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(3,030)
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2,858
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Income tax (recovery)
expense
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(1,685)
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993
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(3,149)
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1,688
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Net and comprehensive
income
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$
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692
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$
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361
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$
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119
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$
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1,170
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Adjusted
EBITDA(1)
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$
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502
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$
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4,326
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$
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712
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$
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8,794
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(1)
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This is a non-GAAP
measure. See "Non-GAAP Measures".
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Outlook
The Company's coal sales guidance for 2014 is approximately
1,700,000 tons. This consists of thermal coal sales guidance of
approximately 870,000 tons and metallurgical coal sales guidance of
approximately 830,000 tons with 430,000 tons expected to be sold as
a result of the acquisition of PBS. See "PBS Transaction" in the
Company's Management's Discussion and Analysis for the three and
six months ended June 30, 2014 for
further details.
Metallurgical Coal
In order to make a strong and stable coke for production of
steel, low volatile coal is a necessary ingredient in the sensitive
coal blend required. Unlike high volatile coal, low volatile
metallurgical coal is a regionally scarce commodity. Wilson Creek's metallurgical reserve base
consists entirely of premium rank low volatile coal. This unique
quality gives the Company's metallurgical coal product a secure
place in the domestic and seaborne trade.
During 2013, the Company was able to demonstrate the value of
its metallurgical coal to domestic and international steel
producers. As a result of the positive quality and reliability of
its metallurgical coal, the Company has been awarded supply
agreements for 2014 and beyond. In First Half 2014, metallurgical
coal sales were 138,000 tons. The metallurgical coal sales guidance
for the second half of 2014 is approximately 692,000, from the
newly formed combination of PBS and Wilson Creek, all of which have been
contracted. The Company also has sales contracts for 150,000 tons
in 2015 and 38,000 tons in 2016, with further updates to come on
2015 volumes after the upcoming 2015 sales season.
Through the acquisition of PBS, the Company gained access to a
significant new customer base which has sales contracted with both
domestic and international steel producers. This has further
diversified the Company's customer base. Corsa has historically
made sales of metallurgical coal to some of PBS' customers but a
significant portion of the sales contracts acquired as part of the
PBS Transaction are new customers to the Corsa group. The Company
is working with its new customers and internally to ensure a
seamless transition for the delivery of the contracted sales of PBS
and will continue to support a reliable supply of metallurgical
coal in the future. A significant portion of the domestic and
international metallurgical coal production is being produced at a
loss, a situation that most view as unsustainable. Producers
have responded to these conditions and have increasingly shown
supply discipline, cutting approximately 20 million metric tonnes
of production so far this year.
Thermal Coal
In First Half 2014, the Company was able to actively participate
in the spot market and has also scheduled spot orders for
deliveries in the second half of 2014. Total sales of thermal coal
in the First Half 2014 amounted to 444,000 tons. The Company is
also aware of several utilities, which consume the Company's
thermal coal product, in the market securing tons for the second
half of 2014 and into calendar 2015. While the thermal coal market
continued to stabilize in First Half 2014, the Company has been
successful in maintaining a high level of contracted sales for the
future. The thermal coal sales guidance for second half of 2014 is
approximately 426,000 tons, all of which has been contracted by the
Company. The Company also has sales contracts in place for 500,000
tons in 2015 and 500,000 tons in 2016. The Company continues to
actively market coal to domestic utilities and industries.
Non-GAAP Measures
Management uses Adjusted EBITDA as an internal measurement of
operating performance for the Company's mining and processing
operations. Management believes this non-GAAP measure provides
useful information for investors as they provide information in
addition to the GAAP measures to assist in their evaluation of the
operating performance of the Company. Reference is made to the
Management's Discussion and Analysis for the three and six months
ended June 30, 2014 for a
reconciliation of non-GAAP measures to GAAP measures.
Financial Statements and Management's Discussion and
Analysis
Refer to the Company's unaudited Condensed Interim Consolidated
Financial statements for the three and six months ended
June 30, 2014 and 2013 and related
Management's Discussion and Analysis, filed on www.sedar.com and
has posted to Corsa's website www.corsacoal.com, for the details of
the financial performance of the Company and the matters referred
to in this release.
Caution
The estimated coal sales, projected market conditions and
potential development disclosed in this news release are considered
to be forward looking information. Readers are cautioned that
actual results may vary from this forward looking information.
Actual sales are subject to variation based on a number of risks
and other factors referred to under the heading "Forward-Looking
Statements" below as well as demand and sales orders received.
Information about Corsa
Corsa's primary business is the mining, processing and selling
of thermal and metallurgical coal, as well as actively
exploring, acquiring and
developing resource properties consistent
with its coal business.
Forward-Looking Statements
Certain information set forth in this press release contains
"forward-looking statements" and "forward-looking information"
under applicable securities laws. Except for statements of
historical fact, certain information contained herein relating to
projected sales for the year ended December
31, 2014, including price and demand, constitutes
forward-looking statements which include management's assessment of
future plans and operations and are based on 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 "estimates",
"expects" "anticipates", "believes", "projects", "plans",
"outlook", "capacity" 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
the Company'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, but are not
limited to: risks that the actual production or sales for the 2014
fiscal year will be less than projected production or sales for
these periods; risks that the prices for coal sales will be less
than projected or expected; liabilities inherent in coal mine
development and production including restarting idled mines;
geological, mining and processing technical problems; inability to
obtain required mine licenses, mine permits and regulatory
approvals or renewals required in connection with the mining and
processing of coal; risks that the Company's coal preparation plant
will not operate at production capacity during the relevant period,
unexpected changes in coal quality and specification; variations in
the coal mine or coal preparation plant recovery rates; dependence
on third party coal transportation systems; competition for, among
other things, capital, acquisitions of reserves, undeveloped lands
and skilled personnel; incorrect assessments of the value of
acquisitions; changes in commodity prices and exchange rates;
changes in the regulations with respect to the use, mining and
processing of coal; changes in regulations on refuse disposal; the
effects of competition and pricing pressures in the coal market;
the oversupply of, or lack of demand for, coal; inability of
management to secure coal sales or third party purchase contracts;
currency and interest rate fluctuations; various events which could
disrupt operations and/or the transportation of coal products,
including labour stoppages and severe weather conditions; the
demand for and availability of rail, port and other transportation
services; the ability to purchase third party coal for processing
and delivery under purchase agreements; and management's ability to
anticipate and manage the foregoing factors and risks. The
forward-looking statements and information contained in this press
release are based on certain assumptions regarding, among other
things, coal sales being consistent with expectations; future
prices for coal; future currency and exchange rates; the Company's
ability to generate sufficient cash flow from operations and access
capital markets to meet its future obligations; the regulatory
framework representing royalties, taxes and environmental matters
where the Company conducts business; coal production levels; the
Company's ability to retain qualified staff and equipment in a
cost-efficient manner to meet its demand; and the Company being
able to execute its program of operational improvement and
initiative to realize cost synergies following the PBS
Transaction.. There can be no assurance that forward-looking
statements will prove to be accurate, as actual results and future
events could differ materially from those anticipated in such
statements. The reader is cautioned not to place undue reliance on
forward-looking statements. The Company does not undertake to
update any of the forward-looking statements contained in this
press release unless required by law. The statements as to the
Company's capacity to produce coal are no assurance that it will
achieve these levels of production or that it will be able to
achieve these sales levels.
The TSX Venture Exchange has in no way passed on the
merits of this news release. Neither TSX
Venture Exchange nor its Regulation Services Provider (as that term
is defined in policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this
release.
SOURCE Corsa Coal Corp.