TORONTO,
Aug. 29, 2014 /CNW/ - Pacific Coal
Resources Ltd. (TSXV: PAK) has filed its unaudited consolidated
financial statements for the three months ended June 30, 2014, 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: "In the second quarter of 2014, we
were able to maintain year to date general and administrative
expenses below forecasted amounts and further ramp up south pit
production at La Caypa. We are also currently negotiating a joint
venture at Cerro Largo that is expected to provide the Company with
a steady cash flow. We aim to further develop the south pit at La
Caypa to maximize its coal production and strengthen our focus on
core assets by disposing off the remaining interest in the
Barranquilla port."
Financial and Operating Summary
A summary of the financial and operating results
for the second quarter of 2014 is as follows:
(000's except per
share and operating data) |
Second Quarter |
2014 |
2013 |
Operational |
|
|
Tonnes of coal produced(1) |
279,593 |
398,865 |
Average stripping ratio -
operations |
14.09:1 |
8.28:1 |
Tonnes of coal sold |
229,276 |
349,818 |
Average realized thermal coal price
per tonne sold (2) |
$
95.39 |
$
106.05 |
Operating margin per tonne sold
(2) |
$
(14.91) |
$
13.60 |
|
|
|
Financial |
|
|
Revenues |
$
22,289 |
$
37,100 |
Adjusted Earnings Before Interest,
Taxes, Depreciation and Amortization ("EBITDA") (2) |
(4,917) |
3,112 |
Earnings (loss) from operations |
(6,578) |
413 |
Net loss attributed to
shareholders |
(12,772) |
2,051 |
Basic and fully diluted loss per
share |
(0.26) |
0.04 |
|
|
|
Cash |
335 |
6,423 |
Mineral properties additions - La
Caypa south pit |
1,844 |
4,408 |
Total assets |
250,154 |
255,889 |
Total debt (3) |
47,879 |
67,623 |
(1) |
Excludes 4,669 tonnes of coal produced from underground
mine. See 'Outlook' for details of the pilot project. |
(2) |
Adjusted EBITDA, average realized thermal coal price per tonne
sold and operating margin per tonne sold are non-GAAP finance
performance measures, none of which have standardized definitions
under IFRS. See pages 18-19 of the Company's Q2 2014 MD&A
for further details. |
(3) |
Total debt includes short-term debt, long-term debt, finance
leases and amounts owed to Chipalo Resources (formerly Masering
S.A.S.) by Norcarbon S.A.S. ("Norcarbon") (June 30, 2014 - $16.1
million, June 30, 2013 - $23.9 million). |
Q2 2014 Highlights
- Coal production: The Company produced 284,262
tonnes of coal in the second quarter of 2014, representing an
increase of 3% from the first quarter of 2014 (276,744 tonnes). The
operational stripping ratio at the Company's Cerro Largo mine of
10.42:1 in the second quarter of 2014 represented a decrease of 6%
from the first quarter of 2014 (11.06:1).
- Revenues: Coal revenues for the second quarter of
2014 were $21.9 million - 229,276
tonnes of coal sold at an average realized price of $95.39 per tonne, consistent with $95.67 per tonne in the first quarter of
2014.
- Earnings from operations: Loss from operations
for the second quarter of 2014 was $6.6
million, compared to earnings of $1.2
million in the first quarter of 2014 and $0.4 million in the second quarter of 2013. This
can be primarily attributed to production issues noted at the La
Caypa mine during the quarter.
- Adjusted EBITDA and operating margin: Adjusted
EBITDA for the second quarter of 2014 was a loss of $4.9 million. The total operating loss for the
second quarter of 2014 on a per tonne sold basis was $14.91.
- Bond Issuance: In July
2014, the Company completed a private debt offering for
aggregate gross proceeds of $6.5
million. The note expires in 2015 and is guaranteed by a
July 2015 payment relating to the
2013 Barranquilla port concession sale agreements.
- Operation of La Caypa mine: After commencing in
late 2013, operations in the south pit continued in the first half
of 2014 as the Company produced 197,106 tonnes from the pit as of
June 30, 2014 (174,603 in the second
quarter). The Company also capitalized stripping costs of
$6.2 million during the first half of
the year as production at the south pit continues to ramp-up.
- General and administrative ("G&A") expenses:
The Company recorded $1.4 million in
G&A expenses, excluding DD&A, in the three months ended
June 30, 2014, compared to
$1.6 million in the same period of
2013, a reduction of 13%. G&A expenses in the first half of
2014 were also 5% lower than the $2.8
million forecasted. The Company anticipates a quarterly
G&A run rate of $1.4 million for
the remainder of 2014.
Operational Update
La Caypa mine
|
Production of Coal
(metric tonnes) |
Waste
(bcm)(1) |
Stripping Ratio |
|
|
|
|
Open-pit operations(2) |
191,975 |
3,026,723 |
15.77:1 |
South pit development |
- |
609,841 |
N/A |
Total |
191,975 |
3,636,564 |
18.94:1 |
(1) |
Bank cubic meters |
(2) |
174,603 tonnes from La Caypa's south pit and 17,372 tonnes from
the north pit. |
Production from the La Caypa mine was 196,644
tonnes in the second quarter of 2014 (open-pit operations of
191,975 tonnes and underground operations of 4,669 tonnes),
achieving 73% of its planned production, a decrease of 39% of the
tonnes produced in the second quarter of 2013 (320,436 tonnes) and
18% less than the tonnes produced in the first quarter of 2014
(241,151 tonnes).
