CanAm Coal (TSX VENTURE: COE) (OTCQX:COECF), which has coal mining operations in Alabama, said April 12 that it had coal sales of 49,852 tons in the fourth quarter of 2011 as compared to 8,526 tons in the year-ago quarter.
The fourth quarter only represents a two month quarter as the company changed its year-end from Jan. 31, 2012, to Dec. 31, 2011. For the eleven month period ended Dec. 31, 2011, coal sales were 256,221 tons as compared to 42,198 tons in the prior year or a six-fold increase.
For the two-month period ended Dec. 31, the company sold 9,152 tons of metallurgical coal, against 6,302 tons in the two-month period the year before. It sold 40,700 tons of thermal coal in the latest two-month period, against 2,224 tons in the November-December 2010 period.
Sales for the quarter were characterized by a contribution of 37,613 tons of coal sales from the company’s 50% ownership in Birmingham Coal & Coke‘s (BCC) three operating surface mines; Bear Creek, Old Union and Gooden Creek. All of BCC’s mines produce high quality thermal coal. In November and December, BCC did not broker any third party coal.
CanAm acquired 50% of BCC in May 2011. CanAm also has an option to acquire an additional 30% of BCC within two years from the closing of the transaction and the remaining 20% of BCC within five years from closing. BCC is run by coal industry veterans Robert Lewis and Thomas Lewis.
Coal sales at CanAm’s Powhatan surface mine were 12,239 tons as compared to 8,526 tons in the prior year or an increase of 44%. Coal sales were below target as production slowed due to a lower than usual recovery rate on thermal coal, greater than usual equipment downtime during a cycle of higher than average strip ratios and extra vacation days taken over the Christmas holiday.
The mix of metallurgical/thermal coal for the fourth quarter at the Powhatan mine was 75%/25% as a result of a lower recovery rate on the thermal coal. The ratio of metallurgical/thermal coal for the eleven month period ended Dec. 31, 2011, at the Powhatan mine was 57%/43%. The company’s target coal mix is 60/40%.
“Another solid quarter in a difficult coal market as we continue to leverage our coal contracts with our customers and sell every ton of coal we can produce,” said Tim Bergen, CEO of CanAm. “Although production was slightly below target for the quarter we finished our eleven month fiscal year with over 250,000 tons of coal sales. Certainly 2011 was a pivotal year for CanAm as we reap the rewards from our 50% acquisition of Birmingham Coal & Coke and continue this momentum into 2012 as we set our sight on coal sales of 500,000 tons for this upcoming year.”
The company will release its full fourth quarter financial results at the end of April.