Corsa Files Third Quarter 2013 Financial Results
November 29, 2013 - Toronto, Ontario - Corsa Coal Corp. (TSXV: CSO) (“Corsa” or the “Company”) announces that it has filed its Condensed Interim Consolidated Financial Statements and related Management’s Discussion and Analysis for the three months and nine months ended September 30, 2013 on www.sedar.com and has posted these documents to its website www.corsacoal.com.
- Sales of 372,000 tons of coal at an average realized price of $81 per ton in the three months ended September 30, 2013 and 939,000 tons at an average realized price of $77 per ton in the nine months ended September 30, 2013. See “Sales”.
- Adjusted EBITDA(1) of $8,245,000 in the three months ended September 30, 2013 and $16,929,000 in the nine months ended September 30, 2013.
- Cash provided by operating activities of $7,898,000 in the three months ended September 30, 2013 and $11,885,000 in the nine months ended September 30, 2013.
- Sales guidance of 1,255,000 tons of coal for 2013 comprised of 1,100,000 tons of thermal coal and 155,000 tons of metallurgical coal. See “Outlook”.
- Completion of the previously announced transaction with Quintana Energy Partners.
- Metallurgical coal production expansion at the Casselman Mine with the purchase of a continuous haulage system for installation in January 2014.
- Underground mining permit for the metallurgical coal deposit at the Acosta Deep Project received from Pennsylvania Department of Environmental Protection allowing the Company to commence mine development in 2014.
(1) This is non-GAAP measure. See “Non-GAAP Measures” below.
Refer to the Company’s unaudited condensed interim consolidated financial statements and related management’s discussion and analysis for the three months and nine months ended September 30, 2013 for the details of the financial performance of the Company and the matters referred to in this release.
Keith Dyke, President, stated “During the third quarter, both the Kopper Glo thermal coal operations in Tennessee and the Wilson Creek metallurgical coal operations in Pennsylvania posted strong operating results with Kopper Glo increasing its tons sold from 2012 levels. The operations continue to improve in every area, including safety and cost reductions. Demand for our coal has remained firm in both markets and the Company expects the market pricing to improve in 2014. We have high quality coals in each of our market segments and we continue to expand and diversify our customer base. With high quality products and low operating costs, we will continue to execute the business plan and grow our company. The Company’s balance sheet is strong with cash of $16,931,000, total assets of $203,512,000 and total debt of $18,316,000 at September 30, 2013. The strong financial position of Corsa should allow us to take advantage of opportunities in acquisitions and internal expansion projects. The revenues and Adjusted EBITDA increases from year over year are encouraging, considering the market environment and in comparison to the performance of other public coal companies in North America. The dedication and skills of all our employees and the management teams are second to none in the industry.”
Three months ended September 30, 2013
The Company sold 372,000 tons of coal at an average realized price of $81 per ton. Thermal coal sales were 299,000 tons at an average realized price of $75 per ton FOB preparation plant. Metallurgical coal sales were 73,000 tons at an average realized price of $104 per ton FOB preparation plant.
Nine months ended September 30, 2013
The Company sold 939,000 tons of coal at an average realized price of $77 per ton. Thermal coal sales were 866,000 tons at an average realized price of $75 per ton FOB preparation plant. Metallurgical coal sales were 73,000 tons at an average realized price of $104 per ton FOB preparation plant.
The Company’s coal sales guidance for 2013 is approximately 1,255,000 tons. Thermal coal sales guidance for 2013 is approximately 1,100,000 tons and metallurgical coal sales guidance is approximately 155,000 tons. The 2013 coal sales guidance for metallurgical coal only covers the period from August to December 2013.
As a result of global economic conditions and low natural gas prices, the thermal coal industry has experienced a slowdown in demand that began in the fall of 2011 and has continued with the result that prices have declined. While this weakness in the market has continued into 2013 and is expected to continue into 2014, the Company believes there may be a modest recovery in the demand and price for thermal coal beginning in the second quarter of 2014.