Missing the production forecast and the decrease
from prior periods can be attributed to adverse geological
conditions in the section produced from in the second quarter of
2014. The issue is outside of the Company's control and primarily a
result of naturally occurring burning of the coal mantles in
addition to the mantles being affected by the presence of a
geological fault.
The Company is forecasting thermal coal from La
Caypa in 2014 of approximately 928,000 tonnes (open pit production
of 920,000 tonnes and underground production of 8,000 tonnes),
representing an 8% production decrease from 2013. The Company had
initially forecasted production of an additional 135,000 tonnes
from open pit production in 2014, but as a result of the lower than
originally estimated tonnes produced in the second quarter, the
forecast has been reduced.
Cerro Largo mine
|
Production of Coal
(metric tonnes) |
Waste
(bcm) |
Stripping Ratio |
Q2 2014 |
87,618 |
912,825 |
10.42:1 |
In the second quarter of 2014, the Company
produced 87,618 tonnes from the Cerro Largo mine, more than two
times the 35,593 tonnes produced in the first quarter of 2014. The
second quarter of 2014 production also represented a 12% increase
from the second quarter of 2013 (78,429 tonnes), although it only
represented 64% of planned production for the quarter.
The company that operated the Cerro Largo mine
from March to mid-July 2014 began
operating after limited production in the first two months of 2014.
This resulted in reduced production in the first quarter. The
Company produced well below planned production for the second
quarter of 2014 because the forecast was made under the assumption
that the transition to third party operation (after own operation
in the second half of 2013) would be finalized before the end of
2013, when in actuality the third party operator had just started
production and was in the process of bringing new equipment to the
mine to ramp up operations as of the second quarter of 2014.
Production targets for 2014 at Cerro Largo are
0.3 million tonnes, an approximately 14% increase over the tonnes
produced in 2013. The Company had originally estimated
production in 2014 to be 0.5 million tonnes, but the results of the
first half of 2014 and production stoppages as a result of the
ongoing negotiations with a new operator reduced the annual
plan.
Outlook
The Company has concentrated its efforts on the
production of thermal coal after re-focusing its strategic goals in
2013, which included the sale of a majority of the Barranquilla
port concession in the fourth quarter of 2013. Management is also
focusing on eliminating the funds owed to Chipalo Resources
(formerly Masering) for past operation of the Cerro Largo mine,
with a balance of $16.1 million owed
at June 30, 2014, compared to a high
of $27.6 million owed at December 31, 2012. Subsequent to June 30, 2014, the Company made a payment towards
the amount owed of $3.4
million. The funds generated from the sale of the
Barranquilla port concession will go towards the amount owed to
Chipalo Resources, helping the Company focus efforts on improving
operations. The Company continues to explore options to sell its
remaining 15% interest of the Barranquilla port concession.
Operationally, La Caypa mine faced adverse
geological conditions during production in the second quarter of
2014 that were outside of the Company's control. The Company
adjusted its mining plan for the second half of 2014, reducing the
forecasted focus on development of the south pit in order to
conserve funds after the issues in the first half. Limiting
development in the second half of 2014 will impact the mine's
production in the first half of 2015. The Company is forecasting
2014 La Caypa thermal coal open pit production of 920,000 tonnes,
reduced by 135,000 tonnes from the original forecast based on
geological issues discovered, and underground production of 8,000
tonnes. After beginning late in the fourth quarter of 2013,
production at the south pit neared full operation with
approximately 174,603 tonnes produced in the second quarter of 2014
(197,106 in the first half of 2014). The underground mine pilot
project began in February 2014, with
approximately 4,669 tonnes of coal produced from the mine in the
second quarter (6,992 in the first half of 2014). The underground
miner will complete a pilot project of approximately 8,000 tonnes
of coal with the goal of contracting all of the underground mining
if the pilot project is successful, which would be expected to
commence in 2015. Production from the south pit and underground
mine is critical for the La Caypa mine going forward as the main
pit nears the end of its life in the second half of 2014.
In an effort to maximize efficiencies of the
mine and increase cash flow from operations, as of the end of
August 2014 the Company is in for a
multi-year joint venture involving the take over by a third party
of Cerro Largo mine operations. The operator would be responsible
for Cerro Largo's thermal coal production and the associated costs
going forward. Norcarbon would be entitled to a percentage of the
tonnes produced. The agreement is expected to provide the Company a
steady cash inflow that will be used to fund the continued ramp-up
of south pit operations and improve the Company's working capital
deficit position. Production targets for 2014 at Cerro Largo are
0.3 million tonnes, an approximately 14% increase over the tonnes
produced in 2013.
In July 2014, the
Company completed a private debt offering for aggregate gross
proceeds of $6.5 million at an annual
interest rate of 12%, payable monthly. The notes expire in
July 2015 and are guaranteed by a
$6.5 million payment as part of the
2013 Barranquilla port concession sale agreements, which is also
due in July 2015. The Company used a
majority of the net proceeds of $6.3
million (after excluding fees associated with the offering)
to pay amounts owed to Chipalo Resources and towards La Caypa
royalties owed to the community of El Cerrejón.
In terms of G&A expenses, after exceeding
the Company's 2013 cost cutting objective, management
was able to surpass the Company's reduction goal for the first half
of 2014. Actual G&A expenses were $2.6 million for the first half of 2014, compared
to the Company's forecast of $2.8
million. The Company anticipates a quarterly G&A
run rate of $1.4 million for the
remainder of 2014, but further cost reduction continues to be a
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.