CanAm Coal Corporation has filed its unaudited condensed consolidated financial statements and related management discussion and analysis for the period ended June 30th 2012. As the company has changed its year end to December 31st from January 31st in order to align year ends across all subsidiaries, the comparative prior year numbers presented are for July 31st 2011.
Highlights and key events for the second quarter include:
Achieved coal sales of 76,577 tonnes, an increase of 14% QoQ from 9,424 tonnes from Q1 2012 but a decrease of 6% YoY from 4,876 tonnes from Q2 2011
Achieved coal sales of 143,730 tonnes for the first half of 2012, an increase of 28% YoY from 31,622 tonnes from the previous year
Generated revenue in Q2 of USD 8.2 million, up from USD 7.5 million in Q2 2011
Generated EBITDA in Q2 of USD 1.1 million, up from USD 1.0 million in Q1 2012 but down from USD 1.3 million in Q2 2011
Generated Q2 cash flow from operations of USD 0.6 million, down from USD 2.0 million in Q2 2011
Invested USD 3.3 million in Q2 in mine equipment and infrastructure
Refinanced, with a major US Bank, all of the Company's equipment debt for a term of 54 months at an interest rate of 3.25%
Acquired the remaining 2% of RAC Mining subsidiary that was not already owned
Appointed Mr Scott Bolton, former Canadian Energy Leader at PwC as CFO
In the second quarter, the company achieved revenue growth of 9% over the previous year. The increase was driven by a higher average sales price in the quarter (USD 106 per tonne vs USD 92 per tonne in 2011), reflecting improved pricing from new long term contracts entered into late last year and early this year. In contrast, second quarter physical coal sales, while improved over the first quarter were 6% below last year. Physical sales were impacted by two of the factors that hampered Q1 sales; namely, the transitional impact of management and operational changes at the Powhatan mine and an operational incident that damaged an excavator at the Gooden Creek mine. Additionally, the Company carried out a considerable amount of grading and vegetation reclamation work in Q2, which also impacted production.
Notwithstanding revenue growth over the previous year, EBITDA was lower than the previous year as a result of higher costs. The company's mining cost structure has been established this year to deliver a higher production level than what was achieved in the second quarter. Average production cost per tonne was USD 12 higher than the previous year. On a positive note, Q2 EBITDA improved 11% over Q1, which was the third consecutive quarter of EBITDA growth.
The management and operational changes made at Powhatan, which produces all of CanAm's metallurgical coal began to show positive results in June where mine production and sales exceeded 12,000 tons, the best month in its history under CanAm ownership. As well, the Company has replaced the damaged excavator with another unit and impacted production is returning to normal levels. Overall, June production, sales and resultant EBITDA improved considerably.
Mr Jos De Smedt president & COO of CanAm said that "During the first half of the year, CanAm made significant investments in equipment, mine development, operations, and senior management. We did this while continuing to deliver reasonable financial results in the short term, despite a number of challenges. In August 2012, we completed the acquisition of an additional 30% interest in BCC. We believe these investments position the Company to realize on the full potential of our existing mines and our 3 planned new mines. In August, we received final permitting for the largest of the three new mines at Old Union 2 and production will commence in the coming weeks. We expect to receive final permitting for the other 2 mines in the near future. Overall, we look forward to improved second half results and a strong 2013."
Subsequent to Q2, the company made a number of significant announcements including:
In July 2012, the company announced the acquisition of 574 acres of coal leases adjacent to the existing Old Union mine and which will form an integral part of the Old Union 2 mine. In August, the Company acquired additional surface mining rights to two tracts of land totaling approximately 133 acres in the Old Union and Old Union 2 mining complex.
In August 2012, the company acquired a permit issued by the Alabama Surface Mining Commission approving mining operations at Old Union 2. First production is scheduled to commence in early Q4 2012.
In August 2012, the company announced and closed the acquisition of an additional 30% interest in BCC for a purchase price of USD 11,505,682. The company funded the acquisition through a non brokered private placement, which raised USD 13,165,000. The BCC vendors subscribed for USD 6,000,000 principal amount in the financing.
In August 2012, the company announced the addition of Mr Steve Somerville, former President of BMO Capital Corporation to the board of directors.
Source - CanAm Coal Corporation
(www.coalguru.com)
