Corsa Coal Corp : Corsa Files Second Quarter 2012 Financial Results
07/11/2012| 06:47pm US/Eastern
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July 11, 2012 Toronto, Ontario - Corsa Coal Corp. (TSXV: CSO)
("Corsa" or the "Company") announces that it has filed its
Condensed Interim Consolidated Financial Statements and
Management's Discussion and Analysis for the three months and
six months ended May 31, 2012 on SEDAR and has posted these
documents to its website www.corsacoal.com.
Second Quarter highlights included:
-
Metallurgical coal sales of 72,000 tons at an average
realized price of $152 per ton in Q2
-
$25 million debt refinancing
-
Casselman Mine upgraded to proven reserve
Refer to the Condensed Interim Consolidated Financial
Statements and Management's Discussion and Analysis filed for
the details of the financial performance of the Company and
the matters referred to in this release including the
technical reports and independent qualified person.
Don Charter, President and Chief Executive Officer, stated
"It is a challenging time in the coal industry and while the
industry slowdown has affected us like everyone else, we were
able to ship approximately 72,000 tons of met coal in the
second quarter at an average realized price of $152 a ton,
exceeding our guidance and we have been able to provide
guidance for Q3 of approximately 140,000 tons."
Production and Sales
Three months ended May 31, 2012
The Company sold 72,000 clean tons of metallurgical coal at
an average realized price of $152 per ton FOB its Coal
Preparation Plant during Q2 2012.
The Company produced 74,000 raw tons of metallurgical coal
during Q2 2012 with 38,000 tons from surface mines and 36,000
from its underground mine. The cash mining costs of
metallurgical coal produced (not including royalties) were
$62 per raw ton. The costs continue to be impacted by mining
conditions at the Casselman Mine (see "Casselman Mine"). The
Company purchased 26,000 raw tons and 1,000 clean tons of
metallurgical coal in Q2 2012.
The Coal Preparation Plant processed 114,000 raw tons of
metallurgical coal and produced 66,000 clean tons during Q2
2012 at cash processing costs of $23 per clean ton.
Cash costs were impacted by lower production levels resulting
from lower than expected sales, double handling of raw coal
while the raw coal storage area was expanded, now completed
and operational. As well start-up costs of the Company's
refuse site, which is now operational eliminating third party
refuse handling, and lower recovery levels as a result of
high dilution experienced from the Casselman Mine and
floatation column performance also contributed to higher
costs.
The Company sold 38,000 raw tons of thermal coal at an
average realized price of $33 per ton during the three months
ended May 31, 2012. The Company produced 38,000 raw tons of
thermal coal from its surface mines in the Q2 2012. The cash
mining costs of thermal coal produced (not including
royalties) were $38 per raw ton. The thermal coal mined is
ancillary to the mining of metallurgical coal.
Six months ended May 31, 2012
The Company sold 137,000 clean tons of metallurgical coal at
an average realized price of $155 per ton FOB the Coal
Preparation Plant during the six months ended May 31, 2012.
The Company produced 155,000 raw tons of metallurgical coal
during the six months ended May 31, 2012 with 77,000 tons
from surface mines and 78,000 from its underground mine. The
cash mining costs of metallurgical coal produced (not
including royalties) were $61 per raw ton. The costs were
impacted by mining conditions at the Casselman Mine (see
"Mine Production"). The Company purchased 82,000 raw tons and
8,000 clean tons of metallurgical coal during the period.
The Coal Preparation Plant processed 229,000 raw tons of
metallurgical coal and produced 124,000 clean tons during the
six months ended May 31, 2012 at cash processing costs of $24
per clean ton. Cash cost were impacted by lower
production levels resulting from lower than expected sales,
double handling of raw coal while the raw coal storage area
was expanded, now completed and operational. As well
start-up costs of the Company's refuse site, which is now
operational eliminating third party refuse handling, and
lower recovery levels as a result of high dilution
experienced from the Casselman Mine and flotation column
performance also contributed to higher costs.
The Company sold 59,000 raw tons of thermal coal at an
average realized price of $36 per ton during the six months
ended May 31, 2012. The Company produced 66,000 raw tons of
thermal coal from its surface mines in the period. The cash
mining costs of thermal coal produced (not including
royalties) were $45 per raw ton. The thermal coal mined is
ancillary to the mining of metallurgical coal.
