Corsa Coal Corp. (TSXV: CSO), which has coal mining operations centered in Somerset County, Pa., said Oct. 11 that it has temporarily idled its surface mines and that operations have continued at the Casselman deep mine in Maryland to meet fourth quarter 2012 expected sales and to ensure an appropriate operating inventory.
However, the company said it will be temporarily idling Casselman and keeping it in readiness for an immediate restart pending an increase in sales levels.
Corsa also reported that in its third quarter ended Aug. 31, it had positive cash flow from operations of $3.5m and metallurgical coal sales of 138,000 tons at an average realized price of $152 per ton. Also, Casselman, which produces coal that is trucked to Corsa’s new Wilson Creek prep plant in Somerset County, went through an expansion to two mining units, which was completed last quarter with production increasing to 44,000 tons for August.
Don Charter, Corsa President and CEO, stated: “This was an important quarter for Corsa. With the successful production and development ramp up at the Casselman mine and shipping of 138,000 tons of met coal, in line with guidance, we have made significant improvements in our competitive position in this tight market. Cash mining costs at Casselman have been reduced by 36 percent to $51 a ton and processing costs have been reduced by 43 percent to $13. The increased volume with reduced costs resulted in the Company achieving positive cash flow from operations. We continue to actively market our high quality low-vol met coal while improving operating costs.”
The global demand for steel is down and the demand for met coal has experienced a continuing slowdown that began in the fall of 2011 resulting in declining prices, Corsa noted. The U.S. coal industry continues to be challenged and a number of producers have announced production cuts. Nonetheless, the company was able to double second quarter 2012 sales in third quarter 2012 shipping 138,000 tons. With the continued decline in the market, based on purchase orders and expected trains, the Corsa expects to ship at least 32,000 clean tons of met coal in fourth quarter 2012 (September-November).
While the company continues to actively market its high quality low-vol coal, which it believes is well suited to domestic users as well as the seaborne market, it said it is not in a position right now to provide production, sales and cost guidance beyond the sales it has currently under contract until sales levels can be more accurately forecast.
For the remainder of the fiscal year, which is through the end of November, the company will continue to adjust its production to match actual demand and sales orders. The company temporarily idled its surface mines, will idle Casselman, and said it does not have large unsold inventories.
Corsa’s main operating subsidiaries are Wilson Creek Energy LLC and Maryland Energy Resources LLC based in Somerset County. Its primary business is the mining, processing and selling of met coal, as well as actively exploring, acquiring and developing resource properties consistent with its coal business.