TORONTO, Aug. 29, 2013 /CNW/ - Pacific Coal Resources Ltd. (TSXV: PAK)
has filed its unaudited interim condensed consolidated financial
statements for three months ended June 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 second quarter of
2013 delivered tangible results of the Company's strategic overhaul in
the form of several milestones, including the highest quarterly
production at La Caypa and the first positive adjusted EBITDA since
incorporation. The Company also continued to cut costs, recording a
quarterly G&A expense less than the forecast for the second quarter in
a row. 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 second quarter
of 2013 is as follows:
(000's except per share and operating data)
Tonnes of coal produced
Average stripping ratio - operations
Tonnes of coal sold
Average realized price per tonne sold
Operating margin per tonne sold(1)||
Earnings from operations
Net earnings (loss) attributed to shareholders
Basic and fully diluted (loss) earnings per share(2)||
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 17-19 of the Company's Second
Quarter of 2013 MD&A for further details.
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.
Total debt includes bank indebtedness, long-term debt, finance leases
and interest accruing amounts owed to Masering S.A.S. (June 30, 2013 -
$23.9 million, June 30, 2012 - $14.8 million). This Masering S.A.S.
("Masering") amount excludes $1.6 million that is currently under
negotiation with Masering and $3.1 million for the current operations
of La Caypa mine (paid subsequent to June 30, 2013 as per the Masering
La Caypa mine contract).
Second Quarter Highlights
The Company produced 398,865 tonnes of coal in the second quarter of
2013. This represents a 19% increase over the second quarter of 2012
(335,008) and a 79% increase over the first quarter of 2013 (223,346).
Quarterly production of 320,436 tonnes at La Caypa was the highest for
the mine since the first quarter of 2011 and represented 111% of
planned mine production for the quarter. The Cerro Largo stripping
ratio of 9.35:1 in the second quarter of 2013 was the lowest stripping
ratio the Company has recorded since acquiring the mine. This
represents a 63% decrease from the second quarter of 2012 (25.53:1) and
24% decrease from the first quarter of 2013 (12.24:1).
Total revenues in the second quarter of 2013 of $37.1 million reflect
sales of 349,818 tonnes of coal at an average realized price of $106.05
per tonne. The second quarter revenue represents a 5% increase over
the second quarter of 2012 ($35.2 million) and a 70% increase over the
first quarter of 2013 ($21.9 million).
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA") for the second quarter of 2013 was $3.1 million, positive
for the first time since the first quarter of 2011. This represented a
significant improvement over the second quarter of 2012 and the first
quarter of 2013 (loss of $8.2 million and $2.5 million, respectively).
The total operating margin of $13.60 on a per tonne sold basis in the
second quarter of 2013 was also the highest since 2011.
Earning from operations and net earnings in the second quarter of 2013
were the highest the Company has ever recorded ($0.4 million and $2.1
million respectively), as a result of an increased average realized
price per tonne sold and the continued cost reduction at the Company's
La Caypa mine site.
The second quarter of 2013 was the first full quarter under the new mine
operator at La Caypa mine, in addition to the Company beginning
operation of the Cerro Largo mine in-house in April 2013. At Jam, a
rental agreement for use of the Company's coke plant was signed in
August 2013, expiring December 31, 2014. Lastly, the Company signed a
Memorandum of Understanding ("MOU") in June 2013 for development of the
Barranquilla port, the concession of which is owned through the
Company's subsidiary S.P. Terminal de las Flores S.A. ("SPTF").
The Company continued to record a quarterly G&A lower than forecasted in
the second quarter of 2013. The $1.7 million recorded (including $0.1
million of non-cash depreciation) is consistent with the first quarter
of 2013, 23% lower than the fourth quarter of 2012 and 7% less than the
$1.9 million forecasted.
Q2 2013 - La Caypa
Production of Coal|
"BCM" is Bank Cubic Metres
During the second quarter of 2013, the Company produced 320,436 tonnes
at La Caypa, achieving 111% of its planned production, and a 20%
increase from the 267,321 tonnes produced in the second 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, as the second quarter represented the operator's first full
quarter of operations. Given that La Caypa produced 439,416 tonnes of
coal in the first half of 2013, including the limited production in the
first quarter as the new operator ramped-up, the Company continues to
anticipate production of 1.0 million tonnes at La Caypa in 2013. This
would represent a 12% production increase from 2012.