While the thermal coal market, as expected, continues to be weak in 2013, the Company has continued to be successful in maintaining a high level of contracted sales. The Company has sales contracts for 846,000 tons of thermal coal for 2013. The current guidance for 2013 is thermal coal sales of approximately 1,100,000 tons, of which 866,000 tons were sold in the nine months ended September 30, 2013 leaving approximately 234,000 tons for the balance of the year. In addition, the Company currently expects thermal coal sales of between 200,000 and 250,000 tons in the first quarter of 2014. The Company continues to actively market its thermal coal and is in discussions with domestic utilities and industrial buyers.
The metallurgical coal markets have been volatile in 2013. The Company has continued to be successful in achieving metallurgical coal sales as a result of the quality of its coal. The current guidance for 2013 is metallurgical coal sales of approximately 155,000 tons, of which 73,000 tons were sold in the nine months ended September 30, 2013 leaving approximately 82,000 tons for the balance of the year. As the Wilson Creek division, which produces metallurgical coal, was acquired on July 31, 2013, the 2013 coal sales guidance only covers the period from August to December 2013. In addition, the Company currently expects metallurgical coal sales of 120,000 to 140,000 tons in the first quarter of 2014 based on current negotiations with existing and potential customers. The Company continues to actively market its metallurgical coal to domestic and international steel producers.
At September 30, 2013, the Company had cash of $16,931,000. During the nine months ended September 30, 2013, the Company received cash of $69,267,000 from sales collections (amounts receivable at December 31, 2012 plus sales for the nine months ended September 30, 2013 less amounts receivable at September 30, 2013) and received cash of $9,827,000 as a result of the transaction with Quintana Energy Partners.
In the nine months ended September 30, 2013, the operating activities of the Company provided cash of $11,885,000, the investing activities provided cash of $7,815,000 and the financing activities used cash of $7,979,000. The increase in cash for the nine months ended September 30, 2013 was $11,721,000.
The Company had working capital of $13,140,000 at September 30, 2013.
At September 30, 2013, the total debt of the Company was $18,316,000. The current portion of the Company’s debt comprised notes payable of $2,493,000 and finance lease obligations of $3,957,000. At September 30, 2013, the long-term portion of the Company’s debt comprised notes payable of $4,562,000, finance lease obligations of $4,562,000 and processing fee payable of $2,742,000. Details of the Company’s debt appear in the notes to the unaudited condensed interim consolidated financial statements for the three and nine months ended September 30, 2013.
At September 31, 2013, the shareholders’ equity of the Company was $132,812,000 and comprised share capital of $72,671,000, contributed surplus of $410,000 and retained earnings of $59,731,000.
Non-GAAP Financial Measures
Management uses EBITDA (Earnings before deductions for interest, taxes, depreciation and amortization) and Adjusted EBITDA (EBITDA adjusted for finance expenses and items related to the transaction with Quintana Energy Partners) as internal measurements of operating performance for the Company’s mining and processing operations. Management believes these non-GAAP measures provide useful information for investors as they provide information in addition to the GAAP measures to assist in their evaluation of the operating performance of the Company.
Reference is made to the management’s discussion and analysis for the three months and nine months ended September 30, 2013 for a reconciliation of non-GAAP measures to GAAP measures.
The estimated coal sales, projected market conditions and potential development disclosed in this news release are considered to be forward looking information. Readers are cautioned that actual results may vary from this forward looking information. Actual sales 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.
Information about Corsa
Corsa’s primary business is the mining, processing and selling of thermal and metallurgical coal, as well as actively exploring, acquiring and developing resource properties consistent with its coal business.
For further information please contact:
Paul D. Caldwell
Chief Financial Officer and Corporate Secretary
Corsa Coal Corp.
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 relating to projected sales the nine months ended September 30, 2013 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 the actual production or sales for the 2013 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 or expected; liabilities inherent in coal mine development and production including restarting idled mines; 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 with 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, coal sales being consistent with expectations; 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 where 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.
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