TORONTO,
July 11, 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 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.
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.