The operational stripping ratio was 8.02 in the second quarter of 2013,
compared to 5.57 in the second quarter of 2012, attributable to the
operator's focus for the quarter being an area of the main pit with
greater waste. The ratio realized in the second quarter of 2012 neared
historic lows and was well below the main pit's quarterly average. The
total stripping ratio (12.67:1) for the second quarter of 2013 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.
Q2 2013 - Cerro Largo
Production of Coal|
In the second quarter of 2013, the Company produced 78,429 tonnes from
the Cerro Largo mine, compared to 67,687 tonnes in the second quarter
of 2012, an increase of 16%. The increase can be attributed to the
work undertaken to address mud concentrations at the bottom of the open
pit in the second quarter of 2012. The production in the second
quarter of 2013 represented 49% of what was planned, as production was
limited by the Company transitioning to operating the mine in-house
during the quarter. In-house operations progressed well during the
quarter, with the production tonnage in June 2013 more than doubling
from April 2013. The Company's production target in 2013 for Cerro
Largo is between 0.5 million and 0.6 million tonnes, a 50% increase
from 2012. The Cerro Largo mine stripping ratio of 9.35 in the second
quarter of 2013 was the lowest recorded since the mine has been at full
operation. This stripping ratio represents a 63% decrease compared to
the second quarter of 2012 (25.53:1). The Company noted that the
reduction was the result of production in a section of the pit with a
high concentration of coal, as compared to other sections of Cerro
Q2 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. The plant has focused on processing third party
purchased materials for use in the production of coke. Coke production
has been held at minimal levels since the suspension, with activity
during the quarter concentrated on conducting repairs to the coking
infrastructure. The Company held costs to a minimum during the second
quarter of 2013, with an operating loss of $0.3 million.
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.
In the second quarter of 2013, the Company progressed with the strategic
and operational plans that were implemented in the first quarter of
2013 as part of the Company's core competency re-focus. Operationally,
the re-focus was evident in the second quarter as the Company's
adjusted EBITDA was positive for the first time since the first quarter
of 2011. Improving the profitability of its operating mines will
continue to be a focus of the Company going forward. Strategically,
management continued to investigate different avenues to raise funds.
As part of this process, the Company engaged the financial advisory
firm of LW Securities in April 2013 to explore alternatives to
consolidate the Company's bank indebtedness and reduce amounts owed to
Negotiations are being finalized with a third party to perform a pilot
project for underground operations at La Caypa beginning in the first
quarter of 2014. If the pilot project is successful, the Company and
the third party plan to sign a long-term deal.
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.
In the second quarter of 2013, the Company signed an MOU with the hopes
of jointly developing the Barranquilla port with a related party for
shipment of liquids. The arrangement was approved by the shareholders
of the Company in August 2013; therefore the Company expects the final
arrangement to be signed in the near future, subject to approval by the
TSX Venture Exchange.
Cost reduction program
The Company continued to exceed cost cutting expectations in the second
quarter of 2013, after forecasting the 2013 quarter run rate at $1.9
million late last year. G&A for the second quarter surpassed
expectations by $0.2 million ($1.7 million) and $0.4 million for the
six months ended June 30, 2013 ($3.4 million). To be conservative, the
Company continues to forecast the annual G&A expense at $7.5 million (a
quarterly run rate of $1.9 million), but additional cost savings
continues to be a top priority.
The Company also announces that on August 19, 2013 it granted options to
purchase 57,143 common shares of the Company to a newly appointed
director of the Company, subject to regulatory approval. The stock
options were granted pursuant to the Company's stock option plan and
are exercisable at a price of $0.45 per share, set to expire on August
Re-organization of Norcarbon S.A.S.
In order to address the working capital deficit, Norcarbon S.A.S., the
subsidiary of the Company whose assets include the Cerro Largo title,
intends to file for a re-structuring under the Colombian
Superintendencia de Sociedades 'Law 1116 of 2006'.
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
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
SOURCE: Pacific Coal Resources Ltd.