TORONTO,
June 2, 2014 /PRNewswire/ - Pacific
Coal Resources Ltd. (TSXV: PAK) has filed its unaudited
consolidated financial statements for the three months ended
March 31, 2014, together with its
management's discussion and analysis ("MD&A") for the
corresponding period. All financial figures contained herein are
expressed in U.S. dollars unless otherwise noted. These documents
will be posted on the Company's website at www.pacificcoal.ca and
under the Company's profile at www.sedar.com.
Hernan Martinez,
Executive Chairman, commented: "In the first quarter of 2014, we
were able to reduce general and administrative expenses below
forecasted amounts, further ramp up south pit production at La
Caypa, hire a third party operator at Cerro Largo, and enter into
an Memorandum of Understanding at Jam for a collaborative project.
We aim to further strengthen our focus on the core assets by
disposing off the remaining interest in the Barranquilla port and
continue to increase cost and operational efficiencies to maximize
production."
Financial and Operating Summary
A summary of the financial and operating results
for the first quarter of 2014 is as follows:
|
|
|
|
|
(000's except per share and operating
data) |
First Quarter |
2014 |
2013 |
Operational |
|
|
|
|
Tonnes of coal produced(1) |
|
274,421 |
|
223,346 |
Average stripping ratio -
operations |
|
9.09:1 |
|
10.28:1 |
Tonnes of coal sold |
|
371,716 |
|
220,751 |
Average realized thermal coal
price per tonne sold (2) |
$ |
95.67 |
$ |
99.10 |
Operating margin per tonne sold
(2) |
$ |
11.51 |
$ |
(4.06) |
|
|
|
|
|
Financial |
|
|
|
|
Revenues |
$ |
35,671 |
$ |
21,901 |
Adjusted Earnings Before Interest,
Taxes, Depreciation
and Amortization ("EBITDA") (2) |
|
3,087 |
|
(2,503) |
Earnings (loss) from
operations |
|
1,161 |
|
(4,887) |
Net loss attributed to
shareholders |
|
(113) |
|
(3,150) |
Basic and fully diluted loss per
share |
$ |
(0.00) |
$ |
(0.07) |
|
|
|
|
|
Cash |
|
430 |
|
4,785 |
Mineral properties additions - La
Caypa south pit |
|
4,368 |
|
2,309 |
Total assets |
|
254,164 |
|
238,635 |
Total debt (3) |
$ |
48,477 |
$ |
66,161 |
(1) |
Excludes 2,323 tonnes of coal produced from underground
mine.
See 'Outlook' for details of pilot project. |
(2) |
Adjusted EBITDA, average realized thermal coal price per tonne
sold and
operating margin per tonne sold are non-GAAP finance
performance
measures, none of which have standardized definitions under
IFRS.
See pages 17-18 of the Company's Q1 2014 MD&A for further
details. |
(3) |
Total debt includes short-term debt, long-term debt, finance
leases and
amounts owed to Masering S.A.S. by Norcarbon S.A.S.
("Norcarbon")
(March 31, 2014 - $14.7 million, March 31, 2013 - $33.4
million). |
Q1 2014 Highlights
- Coal production: The Company produced 274,421
tonnes of coal in the first quarter of 2014 from open-pit mining,
representing an increase of 24% from the first quarter of 2013
(223,346 tonnes). The Company's operational stripping ratio of
9.09:1 in the first quarter of 2014 represented a decrease of 18%
and 12% from the fourth quarter of 2013 (11.06:1) and first quarter
of 2013 (10.28:1), respectively.
- Revenues: Coal revenues for the first quarter of
2014 were $35.6 million - 371,716
tonnes of coal sold at an average realized price of $95.67 per tonne, an increase from $94.52 per tonne in the fourth quarter of 2013.
Coal revenues represented an increase of 54% from the fourth
quarter of 2013 and an increase of 62% from the first quarter of
2013.
- Earnings from operations: Earnings from
operations for the first quarter of 2014 were $1.2 million, a significant improvement when
compared to the loss of $5.4 million
in the fourth quarter of 2013 and a loss of $4.9 million in the first quarter of 2013.
This can be attributed to continued Company-wide cost and expense
reductions.
