Pacific Coal Resources Ltd. announces second quarter 2012 financial results
TORONTO, Aug. 30, 2012 /PRNewswire/ – Pacific Coal Resources Ltd. (TSXV: PAK)
has filed its unaudited interim condensed consolidated financial
statements for the three and six months ended June 30, 2012, 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.
Luis Carvajales, Chief Executive Officer, commented: ‘”We continued to make progress with regard to the Company’s production
during the second quarter of 2012, producing 335,008 tonnes of thermal
coal at our La Caypa and Cerro Largo mines. Important progress
continues with the development work at La Caypa’s south pit, Cerro
Largo’s integrated mine plan and the CI Jam project. We have also
implemented a comprehensive cost reduction plan, given actual thermal
coal and metcoke market trends, that will reduce our G&A expenses by
35% or approximately $6 million annually. We realized savings in the
second quarter of 2012 with G&A expenses down 9% from the first quarter
of 2012, in addition to the 12% decrease previously realized in the
first quarter of 2012, with further reductions in G&A planned for the
third quarter of 2012 and the remainder of the year.”
Financial and Operating Summary
A summary of the financial and operating results for the three and six
months ended June 30, 2012 and 2011 is as follows:
Second Quarter First Half (000's except per share and 2012 2011 2012 2011 operating data) Operational Tonnes of coal produced 335,008 307,528 652,078 669,300 Average stripping ratio - 9.60 7.40 10.20 7.24 operations Tonnes of coal sold(1) 338,775 376,332 599,270 757,200 Average realized price per $ 98.93 $ 94.27 $ 100.82 $ 95.60 tonne sold Operating margin per tonne (12.00) 5.89 (18.45) 11.46 sold(2) Financial Revenues $ 35,197 $ 35,477 $ 63,621 $ 72,392 Gross margin(3) (7,271) 1,464 (16,327) 7,308 Net (loss) earnings (49,520) (8,789) (70,626) (45,253) attributed to shareholders (4) Basic and fully diluted (0.15) (0.03) (0.22) (0.16) (loss) earnings per share Total cash 2,858 34,196 2,858 34,196 Total assets 332,067 383,109 332,067 383,109 Total debt (5) 42,013 32,250 42,013 32,250
(1) Includes coal purchased from third parties for sale. (2) "Operating margin per tonne sold" - see additional financial measures in MD&A. (3) "Gross margin" represents total revenues, net of operating costs, transportation and port services costs, selling costs, mine disruption costs, depreciation, depletion and amortization, and impairment charges related to inventory. (4) 2012 includes a non-cash impairment writedown of $37.5 million; see "Q2 2012 - Cerro Largo" section for discussion. (5) Includes bank indebtedness, long-term debt (including current portion), and obligations under finance leases (including current portion).
Second Quarter Highlights
-- The Company produced 335,008 tonnes of coal during the second quarter of 2012, representing a 6% increase over 317,070 tonnes produced in the prior quarter. In addition, the Company's stripping ratio from operations improved 11% from 10.83:1 in the first quarter of 2012 to 9.60:1 during the second quarter of 2012. -- Production at La Caypa was 267,321 tonnes representing an increase of approximately 45% from the first quarter of 2012 and 96% of its planned production for the quarter. Production at the Cerro Largo mine was 67,687 tonnes, representing a decrease of approximately 50% from the record highs reached during the first quarter of 2012, negatively impacted by additional work undertaken to address difficulties encountered with mud concentrations at the bottom of the open pit and to maintain high wall and foot wall stability. -- Total revenues for the second quarter of 2012 were $35.2 million, up 24% from $28.4 million in the first quarter of 2012, on the strength of coal sales of 338,775 tonnes, 89% of which were sold on an FOB basis at an average realized price of $102.95 per tonne. -- Exploration at both the La Caypa and Cerro Largo mines was completed during the second quarter in coordination with SRK Consulting (UK) Ltd. (SRK) pursuant to updating the NI 43-101 technical reports in connection with the open pit and underground resources at both mines. The updated technical reports are expected to be released during the third quarter of 2012. -- The net loss of $49.5 million, or $0.15 per share, in the second quarter of 2012 includes a $37.5 million, or $0.12 per share, non-cash impairment writedown of Cerro Largo and other non-current assets triggered by the recent trend in coal market prices. A change in this trend could result in a reversal of this writedown in a future period.
Q2 2012 – La Caypa
___________________________________________________ | |Production of Coal| Waste |Strip Ratio| | | (metric tonnes) |(bcm (1))| | |__________|__________________|_________|___________| |Actual Pit| 267,321|1,488,154| 5.57:1| |__________|__________________|_________|___________| |South Pit | -| 865,176| -| |__________|__________________|_________|___________| |Total | 267,321|2,353,330| 8.80:1| |__________|__________________|_________|___________|
(1) "BCM" is Bank Cubic Metres
During the second quarter of 2012, the Company produced 267,321 tonnes
at La Caypa completing 96% of its planned production for the quarter.
