TORONTO,
May 31, 2013 /CNW/ - Pacific Coal
Resources Ltd. (TSXV: PAK) has filed its unaudited interim
condensed consolidated financial statements for three months ended
March 31, 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 first quarter of 2013 began to
bear positive results as a consequence of the strategic changes
undertaken by the Company in the second half of 2012. We will
continue to aspire to greater cost savings and leveraging our
assets to maximize the Company's potential."
Financial and Operating Summary
A summary of the financial and operating results
for the fourth quarter and full year of 2012 is as follows:
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First Quarter |
(000's except per
share and operating data) |
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2013 |
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2012 |
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Operational |
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Tonnes of coal produced |
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223,346 |
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317,070 |
Average stripping ratio - operations |
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10.28:1 |
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10.83:1 |
Tonnes of coal sold(1) |
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220,751 |
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260,495 |
Average realized price per tonne sold |
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$ |
99.10 |
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$ |
103.27 |
Operating margin per tonne sold |
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$ |
(4.06) |
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$ |
(26.84) |
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Financial |
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Revenues |
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$ |
21,901 |
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$ |
28,424 |
Gross margin |
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(2,694) |
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(9,056) |
Net (loss) earnings attributed to
shareholders |
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(3,017) |
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(21,106) |
Basic and fully diluted (loss) earnings per
share(2) |
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(0.07) |
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(0.46) |
Total cash |
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4,785 |
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4,176 |
Total assets |
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238,635 |
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375,008 |
Total debt (3) |
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66,161 |
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48,238 |
(1) |
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Includes coal purchased from third parties for sale. |
(2) |
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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) |
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The total debt amount includes $33.4 million owed to Masering
S.A.S. ("Masering") at March 31, 2013 (March 31, 2012 - $9.3
million). |
First Quarter Highlights
- The Company produced 223,346 tonnes of coal in the first
quarter of 2013. Production at the Cerro Largo mine (104,366
tonnes) increased by 17% when compared to the fourth quarter of
2012 (86,414 tonnes). The Cerro Largo stripping ratio of 12.24:1 in
the first quarter of 2013 was the lowest stripping ratio the
Company has recorded since commencing full-time operation of the
mine. This represents a 24% decrease from the first quarter
of 2012 (16.19:1) and 32% decrease from the fourth quarter of 2012
(17.95:1).
- Total revenues for the first quarter of 2013 were $21.9 million, reflect sales of approximately
220,751 tonnes of coal at an average realized price of $99.10 per tonne. Coal sales in the first quarter
of 2013 were approximately 70% on an FOB basis.
- The total operating margin loss on a per tonne sold basis in
the first quarter of 2013 was 85% lower than the first quarter of
2012 operating margin loss, due largely to cost reductions at the
Cerro Largo mine and selling cost savings company-wide in the first
quarter of 2013, in addition to a work stoppage and operational
issues at the La Caypa mine in the first quarter of 2012.
- In the second half of 2012, the Company worked to identify its
operational issues and consider changes to its future strategic
plans. In the first quarter of 2013 a new mine operator began
work at La Caypa mine and in April
2013 the Company began operating the Cerro Largo mine
in-house. The Company also signed a Memorandum of Understanding
("MOU") in January 2013 to explore
entering into a joint venture to utilize Cerro Largo's thermal coal
for a power plant operation.
- During the first quarter of 2013, the Company recorded the
lowest quarterly G&A since its incorporation, significantly
ahead of its quarterly goal and representing an improvement of 25%
over the fourth quarter of 2012. The Company had anticipated a
quarterly G&A run rate of approximately $1.9 million, with actual G&A for the quarter
totaling $1.6 million.
- The Company has suspended updating the Company's mine 43-101
technical reports for the La Caypa and Cerro Largo mines due to the
Company's operational changes in the fourth quarter of 2012, with
the plan to re-start studies in the third quarter of 2013 and an
anticipated release of the reports by the end of the year.