Outlook
As a result of global economic conditions and demand for
steel, the coal industry has experienced a slowdown which
began in the fall of 2011 and has continued. A number of
producers have announced reductions in planned metallurgical
coal production for 2012 as a result of this slowdown and in
many cases guidance has been reduced. The Company set Q2
guidance at 65,000 to 70,000 clean tons of metallurgical coal
and was able to exceed guidance having shipped 72,000 tons in
the quarter. Based on purchase orders, scheduled and expected
trains and sales agreements in hand the Company expects to
ship approximately 140,000 clean tons of metallurgical coal
in the third quarter ending August 31, 2012, doubling its Q2
sales. Meeting this guidance would result in the Company
shipping approximately 275,000 clean tons of metallurgical
coal in the nine months ended August 31, 2012.
Industry reports indicate that US Low Vol met coal spot
pricing FOB (Eastern seaport) have shown some improvement
recently. Reports are showing that June quarterly
pricing for Australian prime is in the $225 range up from the
previous quarterly pricing in the $210 range.
The Company had a one year 500,000 ton sales contract for
metallurgical coal which expired March 31, 2012. With the
market slowdown discussed, the Company sold less than the
expected tonnage under this arrangement, however the customer
has been purchasing the "roll over" tons this year, which is
expected to be completed by the end of Q3. The Company has
sold, and continues to sell, metallurgical coal to other
customers on a spot basis in 2012 and the Company has entered
into one longer term contract for calendar 2012.
The US coal industry continues to be challenged particularly
with respect to US thermal coal demand and with respect to
lower quality met coals. Accordingly, at this time the
Company is not in a position to provide production, sales and
cost guidance beyond Q3 until sales levels can be more
accurately forecast. For the remainder of the fiscal year,
the Company will continue to adjust its production and third
party purchases to match actual demand and sales orders.
Mine Production
Surface Mines
The Company currently has three surface mines operating; the
Acosta, Hemminger and Plant mines. In addition, it has two
surface projects which have received permit approval. A
portion of the anticipated production of the Hastings Mine
has been permitted, Ankeny has received permitting and
bonding approval and is waiting the issuance of the permit
and the balance of the Hastings production will depend on
obtaining permits to allow operations there to commence. The
Company expects to add production from the Hastings and
Ankeny Mines in fiscal 2012 if markets dictate. In April
2012, the Quarry Mine ceased operations and has begun
reclamation and the Cramer Mine reclamation has been
completed. The Company has significantly advanced the permit
application for expansion at the Hemminger Mine in order to
commence low cost high wall mining at this project. The
pit is being prepared in anticipation of receiving this
permit to be in a position to commence high wall mining as
quickly as possible. The Plant mine has experienced
coal qualities lower than expected and the Company has
conducted further drilling. While it is considering
potential for highwall mining it expects to stop production
at this pit in light of current coal prices.
Coal production in fiscal 2012 will be adjusted to reflect
actual customer demand during the year. The Company's thermal
coal production is ancillary to its metallurgical surface
coal operations and will be adjusted to reflect customer
demand, but is also dependent in part on the level of
metallurgical coal production at the surface operations.
Underground Mine
The Company continues the mine expansion at the Casselman
mine. The Company's initial plans were to add a second
continuous mining unit in the second quarter of fiscal 2012
and a third unit in the fourth fiscal quarter. The Company
continues to review its expansion plan of adding a second
unit which has been delayed until the third quarter and a
third unit by the end of the year or first quarter of next
year based on coal markets. Coal production in fiscal 2012
will be adjusted to reflect actual customer demand during the
year.
Purchased Coal
The Company has the capacity to purchase raw metallurgical
coal from third parties which increases the amount of raw
coal available for blending and processing at the Coal
Preparation Plant. The Company's actual purchases will be
adjusted to reflect actual customer demand during the year.
The level of purchased coal is also impacted by the coal
qualities of the purchased coal and the Company's coal due to
blending requirements. The cost of purchased metallurgical
coal is typically, but not always, based on a formula so that
the price paid is dependent on the actual sale price realized
by the Company.
