TORONTO, May 1, 2015 /CNW/
- Corsa Coal Corp. (TSXV: CSO) ("Corsa"), a premium quality
metallurgical and thermal coal producer, today reports financial
results for the three months and year ended December 31, 2014. Corsa has filed its audited
Consolidated Financial Statements for the years ended December 31, 2014 and 2013 and related
Management's Discussion and Analysis on www.sedar.com under Corsa's
profile and has posted these documents to its website
www.corsacoal.com.
Corsa is also pleased to announce that an updated technical
report prepared in accordance with the requirements of National
Instrument 43-101 – Standards of Disclosure for Mineral
Projects has been prepared and filed on www.sedar.com under
Corsa's profile in respect of the Kopper Glo Project, and is
entitled "Technical Report on the Coal Reserve and Resource
Controlled by Kopper Glo Mining, LLC, Tennessee USA, Prepared in accordance with
National Instrument 43-101 – Standards of Disclosure for Mineral
Projects, Effective December 31,
2014".
The reference in this news release to "Fourth Quarter 2014"
means the three months ended December 31,
2014 and to "2014" means the year ended December 31, 2014. Unless otherwise noted, all
dollar amounts in this new release are expressed in United States dollars and all ton amounts are
short tons (2,000 pounds per ton).
Highlights
- Revenues of $51,235,000 for
Fourth Quarter 2014 and $140,547,000
for 2014.
- NAPP Division metallurgical coal sales of 317,000 tons in
Fourth Quarter 2014 and 718,000 tons in 2014.
- NAPP Division realized price per ton sold(1) for
metallurgical coal of $92 in Fourth
Quarter 2014 and $92 in 2014.
- CAPP Division thermal coal sales of 233,000 tons in Fourth
Quarter 2014 and 924,000 tons in 2014.
- CAPP Division realized price per ton sold(1) for
thermal coal of $69 in Fourth Quarter
2014 and $68 in 2014.
- Completed the acquisition of PBS Coals Limited ("PBS") on
August 19, 2014.
2015 Guidance
Guidance for the year ended December 31,
2015 is as follows:
- Sales for NAPP Division of 895,000 to 985,000 tons, including
metallurgical coal sales guidance of 725,000 to 775,000 tons and
thermal coal sales guidance of 170,000 to 210,000 tons.
- Sales for CAPP Division of 775,000 to 825,000 tons of thermal
coal.
- Cash production cost per ton sold(1) for
metallurgical coal at NAPP Division of $67
to $72.
- Cash production cost per ton sold(1) for thermal
coal at NAPP Division of $30 to
$35.
- Cash production cost per ton sold(1) for thermal
coal at CAPP Division of $57 to
$62.
(1) This is a non-GAAP financial measure. See "Non-GAAP
Financial Measures" below.
George Dethlefsen, Chief
Executive Officer, commented, "The fourth quarter of 2014 was a
time of transition for Corsa, as we continued to make operational
changes to integrate PBS into the NAPP Division and also
adjusted to changing market conditions. At our NAPP Division
in early 2015, we took several steps to lower our operating cost
profile including idling two higher cost mines that had encountered
challenging geology during the fourth quarter, and we shifted
resources to our most productive mines. The positive
financial impacts of these moves, in addition to our capital
improvement program, will be seen in subsequent quarters. The
CAPP Division finished the year strong and continues to be a low
cost producer of high quality thermal and industrial coal."
Dethlefsen continued, "Our priorities for 2015 include realizing
additional synergies from the PBS acquisition, productivity
improvement initiatives, broadening and enhancing customer
relationships, and continuing to be a leader in safety and
environmental compliance. During this time of depressed coal
prices, Corsa will continue to take cost-cutting steps to maintain
our advantaged position on the delivered cost curve. We will
also continue to invest in the growth of the company, in order to
position Corsa to capitalize on future improvements in coal
prices."
