Reuters reported that Massey Energy Company will take a charge in its Q2 to cover family benefits and costs of a blast that killed 29 miners this month at one of its West Virginia coal mines.
It also said that it will make up for lost steel making metallurgical coal production at the Upper Big Branch mine, where the blast occurred, by increasing operations at other mines instituting 6 day work weeks and adding more miner sections at the coal face.
The announcement came as Massey posted Q1 financial results that beat Wall Street expectations, even though the net profit fell because power plants used less coal and rail and sea transportation were disrupted.
Mr Don Blankenship chairman and CEO of Massey said that with our plans to mitigate most of the lost production at the Upper Big Branch mine, we believe the Q1's metallurgical coal volume is approximately in line with our capabilities in the second half of 2010. He made no other comment about the April 5th 2010 explosion, which occurred in the Q2 of the financial year but in its release Massey referred to the accident in its outlook.
Massey said that financial results for the Q2 2010 will include a charge related to the tragic accident at the Upper Big Branch mine. While Massey anticipates further analysis will be required, the company estimates the range of loss to be USD 80 million to USD 150 million for charges related to the benefits being provided to the families of the fallen miners, costs associated with the rescue and recovery efforts, insurance deductibles, possible legal and other contingencies.
It said that the full book value of equipment and mineral rights at the mine affected by the disaster is about USD 62 million. The company will assess these assets for possible impairment charges once full access to the mine is restored but it does expect to recover much of the equipment.
The company said that the mitigation plan represents approximately 1.3 million tonnes of annualized metallurgical coal production. At the same time, the impacts of the UBB tragedy on productivity are not yet predictable.
The Richmond, Virginia based company said that for the Q1 ended March 31st 2010, net income fell to USD 33.6 million or 39 cents per share from USD 43.4 million or 51 cents per share in the year ago period. Coal revenue dropped to USD 571.8 million from USD 681.0 million in the Q1 of 2009. It shipped less coal. The average revenue per ton rose to USD 67.38 from USD 63.03 in the year ago quarter.
(Sourced from Reuters)
