Tax adjustment triggers big James River Coal loss in 2011

Virginia-based James River Coal (NASDAQ:JRCC), which has mines mainly in Indiana and eastern Kentucky, said March 1 that it had a net loss of $39.1m in all of 2011 and a net loss of $28.5m for the fourth quarter of 2011.

Included in full year 2011 results is an income tax expense adjustment related to a valuation allowance placed on the company’s deferred tax assets of $26.8m.

James River had net income of $78.2m for all of 2010 and net income of $25.9m for the fourth quarter of 2010. Included in the 2010 results is an income tax benefit related to the reversal of the deferred income tax valuation allowance of $22.1m.

James River Chairman and CEO Peter Socha said: “2011 was a year of transformation for James River Coal Company. We continued the process to grow and diversify our company. We expanded our presence in both the metallurgical coal segment and the international coal markets. In the operations area, we achieved industry-leading performance in both safety and regulatory compliance. In the financial area, we strengthened our balance sheet by refinancing all of our funded debt and substantially improving our liquidity position. While we are cautious and realistic about the current soft market conditions, we are also optimistic that James River will be well positioned for improving markets in the future.”

Company and contractor production in 2011 was 10.3 million tons, up from 8.8 million tons in 2010. Coal purchased from other sources for re-sale was 1.6 million tons in 2011, up sharply from 128,000 tons in 2010.

In Central Appalachia, company and contractor production last year came in at 7.8 million tons, up from 6 million tons in 2010. But Indiana coal production, which makes up the company’s Midwest segment, fell from 2.8 million tons in 2010 to 2.4 million tons in 2011.

As of Feb. 29, James River has committed and priced for 2012 sales 7.9 million tons of Central Appalachia coal for an average of $94.37/ton, and 2.8 million tons of Indiana coal at $44.16/ton. For 2013, the committed and priced figures are 1.4 million tons of Central Appalachia coal at $80.45/ton, and 2.1 million tons of Indiana coal at $45.35/ton. Priced tons in Central Appalachia in both years do not include about 700,000 tons of met coal that has been sold but not yet priced.

For its 2012 guidance, James River reports plans to ship 6.7 million tons of thermal, stoker and PCI coal out of Central Appalachia at a cash cost of $74-$76/ton. Also out of Central Appalachia in 2012, the guidance is for shipments of 2.8 million tons of met coal at $108-$112/ton cash costs. In Indiana, 2.7 million to 2.8 million tons of shipments are expected in 2012, at cash costs of $34-$38/ton. Substantially all the Central Appalachia tons that are currently unsold or unpriced consist of met, PCI, and industrial stoker. Cash costs per produced ton excludes purchased coal.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.