Q1 2013 - La Caypa
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Production of Coal
(metric tonnes) |
Waste
(bcm (1)) |
Operational Strip Ratio |
North Pit |
118,980 |
1,019,702 |
8.57:1 |
South Pit |
- |
770,278 |
- |
Total |
118,980 |
1,789,980 |
8:57:1 |
(1) |
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"BCM" is Bank Cubic Metres |
During the first quarter of 2013, the Company
produced 118,980 tonnes at La Caypa, down approximately 36% from
185,175 tonnes produced in the first quarter of 2012. The reduction
is attributed to the fact that a new operator at the mine began
production in the middle of February
2013, after the former operator stopped operations suddenly
after being notified of the Company's plan to change operators in
December 2012. In the interim period,
the Company had limited production through its own operation,
although the amount produced was approximately 25% in January and
57% in February of what the new operator produced at full-operation
in March 2013. With the new operator
at full-operation, the Company continues to anticipate production
of 1.0 million tonnes at La Caypa in 2013, a 12% production
increase from 2012.
Operational stripping ratio at La Caypa was 8.57
in the first quarter of 2013 compared to 7.01 in the same period of
2012. The increase was also attributed to the change in operator
during the quarter, including the removal and installation of
equipment. The total stripping ratio for the first 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 the first quarter of 2014.
Q1 2013 - Cerro Largo
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Production of Coal
(metric tonnes) |
Waste
(bcm (1)) |
Strip Ratio |
Total |
104,366 |
1,277,113 |
12.24:1 |
(1) |
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"BCM" is Bank Cubic Metres |
In the first quarter of 2013, the Company
produced 104,366 tonnes from the Cerro Largo mine, compared to
131,895 tonnes in the first quarter of 2012 (which was the mine's
record high). Although production was greater than the fourth
quarter of 2012 (86,414 tonnes), production was affected by the
operator of Cerro Largo transitioning to become the new operator at
La Caypa, as the Company made the decision to take over as operator
of Cerro Largo in April 2013. The
Cerro Largo mine stripping ratio of 12.24 in the first quarter of
2013 was the lowest recorded since the mine has been at full
operation. This stripping ratio represents a 24% decrease
compared to the first quarter of 2012 (16.19:1). The Company
credits the improved stripping ratio to the resolution of mud
concentration issues late in the fourth quarter of 2012.
Q1 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 first quarter
of 2013 concentrated on conducting repairs to the coking
infrastructure.
The Company attempted to hold costs to a minimum
during the first quarter of 2013, with the operating margin held to
a loss of $0.2 million as a result of
fixed overhead costs of $0.1 million
and an inventory impairment of $0.1
million.
Corporate update
In the first quarter of 2013, the Company began
implementing the significant strategic and operational plans that
were established in the second half of 2012. 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
Masering.
In terms of operational plans, the exploration
of alternatives for the operation of the Cerro Largo mine led the
Company to decide to convert to a self-operating mine, with the
Company commencing operations in April
2013. The re-assessment of the Cerro Largo operation also
led the Company to sign a long-term focused MOU with the purpose of
the incorporation of a company in the future dedicated to the
generation of electric power using the coal from the mine.
In the first quarter of 2013, the Company
decided that the optimal decision for Jam was to enter into a
commercial relationship with another mining company that has
experience producing metcoal and coke, and then using the coke in
its future operations or selling it to third parties. With
this approach in mind, the Company believes it can finalize a deal
that would result in a coke plant production ramp-up starting in
June 2013. The Company is
continuing to also look into various alternatives for refurbishment
of the Jam mine to maximize operational efficiency, with the hopes
to re-start metcoal production in the second quarter of 2014.
Underground mine
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. The process of hiring a leading
international underground operator at La Caypa continues, with the
expectation for underground mining to begin in the first quarter of
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 analysis is expected to be
completed early in the third quarter of 2013, at which time the
Company will determine an adequate course of action for the
property.
Barranquilla port
The Company has hired a port expert to lead a
project focusing on determining an optimal use for and the ultimate
development of the Barranquilla port. Management plans on
expanding its permits to facilitate the shipment of liquids from
the port.
Cost reduction program
The Company has undertaken a comprehensive cost
cutting program including payroll and G&A reductions. The
Company expected to reduce the first quarter G&A run rate to
approximately $1.9 million in 2013,
but the G&A for the first quarter surpassed expectations by
$0.3 million ($1.6 million), an approximate 14% decrease from
the expectation and approximately 25% lower than G&A in the
fourth quarter of 2012 ($2.2 million
excluding $0.1 million of DD&A).
The Company continues to forecast the annual G&A expense at
$7.5 million (a quarterly run rate of
$1.9 million), but generating
additional cost savings continues to be a top priority.
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.
SOURCE Pacific Coal Resources Ltd.