Canada-listed CanAm Coal Corp. (TSX VENTURE:COE)(OTCQX:COECF), which has coal mining operations in Alabama, said Feb. 28 that it is estimating coal sales of between 450,000 to 550,000 tons for 2012 with a metallurgical/thermal coal mix of 20/80% respectively.
This represents a 200,000 to 300,000 ton increase over 2011 estimated sales. Up to 85% of this estimated 2012 production has been contracted with a variety of customers including the Alabama Coal Cooperative and various industrial users. Sales contracts are for a minimum term of three years and some thermal coal production has been contracted through 2017.
Pricing obtained for its high quality metallurgical and thermal coals has been extremely favorable and all prices are at higher levels than in 2011, CanAm noted. On average, the estimated realized sales price for 2012 will be $100/ton with average price increases as follows: met coal up 11%; thermal coal for the power market up 4%; and thermal coal for industrial customers up 17%.
“We are extremely pleased with our recently completed sales contracts as they provide us with both downside protection and earnings visibility for 2012 and beyond,” said Tim Bergen, CEO of CanAm. “In addition, most of our contracts include cost inflation clauses which provide for additional protection in the event our major production cost components were to escalate in the next couple of years.”
CanAm’s main activities and assets include its four operating coal mines in Alabama and the Buick Coal Project, which is an undeveloped lignite reserve in Elbert County, Colo. CanAm is listed on the TSX Venture Exchange and the OTCQX International market
The main activities of the CanAm team recently were devoted to integrating the 50% acquisition of Birmingham Coal & Coke, permitting of various tracts of land and identification of additional expansion opportunities. With four mines in operation – Bear Creek, Old Union, Gooden Creek and Powhatan – average coal sales are now in excess of 30,000 tons per month, the company reported in a Dec. 29, 2011, financial filing.