Processing
The Coal Preparation Plant is operating below designed
capacity. The Company expects its average recovery in the
plant in fiscal 2012 to be below its long term targets due to
the out of seam dilution from the low seam coal area in the
initial phase of the Casselman mine and continued lower than
expected recovery from fines in the flotation column. The
Company's production in fiscal 2012 will be adjusted to
reflect actual customer demand during the year which will
also affect the processing cost per ton.
Casselman Mine
The Casselman Mine is an underground metallurgical coal mine
located in Garrett County, Maryland. This mine is
approximately 31 miles by road from the Coal Preparation
Plant.
The mine commenced operations in late July 2011and is
currently operating with one continuous mining unit. The
initial mine plan was to have a second continuous mining unit
in production by second fiscal quarter 2012 which has been
delayed until the third quarter and a third unit in
production in the fourth fiscal quarter of 2012 or first
quarter of next year, however the Company continues to review
this mine plan and expansion in the context of the current
market. The current recovery is below the expected life of
mine recovery due to the low seam section in which the
Company is currently operating. The Company has installed a
screening plant at the mine site to improve Coal Preparation
Plant recoveries and reduce haulage costs
An updated technical report (the "Casselman Report") to
satisfy the requirements of NI-43-101 has been prepared and
filed on www.sedar.com with respect to the Casselman Mine and
is entitled the "Wilson Creek Energy, LLC Technical Report on
Coal Reserves, Casselman Mine Site, Garrett County, Maryland,
USA, June 13, 2012". The Casselman Report upgrades the
Casselman Mine indicated resource to a proven reserve of
9,886,000 recoverable short tons which is expected to result
in 7,884,000 short tons of clean coal after
beneficiation. Reference is made to the Casselman
Report for full details.
The indicated resource was originally disclosed on May 5,
2011 in the technical report titled "Wilson Creek Energy,
LLC, Technical Report on Coal Resources, Casselman Mine Site,
Garrett County, Maryland, USA". The coal reserve footprint is
2,452 acres, 19 of which have been mined to date to develop
egress to the remainder of the reserves. The coal seam is the
Upper Freeport, which ranges from 100 to 600 feet deep over
the reserve area, exhibiting a gentle inclination, averaging
3.2 degrees. All of the reserve footprint is permitted and
controlled for all aspects of mining. The reserve footprint
has been calculated, employing Carlson software modeling,
utilizing 52 drill holes for a resulting drilling density of
1 hole per 0.07 square mile. Twenty five (25) of the test
holes were analyzed for quality, designating the deposit as
low volatile, bituminous coking coal.
The Company continues to look to expand this mine and has
obtained options to lease a further approximately 1,000 acres
adjoining the current permitted area for this mine.
These areas will require exploration and assessment before
the Company determines if it will exercise these options to
lease. These additional areas are not contained in the
Casselman Report. (see "Forward-Looking Statements").
Caution
The estimated coal production, purchases, sales and mining
cash costs per ton of coal and processing costs per ton of
coal sold disclosed in this press release are considered to
be forward looking information. Readers are cautioned that
actual results may vary from this forward looking
information. Actual production, purchases, total cash costs,
sales and processing costs 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. Costs will be impacted by
production levels actually achieved.
Technical Report and Qualified Person
The mineral reserve and resource estimates in this press
release have been prepared under the supervision of, and the
technical information in this press release was verified and
approved by, Dennis Noll of Earthtech Inc., a qualified
person, as such term is defined in NI 43-101 - Standards
of Disclosure for Mineral Projects. Dennis Noll is
independent of Corsa and Wilson Creek Energy.
Information about Corsa
Corsa's main operating subsidiaries are Wilson Creek Energy
LLC and Maryland Energy Resources LLC based in Somerset
County, Pennsylvania. Its primary business is the
mining, processing and selling of metallurgical coal, as well
as actively exploring, acquiring
and developing resource
properties consistent with its coal business.
For further information please contact:
Corsa Coal Corp.:
Don Charter,
President and Chief Executive Officer
416-214-9800
communication@corsacoal.com
www.corsacoal.com
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 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 transactions referred to will not
be completed; risks that the actual production or sales for
the 2012 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; liabilities inherent in
coal mine development and production; 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 in 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, 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 in the countries in which the Company conducts
business; coal production levels; and the Company's ability
to retain qualified staff and equipment in a cost-efficient
manner to meet its demand. 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 neither approved nor
disapproved the contents of this press 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.
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