Financial Summary
|
|
For the three
months ended
|
For the year
ended
|
|
|
December
31,
|
December
31,
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
(000's)
|
|
(000's)
|
|
(000's)
|
|
(000's)
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
51,235
|
$
|
29,566
|
$
|
140,547
|
$
|
102,067
|
|
|
|
|
|
|
|
|
|
Net and comprehensive
(loss)
|
|
|
|
|
|
|
|
|
income
for period
|
$
|
(23,527)
|
$
|
(3,195)
|
$
|
(54,814)
|
$
|
50,647
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(1)
|
$
|
(304)
|
$
|
2,510
|
$
|
5,955
|
$
|
19,541
|
|
|
|
|
|
|
|
|
|
Net cash flow from
operations(1)
|
$
|
63
|
$
|
3,068
|
$
|
4,700
|
$
|
18,052
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
This is a non-GAAP
financial measure. See "Non-GAAP Financial Measures"
below.
|
|
|
As
at
|
|
As
at
|
|
|
December
31,
|
|
December
31,
|
|
|
2014
|
|
2013
|
|
|
(000's)
|
|
(000's)
|
|
|
|
|
|
Cash
|
$
|
13,925
|
$
|
20,066
|
|
|
|
|
|
Working
capital
|
$
|
16,427
|
$
|
7,241
|
|
|
|
|
|
Debt
|
$
|
34,451
|
$
|
17,772
|
|
|
|
|
|
Total
assets
|
$
|
363,954
|
$
|
202,724
|
|
|
|
|
|
Total
liabilities
|
$
|
168,558
|
$
|
72,966
|
|
|
|
|
|
Total
equity
|
$
|
195,396
|
$
|
129,758
|
Operations Summary
|
|
For the three
months ended
|
|
For the year
ended
|
|
|
December
31,
|
|
December
31,
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
Consolidated - Coal
tons sold
|
|
550,000
|
|
354,000
|
|
1,642,000
|
|
1,293,000
|
|
|
|
|
|
|
|
|
|
|
Realized price per
ton sold(1)
|
$
|
82
|
$
|
79
|
$
|
79
|
$
|
77
|
|
Cash production cost
per ton sold(1)
|
|
78
|
|
64
|
|
69
|
|
58
|
|
|
|
|
|
|
|
|
|
|
Cash margin per ton
sold(1)
|
$
|
4
|
$
|
15
|
$
|
10
|
$
|
19
|
(1)
|
This is a non-GAAP
financial measure. See "Non-GAAP Financial Measures"
below.
|
Outlook
Corsa's coal sales guidance for 2015 is approximately 1,670,000
to 1,810,000 tons. At NAPP, this consists of metallurgical coal
sales guidance of approximately 725,000 to 775,000 tons and thermal
coal sales guidance of approximately 170,000 to 210,000 tons. At
CAPP, this consists of thermal coal sales guidance of approximately
775,000 to 825,000 tons.
The preliminary coal sales outlook for 2015 in Corsa's
December 2014 investor presentation
(available on Corsa's website at www.corsacoal.com) was 2,300,000
to 2,600,000 tons which consisted of NAPP Division metallurgical
coal sales guidance of approximately 1,500,000 to 1,700,000 tons
and CAPP Division thermal coal sales guidance of approximately
800,000 to 900,000 tons. The metallurgical coal sales guidance
changed due to the idling of the Kimberly Run Mine and the Barbara
B Project in early 2015. The Barbara B Project was being developed
for commercial production in 2015. These moves were made in
response to changes in market conditions, particularly for export
sales orders.
NAPP Division
Current metallurgical coal prices continue at a level where a
substantial amount of global production is uneconomic. This
situation arose as a result of global producers committing to
multi-billion dollar projects in a significantly higher price
environment. Mines often take three or more years from final
investment decision to first production. New supply came online
over 2013 and 2014, a period where demand growth softened. This
supply growth is expected to mitigate in 2015 as the pipeline of
growth projects is exhausted and prices are insufficient to
incentivize new production. Corsa expects that over time, the
fundamentals of the metallurgical coal market will rebalance as
supply growth ends and production cutbacks are implemented.
Seaborne benchmark contract prices for the highest quality
metallurgical coal decreased to $109.50 per metric ton in the second quarter of
calendar 2015, reflecting a year-over-year decrease of
approximately 9%. Adjusting for inflation, the second quarter price
is the lowest benchmark settlement since 2004. Many analysts view
the current market fundamentals as unsustainable.
