TORONTO,
May 3, 2012 /PRNewswire/ - 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 ended
February 29, 2012 on SEDAR and has
posted these documents to its website www.corsacoal.com.
Highlights for the first quarter included:
- Metallurgical coal sales of 65,000 tons at an average realized
price of $158 per ton
- Purchase of the Keyser Property with an indicated resource
of approximately 11 million in place tons
- Completion of a Cdn$22 million
equity private placement
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 has been a
challenging six months in the coal industry. While the industry
slowdown has affected us like everyone else, we were able to ship
approximately 65,000 tons of met coal in the first quarter at an
average realized price of $158 a ton
and have continued to ship coal in the second quarter with
expectations of doing the same or higher volumes in the second
quarter. In markets such as this, coal quality is important and
with our low vol met coal we are well positioned with a strong
product. Sales activity appears to be increasing and we are
encouraged by current indicators. We continue with property
acquisitions aimed at the aggressive expansion of our resource base
as evidenced by our recent purchase of the Keyser property as well
as optioning a further 6,500 acres for drilling."
Production and Sales
The Company sold 65,000 clean tons of
metallurgical coal at an average realized price of $158 per ton during the three months ended
February 29, 2012.
The Company produced 82,000 raw tons of
metallurgical coal during the three months ended February 29, 2012 with 40,000 tons from surface
mines and 42,000 from its underground mine. The cash mining costs
of metallurgical coal produced (not including royalties) were
$60 per raw ton. The costs were
impacted by mining conditions at the Casselman Mine (see "Mine
Production"). The Company purchased 55,000 raw tons and 7,000 clean
tons of metallurgical coal during the three months ended
February 29, 2012.
The Coal Preparation Plant processed 115,000 raw
tons of metallurgical coal and produced 58,000 clean tons during
the three months ended February 29,
2012. The cash processing costs of $22 per clean ton were impacted by lower
production levels resulting from lower than expected sales, double
handling of raw coal while the raw coal storage area is expanding,
third party refuse handling pending the start-up of the Company's
refuse site and lower recovery levels as a result of high dilution
experienced from the Casselman Mine due to poor mining conditions
and the flotation column performance.
The Company sold 21,000 raw tons of thermal coal
at an average realized price of $41
per ton during the three months ended February 29, 2012. The Company produced 28,000
raw tons of thermal coal from its surface mines in the three months
ended February 29, 2012. The cash
mining costs of thermal coal produced (not including royalties)
were $56 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 into the spring
of 2012. 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 or suspended. The
Company had expected to ship approximately 90,000 tons of
metallurgical coal in the three months ended February 29, 2012, however with the slowdown
sales were only 65,000 tons. The Company, as a result, reduced its
surface mine production and third party coal purchases to meet
these lower sales levels. The Company continued to ship coal in the
second fiscal quarter and based on sales to date, purchase orders
and scheduled trains, the Company expects to ship 65,000 to 70,000
clean tons of metallurgical coal in the quarter. At this time the
Company is not in a position to provide production, sales and cost
guidance 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
In January 2012,
the Cramer Mine ceased operations as scheduled as the coal reserves
were depleted. In April 2012, the
Quarry Mine was placed on temporary shutdown pending commercial
analysis of costs and coal prices. The Company expects to add
production from the Hastings and Ankeny Mines in fiscal 2012 if
markets dictate. A portion of the anticipated production of the
Hastings Mine has been permitted but the Ankeny production and the
balance of the Hastings production will depend on obtaining permits
to allow operations there to commence on schedule. 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 did not significantly reduce
production at the Casselman Mine
as it continues the mine expansion. 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
Casselman Mine continues to experience poor mining conditions due
primarily to the seam thinness currently being experienced together
with floor and roof conditions. Drill holes indicate that the seam
height is expected to increase in between two to three months of
operations at current levels. The Company continues to review its
expansion plan of adding a second unit and by end of the year a
third unit 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 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.
Sales
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 has sold less than the expected tonnage
under this arrangement to date. The Company is in discussions with
the customer with respect to the purchase of the "roll over" tons
in the 12 month contract period ending March
31, 2013. While the Company has sold, and continues to sell,
metallurgical coal to other customers on a spot basis in 2012, the
Company has not entered into any longer term contracts. The
Company's production in fiscal 2012 will be adjusted to reflect
customer demand during the year and will be dependent on the sales
orders received. Sales are expected to be less than the Company's
capacity to produce as a result of weak demand.
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 MD&A 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 "Risk Factors" and
"Forward-Looking Statements" below as well as demand and sales
orders received. Costs will be impacted by production levels
actually achieved.
Appointment of Director
Charles Pitcher
has been appointed a director of the Company. Mr. Pitcher is
currently acting as interim President and Chief Operating Officer
of Wilson Creek. Mr. Pitcher
has four decades of experience in civil and mining operations,
engineering, management and project development. He holds a B.Sc.
Mining Engineering degree (1979) from the Colorado School of Mines and a Mining Technologist
diploma from the British Columbia Institute of Technology (1969)
and is a member of the Professional Engineers of Ontario and the Canadian Institute of Mining
& Metallurgy.
Caution
The estimated coal production, purchases, sales
and 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. There can be no
assurance as to when or if the required permits will be issued.
Actual production, sales, shipments, purchases, total cash costs
and 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" as well as actual demand and sales
orders received. Costs will be impacted by production levels
actually achieved.
Technical Report and Qualified Person
The mineral resource estimates for the Keyser
Property 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. This deposit meets the definition of an
indicated coal resource as per National Instrument 43-101 -
Standards of Disclosure for Mineral Projects ("NI 43-101"). A
technical report (within the meaning of NI 43-101) has not been
filed in respect of the Keyser Property. The effective date of the
estimate of this mineral resources is October 14, 2011. The estimate of mineral
resources reflects known environmental, permitting, title and other
relevant matters. The footprint will require further definition in
the following areas in order to achieve the classification of a
coal reserve: surface and mineral control, mineability related to
geologic conditions, and economic viability. The mineral resources
referred to in this press release have not been classified as
mineral reserves and a feasibility study has not been
completed. Accordingly the economic viability of the Keyser
Property has not yet been demonstrated.
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.
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.
SOURCE Corsa Coal Corp.