- Adjusted EBITDA and operating margin: Adjusted
EBITDA for the first quarter of 2014 was $3.1 million, an increase of $6.5 million and $5.6
million and when compared to the fourth and first quarters
of 2013 losses of $3.4 million and
$2.5 million, respectively. The total
operating margin for the three months ended March 31, 2014 on a per tonne sold basis was
$11.51.
- Operation of Cerro Largo and La Caypa
mines: In January 2014,
the Company entered into an agreement with a third party for the
operation of the Cerro Largo mine. The third party has substantial
experience with the Cerro Largo mine, being previously involved
with its operations prior to the Company's acquisition of the
mine. After commencing in November 2013, operations in the La Caypa south
pit continued in the first quarter of 2014 as the Company produced
22,503 tonnes from the pit in the quarter.
- General and administrative ("G&A") expenses:
The Company recorded $1.2 million in
G&A expenses, excluding DD&A, in the three months ended
March 31, 2014, compared to
$1.6 million in the same period of
2013, a reduction of 26%. G&A expenses in the first quarter of
2014 were also 13% lower than the $1.4
million forecasted. The Company anticipates a
quarterly G&A run rate of $1.4
million for the remainder of 2014.
Operational Update
La Caypa mine
|
Production of Coal
(metric tonnes) |
Waste
(bcm)(1) |
Stripping Ratio |
|
|
|
|
Operations(2) |
238,828 |
2,100,572 |
8.80:1 |
South pit development |
- |
1,487,944 |
N/A |
Total |
238,828 |
3,588,516 |
15.03:1 |
(1) |
Bank cubic meters |
(2) |
216,325 tonnes from La Caypa's north pit and 22,503 tonnes from
the
south pit. |
Production from the La Caypa mine was 238,828
tonnes in the first quarter of 2014, achieving 89% of its planned
production and over two times the tonnes produced in the first
quarter of 2013 (118,980 tonnes), but 8% less than the 258,754
tonnes in the fourth quarter of 2013.
The increase from the first quarter of 2013 can
be attributed to the fact that the current operator of La Caypa
commenced operations in February
2013, therefore production in the first quarter of 2013 was
limited. The decrease from the fourth quarter of 2013 can be
attributed to the ramp up of the south pit operations in the first
quarter of 2014, which began in November
2013.
The Company is forecasting thermal coal from La
Caypa in 2014 of approximately 960,000 tonnes (open pit production
of 920,000 tonnes and underground production of 40,000 tonnes),
representing a 5% production decrease from 2013. The Company had
initially forecasted production of an additional 130,000 tonnes
from open pit production in 2014, but production results in the
second and third quarter of 2014 are expected to be lower than
originally estimated as a result of adverse geological conditions
in the section from which the Company plans to produce. The
issue in the section is primarily a result of naturally occurring
burning of the coal mantles in addition to the mantles being
affected by the presence of a geological fault.
Cerro Largo mine
|
Production of Coal
(metric tonnes) |
Waste
(bcm) |
Stripping Ratio |
Q1 2014 |
35,593 |
393,644 |
11.06:1 |
In the first quarter of 2014, the Company
produced 35,593 tonnes from the Cerro Largo mine, compared to
104,366 tonnes in the first quarter of 2013, a decrease of 66%.
This was consistent with the 40,624 tonnes produced in the fourth
quarter of 2013.
The Company dealt with a production slowdown in
the first quarter of 2014 as the Company finalized an agreement
with a third party for operation of the Cerro Largo mine. On
January 31, 2014, the Company signed
a contract with Servicios Integrales del Ranchería S.A.S. ("SIRA
S.A.S.") for operations of the Cerro Largo mine. This operator is
controlled by a company with vast experience in engineering, strip
mining services and the Cerro Largo mine specifically, as they are
a former operator of the mine (prior to the Company's acquisition
of it) and therefore familiar with the region and mine conditions.
The Company produced well below planned production for the first
quarter of 2014 because the forecast was made under the assumption
that the transition to third party operation would be finalized
before the end of 2013.
Production targets for 2014 at Cerro Largo are
0.4 million tonnes, an approximately 32% increase over the tonnes
produced in 2013. The Company had originally estimated
production in 2014 to be 0.5 million tonnes, but the results of the
first quarter of 2014 mitigated the annual plan.