Unfavorable foreign exchange movements, low dry-bulk chartering
rates, and softening oil prices have added pressure to U.S.
metallurgical coal demand. Corsa estimates that approximately half
of the U.S. production for domestic and export markets is
unprofitable. Since on average, Central Appalachia metallurgical
coal producers have higher cost structures, the great majority of
the at-risk production is weighted towards that region with
Northern Appalachia production making up the smallest portion of
the at-risk production. Recent announcements of U.S. domestic
steel production cutbacks have decreased the overall domestic
metallurgical coal demand. However, this decrease has been
mitigated in part by a corresponding increase in metallurgical coal
demand in the transportation-advantaged region for Northern
Appalachia producers, including Corsa. Many of the steel producers'
strongest coke plants are located in this region.
In order to make a strong and stable coke for steel companies'
production of iron, low volatile coal is a necessary ingredient in
the sensitive coal blend required. NAPP Division's metallurgical
reserve base consists entirely of premium rank low volatile coal.
Corsa is also well positioned with its close proximity to coke
producers on the river systems, which are easily accessed by truck
or barge and rail through Pittsburgh.
As metallurgical coal production is rationalized in places like
China. Western Canada, Australia and the
United States, Corsa expects the seaborne metallurgical coal
fundamentals to normalize. Corsa's short rail distance and multiple
options to access the Baltimore
export terminals solidify Corsa's ability to take advantage of any
recoveries in seaborne pricing.
Metallurgical coal sales in 2015 are expected to be in the range
of 725,000 to 775,000 tons. As of the date hereof, approximately
68% of these sales are committed. Actual sales will depend on
customer demand and market conditions. Vessel nominations for
export sales are determined by customers and concluded on a
month-by-month basis.
CAPP Division
Current Southeastern U.S. utility market thermal coal pricing
declined 25% over the course of 2014. As a result, much of the
Central Appalachia coal production is below the marginal cost
curve. Corsa expects utility coal demand for Central Appalachia
production to decrease in 2015. Conversely, industrial thermal
demand grew 4% year over year for 2014 and Corsa expects industrial
demand to grow 1% in 2015.
The CAPP reserve base exclusively consists of high BTU and high
carbon content coal. These unique qualities, combined with
advantaged logistics, set CAPP apart from other producers and
create a niche in the utility and industrial marketplace. As a
result, despite thermal supply outpacing demand in 2014, CAPP has
been successful in maintaining a high level of contracted sales for
the future.
CAPP will continue to target the industrial market segment as it
transitions from a utility supplier to an industrial supplier
during 2015. Additionally, the planned opening of the Cooper Ridge
mine will position CAPP to service the industrial specialty coal
markets. Since the end market use of this coal is not for
electricity, these specialty markets are relatively protected from
natural gas prices and historically reflect higher pricing than the
thermal markets.
The CAPP coal sales for 2015 are expected to be in the range of
750,000 to 800,000 tons. As of the date hereof, approximately 86%
of these sales are committed. Actual sales will depend on customer
demand and market conditions. Corsa also has sales contracts in
place for 500,000 tons in 2016.
Non-GAAP Measures
Management uses realized price per ton sold, cash production
cost per ton sold, adjusted EBITDA and net cash flow from
operations as internal measurements of operating performance for
Corsa's mining and processing operations. Management believes these
non-GAAP measures provide useful information for investors as they
provide information in addition to the GAAP measures to assist in
their evaluation of the operating performance of Corsa. Reference
is made to the Management's Discussion and Analysis for the year
ended December 31, 2014 for a
reconciliation of non-GAAP measures to GAAP measures.
Financial Statements and Management's Discussion and
Analysis
Refer to Corsa's audited Consolidated Financial Statements for
the years ended December 31, 2014 and
2013 and related Management's Discussion and Analysis, filed on
www.sedar.com under Corsa's profile and posted to Corsa's website
www.corsacoal.com, for the details of the financial performance of
Corsa and the matters referred to in this news 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, 2015, including price and demand, expected cash
production costs and expectations of market demand for coal
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", "hope", "forecast", "anticipate",
"could" 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 Corsa'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 2015 fiscal year
will be less than projected production or sales for this period;
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 Corsa's coal preparation plants 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; Corsa'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 in the countries where
Corsa conducts business; coal production levels; Corsa's ability to
retain qualified staff and equipment in a cost-efficient manner to
meet its demand; and Corsa being able to execute its program of
operational improvement and initiatives to realize cost synergies
following the completion of Corsa's acquisition of PBS. 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. Corsa does not undertake to update any of the
forward-looking statements contained in this press release unless
required by law. The statements as to Corsa'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.