Operational stripping ratios at La Caypa improved 22% over the second
quarter of 2011 and were only 3% behind the historic lows reached in
the fourth quarter of 2011. Total stripping ratios at La Caypa include
waste volumes moved from the south pit.
The Company expects total coal production from La Caypa, including the
south pit, to reach 1,150,000 tonnes for 2012.
Q2 2012 – Cerro Largo
______________________________________________ | |Production of Coal| Waste |Strip Ratio| | | (metric tonnes) |(bcm (1))| | |_____|__________________|_________|___________| |Total| 67,687|1,727,779| 25.53:1| |_____|__________________|_________|___________|
(1) "BCM" is Bank Cubic Metres
The Company’s production at Cerro Largo of 67,687 tonnes in the second
quarter of 2012 was approximately 50% lower than the record highs in
the previous quarter. Production at Cerro Largo during the quarter was
negatively impacted due to significant work required to address mud
concentrations at the bottom of the open pit and work necessary for
maintaining high wall and foot wall stability. The Company expects
these improvements to result in greater production from the mine in the
second half of the year.
During the second quarter of 2012, there was a fundamental decrease in
current and forward looking Atlantic basin seaborne coal prices.
Consequently, the fair value of the Cerro Largo property, based on
estimated cash flows using these current and forward looking prices,
declined below its carrying value at June 30, 2012, and the Company
recorded a $35.6 million non-cash impairment charge on its Cerro Largo
non-current assets in the second quarter. Under IFRS, future
improvements in such coal prices that result in an increase in the fair
value of the property could result in a reversal of the impairment
writedown in future periods.
Q2 2012 – CI Jam
_______________________________ | |Q2 2012|Q1 2012| |_______________|_______|_______| |Tonnes produced| 7,397| 10,547| |_______________|_______|_______|
Given current metcoke market trends the Company has decided to maintain
coke production at minimum levels. The Company’s metcoke production has
been suspended and coke production activity has been focused on
processing third party purchased metcoke.
Revised production guidance
As a result of production for the first half of 2012, the Company’s 2012
production target at La Caypa has been reduced from 1,200,000 tonnes to
1,150,000 tonnes, including expected coal production from the south pit
At Cerro Largo, in light of the second quarter results and the ongoing
work required to clear the mud concentration in the pit, the Company
has revised its 2012 production target for Cerro Largo from 800,000
tonnes to 700,000 tonnes.
The Company’s total 2012 forecasted production is 1,850,000 tonnes, a
projected 30% increase from 2011 production.
Exploration at both the La Caypa and Cerro Largo mines was completed
during the second quarter of 2012 in coordination with SRK pursuant to
updating the National Instrument 43-101 compliant technical reports in
connection with the open pit and underground resources at both mines.
The updated technical reports are expected to be released during the
third quarter of 2012.
The Company continues to advance its Colloidal Asphaltite in Water
project (“CAW”). In addition, the Colloidal Coal in Water (“CCW”)
project continues to advance with trial burns at the Babcock & Wilcox
facilities conducted in July and August 2012. A new visitor day for
detailed discussions of the progress of “CCW” trials has been scheduled
for Q3 2012. A fact sheet on the properties, uses and commercialization
opportunities for asphaltite is available on the Company’s website at www.pacificcoal.ca.
Conceptual design for the underground mine project at La Caypa continues
to progress according to plan with in-house staff working in
coordination and with the support of external local consultants.
La Tigra exploration
Geophysical, metalotelluric, and gravimetric studies are in progress and
results were received and are in the process of being analyzed to
determine future exploration plans.
Work at the Barranquilla port has been suspended as a result of the
recent metcoke market trends and mid term demand/supply balance
expectations. The Company is exploring different options to attract
third party interest in the port which may include a potential joint
venture, sale or partial sale of the asset.
Cost reduction program
The Company has undertaken a comprehensive cost cutting program
including payroll and G&A reductions. During the second quarter,
actions taken contributed to a decrease of 9% in G&A expenses to $4.4
million as compared to $4.8 million in the first quarter of 2012, in
addition to the 12% decrease already realized in the first quarter of
2012. G&A costs are expected to decrease a further 35% during the
remainder of 2012 to an expected quarterly run rate of approximately $3
million by the fourth quarter of 2012.
About Pacific Coal Resources Ltd.
Pacific Coal Resources Ltd. is a Canadian-based mining company focused
on coal, coking coal, asphalt and asphaltite exploration, development
and production from producing, development-stage and exploration-stage
properties in Colombia. The Company’s common shares and warrants are
listed on the TSX Venture Exchange and trade under the symbol “PAK” and
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.