Outlook
The Company has concentrated its efforts on the
production of thermal coal after re-focusing its strategic goals in
2013, which included the sale of a majority of the Barranquilla
port concession in the fourth quarter of 2013. Management is also
focusing on eliminating the funds owed to Masering for past
operation of the Cerro Largo mine, with a balance of $14.7 million owed at March 31, 2014, compared to a high of
$27.6 million owed to Masering at
December 31, 2012. The funds
generated from the sale of the Barranquilla port concession will be
used to pay the remaining amount owed to Masering, helping the
Company focus efforts on improving operations. The Company
continues to explore options to sell its remaining 15% interest of
the Barranquilla port concession.
Operationally, the margin of $5.4 million at the La Caypa mine was the fourth
straight quarter with positive results, although the Company is
still in need of additional cash to continue to fund the ramp-up of
south pit operations. The Company is determined to continue in
improving operations of the Cerro Largo mine, evidenced by the
hiring of an experienced mine operator and a reduction of the cost
of operations per tonne by approximately 6% (when compared to the
2013 per tonne average).
The Company is forecasting open pit production
of 920,000 tonnes and underground production of 40,000 tonnes of
thermal coal from La Caypa in 2014, reduced by 130,000 tonnes from
the original forecast based on geological issues discovered in the
area the Company will be producing from in the second and third
quarter of 2014. After beginning late in the fourth quarter of
2013, production at the south pit continued to ramp-up with
approximately 23,000 tonnes produced in the first quarter of
2014. The Company is anticipating the south pit to be at full
operation by the second quarter of 2014. The underground mine
pilot project began in February 2014,
with approximately 2,500 tonnes of coal produced from the mine in
the first quarter. The underground miner will complete a pilot
project of approximately 40,000 tonnes of coal with the goal of
contracting all of the underground mining if the pilot project is
successful. If successful, full production of the underground
mine would commence in 2015. Production from the south pit
and underground mine is critical for the La Caypa mine going
forward as the main pit nears the end of its life in the second
half of 2014. At Cerro Largo, with the new operator beginning
production in March 2014, production
targets for 2014 at Cerro Largo are 0.4 million tonnes.
In February 2014,
the Company signed a letter of intent with a third party to perform
analysis of the results of asphaltite exploration at the La Tigra
property and additional exploration if desired, at the third
party's cost, to determine the site's prospects. The third party's
exploration period will conclude at the end of October 2014, although they can elect to extend
the period by six months.
In terms of G&A expenses, after exceeding
the Company's 2013 cost cutting objective, management
was able to surpass the Company's reduction goal for the first
quarter of 2014. Actual G&A expenses were $1.2 million for the first quarter of 2014,
compared to the Company's forecast of $1.4
million. The Company anticipates a quarterly G&A
run rate of $1.4 million for the
remainder of 2014, but further cost reduction continues to be a
priority.
About Pacific Coal Resources Ltd.
Pacific Coal Resources Ltd. is a
Canadian-based mining company engaged in the acquisition,
exploration and production of coal and coal-related assets from
properties located in Colombia.
The Company's common shares are listed on the TSX Venture Exchange
and trade under the symbol "PAK".
Forward Looking Information:
This news release contains "forward-looking
information", which may include, but is not limited to, statements
with respect to the future financial or operating performance of
the Company and its projects. Often, but not always,
forward-looking statements can be identified by the use of words
such as "plans", "expects", "is expected", "budget", "scheduled",
"estimates", "forecasts", "intends", "anticipates", or believes" or
variations (including negative variations) of such words and
phrases, or state that certain actions, events or results "may",
"could", "would", "might" or "will" be taken, occur or be achieved.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of Pacific Coal to be materially
different from any future results, performance or achievements
expressed or implied by the forward-looking statements.
Forward-looking statements contained herein are made as of the date
of this press release and Pacific Coal disclaim, other than as
required by law, any obligation to update any forward-looking
statements whether as a result of new information, results, future
events, circumstances, or if management's estimates or opinions
should change, or otherwise. 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. Accordingly, the reader is
cautioned not to place undue reliance on forward-looking
statements.
Neither TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this news release.
SOURCE Pacific Coal Resources Ltd.