Pacific Coal Resources Ltd. announces third quarter 2013 financial results
TORONTO, Nov. 28, 2013 /PRNewswire/ -- Pacific Coal Resources Ltd. (TSXV: PAK) has filed its unaudited interim condensed consolidated financial statements for three months ended September 30, 2013, 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.
Hernan Martinez, Executive Chairman, commented: '"The Company continues to improve its results; the adjusted EBITDA in the third quarter of 2013 was an increase of over 70% from the second quarter of 2013. The adjusted EBITDAs of the last two quarters have been the highest since the first quarter of 2011. The Company also continues to cut costs, recording a quarterly G&A expense less than the forecast for the third quarter in a row and reducing the 2013 G&A expectation by $1.0 million. We are extremely pleased with the Company's progress and look forward to even better results in the future."
Financial and Operating Summary
A summary of the financial and operating results for the third quarter of 2013 is as follows:
| Third Quarter |
|||||
| (000's except per share and operating data) |
2013 |
2012 |
|||
| Operational |
|||||
| Tonnes of coal produced |
395,499 |
341,248 |
|||
| Average stripping ratio - operations |
8.48:1 |
11.38:1 |
|||
| Tonnes of coal sold |
356,299 |
366,678 |
|||
| Average realized price per tonne sold |
$ |
102.71 |
$ |
92.53 |
|
| Operating margin per tonne sold(1) |
$ |
18.77 |
$ |
(5.76) |
|
| Financial |
|||||
| Revenues |
$ |
37,189 |
$ |
35,033 |
|
| Gross margin(1) |
5,001 |
(4,120) |
|||
| Adjusted EBITDA(1) |
5,252 |
(5,035) |
|||
| Earnings (loss) from operations |
11,376 |
(15,676) |
|||
| Net earnings (loss) attributed to shareholders |
9,021 |
(15,201) |
|||
| Basic and fully diluted (loss) earnings per share(2) |
0.18 |
(0.33) |
|||
| Total cash |
448 |
135 |
|||
| Total assets |
266,513 |
318,462 |
|||
| Total debt(3) |
$ |
63,098 |
$ |
59,483 |
|
| (1) |
Adjusted EBITDA and operating margin per tonne sold are non-GAAP finance performance measures and gross margin is an additional GAAP financial performance measure, none of which have standardized definitions under IFRS. See pages 18-19 of the Company's Third Quarter of 2013 MD&A for further details. |
| (2) |
At a special meeting held on March 11, 2013, the Company's shareholders approved a share consolidation, in which seven old common shares of the Company were exchanged for one new common share. This also resulted in a consolidation of the Company's outstanding share purchase warrants and stock options. |
| (3) |
Total debt includes bank indebtedness, long-term debt, finance leases and interest accruing Norcarbon S.A.S. amounts owed to Masering S.A.S. (September 30, 2013 - $23.7 million, September 30, 2012 - $19.8 million). |
Third Quarter Highlights
- The Company produced 395,499 tonnes of coal in the third quarter of 2013. This represents a 16% increase over the third quarter of 2012 (341,248) and is consistent with production in the second quarter of 2013 (398,865). Quarterly production of 315,933 tonnes at La Caypa was consistent with the second quarter of 2013 (320,436), which was the highest for the mine since the first quarter of 2011. The La Caypa operational stripping ratio of 7.74:1 in the third quarter of 2013 was the lowest for the mine since the second quarter of 2012. This represents a 3% decrease from the second quarter of 2013 (8.02:1).
- Total coal revenues in the third quarter of 2013 of $36.6 million reflect sales of 356,299 tonnes of coal at an average realized price of $102.71 per tonne. This represents an 8% increase over the third quarter of 2012 ($33.9 million).
- Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") for the third quarter of 2013 was $5.3 million, the highest since the first quarter of 2011. This represented a significant improvement over the third quarter of 2012 and the second quarter of 2013 (loss of $5.0 million and earnings of $3.1 million, respectively). The total operating margin of $18.77 on a per tonne sold basis in the third quarter of 2013 was also the highest since the first quarter of 2011.
- Earnings from operations and net earnings in the third quarter of 2013 were the highest the Company has ever recorded ($11.4 million and $7.4 million respectively), as a result of favourable domestic sales contracts and continued cost reduction at the Company's La Caypa mine site, in addition to the port impairment reversal recognized in the quarter.
- In October and November 2013, the Company signed sale agreements for $29.0 million for 85% of the Barranquilla port, with the Company retaining the remaining 15%. In September 2013, the Company signed a contract for a 40,000 tonne pilot project for La Caypa's underground mine. The Company also signed a rental agreement for use of its coke plant in August 2013 until the end of 2014.
- In the third quarter of 2013, the Company continued to record a quarterly G&A lower than forecasted. The $1.4 million (excluding $0.1 million of depreciation, depletion and amortization ("DDA")) recorded is 11% and 13% lower than the amount recorded in the first and the second quarter of 2013 respectively, and 23% less than the $1.9 million originally forecasted.
