PAK

TORONTO, April 29, 2014 /CNW/ - Pacific Coal Resources Ltd. (TSXV: PAK) has filed its audited annual consolidated financial statements for year ended December 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. The Company intends to file its 2013 annual information form (AIF) on April 30, 2014. 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: '"2013 saw the Company achieve the strategic objectives we set out in late 2012, with an ever-decreasing G&A and improvements to the operations at La Caypa and Cerro Largo, both in terms of stripping ratio and operating costs per tonne produced.  This is evident in the Company's Adjusted EBITDA, which increased from a loss of $30.7 million in 2012 to earnings of $2.4 million in 2013. Looking back, I'd like to see 2013 as the turning point for the Company and we are excited for what it is to come. In 2014, we will be working to further reduce costs and maximize production efficiency to make our core assets profitable."

Financial and Operating Summary

A summary of the financial and operating results for the fourth quarter and full year of 2013 is as follows:

2013 Highlights

• Coal production: The Company produced 299,378 tonnes of coal in the fourth quarter of 2013 for a total of 1,317,088 tonnes in 2013, representing an increase of 9% and 4% from the fourth quarter of 2012 (274,756 tonnes) and 2012 total (1,268,082 tonnes), respectively.  The Company's operational stripping ratio of 9.31:1 in 2013 represented a decrease of 13% from 2012 (10.71:1).
  
  
• Revenues: Coal revenues for the fourth quarter of 2013 were $23.0 million - 243,847 tonnes of coal sold at an average realized price of $94.52 per tonne. Total coal revenues in 2013 of $118.6 million reflect sales of 1,170,716 tonnes of coal at an average realized price of $101.26 per tonne.  The average realized price of coal sold in 2013 represented a 3% increase over 2012 ($98.22).
  
  
• Earnings from operations: Earnings from operations for the fourth quarter and year ended December 31, 2013 were a loss of $5.4 million and earnings of $1.5 million respectively, compared to a loss of $58.2 million and a loss of $137.4 million in 2012.  The earnings from operations for the year ended December 31, 2013 was the highest the Company has ever recorded, and can be attributed to the favourable domestic sales contracts and continued Company-wide cost and expense reductions, in addition to the port impairment reversal recognized in the year.
  
  
• Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") and operating margin: Adjusted EBITDA for the year ended December 31, 2013 was $2.4 million, a significant improvement over a loss of $30.7 million in the year ended of December 31, 2012.  The total operating margin for the year ended December 31, 2013 on a per tonne sold basis was $7.33. See 'Non-GAAP and Additional GAAP Financial Measures' for a definition and reconciliation of Adjusted EBITDA and operating margin per tonne sold.
  
  
• Operational and strategic changes:  In October and November 2013, the Company signed sale agreements for $29.0 million for 85% of the Barranquilla port.  In September 2013, the Company signed a contract with the purpose of implementing a pilot project for La Caypa's underground mine.  The Company also signed a rental agreement for use of its coke plant in August 2013. In January 2014, an agreement was entered into for the operation of the Cerro Largo mine.
  
  
• General and administrative ("G&A") expenses: The Company recorded $6.3 million in G&A expenses in the year ended December 31, 2013, compared to $13.5 million in 2012, a reduction of 53%. Actual G&A expenses were also 15% lower than the $7.5 million initially forecast for 2013.  G&A of $1.7 million in the fourth quarter of 2013, was 25% lower than the corresponding quarter in 2012 ($2.2 million). The Company anticipates a quarterly G&A run rate of approximately $1.4 million in 2014.

Outlook

The Company concluded 2013 with a bright outlook on the future after making significant progress on the goals set at the beginning of the year.  Management implemented its strategic and operational plans in the first half of 2013 as part of the Company's re-focus on core competencies. Operationally, the re-focus was evident as the Company's Adjusted EBITDA increased from a loss of $30.7 million in 2012 to earnings of $2.4 million in 2013.  The goal of making the operating mines profitable, specifically Cerro Largo, will continue to be a focus of the Company in 2014.

Strategically, significant progress was made in completing two goals set by senior management: determining the future of the Barranquilla port concession, and eliminating the debt owed to the former operator of Cerro Largo.  First, in October and November 2013 the Company signed sale agreements for $29 million relating to 85% of the Barranquilla port concession.  The Company currently retains the remaining 15% of the concession, although the Company is currently exploring options to sell this interest.  Second, in November 2013 the Company's subsidiary Norcarbon signed a settlement agreement with the former operator at Cerro Largo, with proceeds from the Barranquilla port concession sale going towards settling the total balance owed.

In terms of operational plans, management was able to exceed the 2013 cost cutting goal, with annual G&A expenses of $6.3 million compared to the initial forecast of $7.5 million.  This is also significantly lower than the $13.5 million recorded in 2012.  The Company has set a new cost cutting goal, forecasting 2014 G&A expenses at $5.5 million.

At La Caypa, although the change in operator during the first quarter of 2013 negatively impacted production earlier in the year, the Company was still able to fulfill its 2013 production and financial goals for La Caypa mine.  Financially, the mine achieved an operating margin of $14.4 million in 2013, compared to being breakeven in 2012. In terms of production, the mine produced 1.0 million tonnes of coal in 2013, consistent with the forecast and a 12% increase over the production results of 2012.  The Company continues to solidify the mine's future as the original main pit nears the end of its life, by signing a contract with an experienced miner in September 2013 for an underground mine pilot project and production from La Caypa's south pit commencing in November 2013.  The underground miner is currently completing a pilot project of approximately 40,000 tonnes of coal, which began at the end of February 2014, with the goal of contracting all of the underground mining if the pilot project is successful.  Full production of the underground mine would commence in 2015. The Company is anticipating the south pit to be at full operation by the second quarter of 2014.  The Company is forecasting open pit production of 1.05 million tonnes and underground production of 40,000 tonnes of thermal coal from La Caypa in 2014. This would represent an 8% production increase from 2013.

The Company commenced its plan for self-operation of the Cerro Largo mine in April 2013 but re-focused the plan late in the year, deciding to use a new third party as the operator of Cerro Largo.  In January 2014, an agreement with a third party was signed. The Company had always planned to use some third-party assistance for some of the mine's operational requirements, beginning by signing a two-year contract for the transportation of mine waste materials in September 2013. Management is forecasting production of 507,000 tonnes of thermal coal from Cerro Largo in 2014.  This would represent a 70% increase from the tonnes produced in 2013.

In February 2014, the Company signed a letter of intent with a third party to perform analysis of the results of asphaltite exploration at the La Tigra property and additional exploration if desired, at the third party's cost, to determine the site's prospects. The third party's exploration period will conclude at the end of October 2014, although they can elect to extend the period by six months.

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 and warrants are listed on the TSX Venture Exchange and trade under the symbol "PAK" and "PAK.WT" respectively.

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.