Corsa Coal Corp. (TSXV: CSO), which mines coal in and around Somerset County, Pa., said Sept. 19 that during the third fiscal quarter of 2012 (June-August), it sold 138,000 clean tons of metallurgical coal at an average realized price of $152 per clean ton in line with its published guidance of 140,000 tons.
Also, the company sold 37,000 tons of thermal coal during the quarter at an average price of $32/ton. Thermal coal for the company is basically a lower-quality material it picks up during its more lucrative met coal mining.
For the nine months ended Aug. 31, the company has sold 275,000 clean tons of met coal at an average realized price of $153/ton and 96,000 tons of thermal coal at an average realized price of $34/ton. The realized prices reflect the sale of some carryover tons from a 2011 sales contract.
For the nine months ended Aug. 31, the company produced a total of 289,000 tons of raw met coal from its own mines and purchased 212,000 tons of raw met coal from third parties.
The June-August period was a “breakthrough quarter” at the new Casselman underground mine in Maryland. Coal is trucked from the mine to a new Corsa prep plant in Somerset County, Pa., for cleaning. The disturbed low seam area at the mine entrance has now been mined through and the coal seam is currently 44 to 46 inches at the face with very good mining conditions, Corsa said. The company has utilized a contract miner that has provided the additional required staffing to expand the mine to two units. The mine is now currently operating with two continuous mining units working two shifts with a third maintenance shift.
The Casselman mine production has ramped up successfully from about 11,000 raw tons in June to 42,000 raw tons in August with prep plant recoveries exceeding 63% on unscreened run of mine (ROM) coal. This represents an underground productivity rate in excess of 4.5 tons per man hour. This had led to a significant improvement in mining costs per ton. When combined with improved recoveries in the plant and the improved raw coal and refuse handling, the company said it continues to improve its competitiveness in the current tight market. The mine produces a high-quality low-vol product, which management believes is very well suited for domestic steel producers and coking operations as well as the seaborne market.
“While the met coal market had shown some signs of strengthening in calendar Q2, it has shown a sharp decline in both demand and prices in calendar Q3 and the outlook for calendar Q4 is for a weaker market,” Corsa noted. “In the face of declining demand and uncertain sales levels and pricing for fiscal Q4, the Company has continued to match production to sales and accordingly does not have unnecessary inventories of unsold coal. Based on purchase orders and scheduled trains the Company expects to ship approximately 32,000 clean tons of metallurgical coal in September. The Company will continue to market its high quality low vol met coal to domestic buyers and in the spot market, and while it believes it can be successful in achieving additional sales it is not in a position to provide further fiscal Q4 sales guidance at this time. The Company is also focused on sales contracts for the 2013 fiscal year and is in discussions with both domestic buyers and buyers for the seaborne market. For the remainder of the year the Company will continue to adjust its production and third party purchases to match actual demand and sales orders.”
Corsa’s main operating subsidiaries are Wilson Creek Energy LLC and also Maryland Energy Resources LLC, which runs the Casselman mine.