Q3 2013 - La Caypa
| Production of Coal |
Waste |
Strip Ratio |
|
| North Pit |
315,933 |
2,444,648 |
7.74:1 |
| South Pit |
- |
916,406 |
- |
| Total |
315,933 |
3,361,054 |
10.64:1 |
(1) "BCM" is Bank Cubic Metres
During the third quarter of 2013, the Company produced 315,933 tonnes at La Caypa, achieving 105% of its planned production, and a 26% increase from the 251,525 tonnes produced in the third quarter of 2012. The increase can be attributed to the positive results of the collaboration between the Company's La Caypa team and the mine's new operator, which began production in February 2013, in addition to the destabilization of the mine footwall in August 2012 which limited production in the third quarter of 2012. Given that La Caypa produced 755,349 tonnes of coal in the first nine months of 2013, including the limited production in the first quarter as the new operator ramped-up, the Company is in-line to meet the anticipated production target of 1.0 million tonnes at La Caypa in 2013. This would represent a 12% production increase from 2012.
The operational stripping ratio was 7.74:1 in the third quarter of 2013, which was consistent with the ratio of 7.82:1 in the third quarter of 2012. The total stripping ratio for the third quarter of 2013 (10.64:1) includes development work which took place at the south pit to prepare the site for production, which is expected to begin by the end of 2013.
Q3 2013 - Cerro Largo
| Production of Coal |
Waste |
Strip Ratio |
|
| Total |
79,566 |
910,694 |
11.45:1 |
In the third quarter of 2013, the Company produced 79,566 tonnes from the Cerro Largo mine, compared to 89,723 tonnes in the third quarter of 2012, a decrease of 11%. The third quarter of 2013 production represented 40% of what was planned for the three month period. The decrease can be attributed to lower than forecasted availability of equipment for mine operations and transportation, as the Company transitioned from use of a third party operator to operating the mine in-house in 2013. The Company plans to rectify the equipment issues in the fourth quarter of 2013. As the Company continues to ramp-up in-house operations of Cerro Largo, production targets for 2013 for Cerro Largo were adjusted to 0.4 million tonnes, consistent with the production levels in 2012. The Cerro Largo mine stripping ratio of 11.45:1 in the third quarter of 2013 represented a 46% decrease when compared to the third quarter of 2012 (21.38:1) and was the result of production in a section of the pit with a high concentration of coal, as compared to other sections of Cerro Largo.
Q3 2013 - Jam
The Company's metcoal production at Jam has been suspended since late in the second quarter of 2012 as a consequence of high costs and weak international prices and, until the end of July 2013, the Company's coke plant had focused on processing third party purchased materials. In August 2013, an agreement was signed with a third party for the rental of the Company's coke processing plant and related equipment for approximately $0.3 million annually. This agreement ends December 31, 2014, coinciding with the long-term plan of the Company to re-start metcoal and coke production in 2015, at which point the Company hopes international prices will have rebounded.
Corporate update
In the third quarter of 2013, the Company progressed with the strategic and operational plans that were implemented in the first half of 2013 as part of the Company's core competency re-focus. Operationally, the re-focus was evident as the Company's Adjusted EBITDA was the highest since the first quarter of 2011. Improving the profitability of its operating mines, specifically Cerro Largo, will continue to be a focus of the Company going forward.
Strategically, significant progress was made in completing two goals the current senior management set upon joining the Company, determining the future of the Barranquilla port and eliminating the debt owed to the former operator of Cerro Largo. First, in October and November 2013 the Company signed sale agreements relating to 85% of the Barranquilla port (note: the transactions remain subject to TSXV approval). The Company currently retains the remaining 15% of the concession, although the Company believes it is highly probable this interest will be sold in the near future. Second, in November 2013 the Company's subsidiary Norcarbon signed a settlement agreement with the former operator at Cerro Largo that sets out that the total balance owed shall be paid by February 2014.
Underground mine
In September 2013 signed a contract with an experienced miner for an underground mine at La Caypa. The miner will first complete a pilot project of approximately 40,000 tonnes of coal, with the goal of contracting all of the underground mining if the pilot project is successful. The Company anticipates that preliminary work will begin in the fourth quarter of 2013 and, assuming successful completion of the pilot project, full operation to begin in 2014.
La Tigra exploration
The Company has signed an agreement with a third party to perform analysis of the results of asphaltite exploration at the La Tigra property, at the third party's cost, to determine the site's prospects. The Company is awaiting the analysis, at which time the Company will determine an adequate course of action for the property.
Cost reduction program
The Company continued to exceed cost cutting expectations in the third quarter of 2013, after forecasting the 2013 quarter run rate at $1.9 million late last year. G&A for the third quarter surpassed expectations by $0.3 million ($1.6 million) and $0.6 million for the nine months ended September 30, 2013 ($5.0 million). The Company has reduced the forecasted G&A for 2013 from $7.5 million to $6.5 million, a 52% decrease from 2012.
About Pacific Coal Resources Ltd.
Pacific Coal Resources Ltd. is a Canadian-based mining company engaged in the acquisition, exploration and production of coal and coal-related assets from properties located in Colombia. The Company's common shares are listed on the TSX Venture Exchange and trade under the symbol "PAK".
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.
For further information:
Melissa Krishna
Deputy General Counsel & Secretary
+1-(416)-360-8725
SOURCE Pacific Coal Resources Ltd.
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