Corsa Coal reports better met coal sales in the latest quarter

Corsa Coal (TSXV: CSO) said June 6 that during the second quarter (March-May) of fiscal 2013, it sold 83,000 tons of clean metallurgical coal bringing its year-to-date sales to 119,000 tons.

The company, which has mines in central Pennsylvania and one mine in nearby Maryland, also sold 10,000 tons of raw metallurgical coal in the first quarter (December 2012-February 2013) of fiscal 2013. The company confirmed its stated clean metallurgical coal sales guidance for fiscal 2013 (December 2012-November 2013) of about 300,000 to 320,000 tons and first quarter 2014 (December 2013-February 2014) of approximately 45,000 to 60,000 tons.

Production from the company’s Casselman underground mine in Maryland was approximately 116,000 run of mine (ROM) raw tons for the latest fiscal quarter with the mine achieving record production of 45,000 ROM tons in May. The company has successfully commenced highwall mining at its Hemminger surface mine and has commenced development at its Ankeny surface mine with initial production expected this month.

Corsa said it expects to post the required bond for its Acosta Deep underground mine in the Middle Kittanning seam this month with the final permit expected to be issued shortly thereafter. The company also expects to post the required bonds for its Ash and Hamer surface mines this month with the final permits expected shortly thereafter.

CEO Don Charter stated: “We are very pleased with the performance of the Casselman mine and the commencement of the highwall mining operations at Hemminger. The Company continues to make positive strides in its mining costs with costs for the quarter expected to be lower than last quarter as a result of the performance at Casselman. With the completion of the permitting of the Acosta Deep project imminent and the ability to quickly expand Casselman, the Company is very well positioned moving forward.”

The company continues to actively market its high quality low-vol met coal and is in discussions with domestic and international buyers. The company continues to match production to actual sales and does not have unnecessary inventories of unsold coal. While the company said it remains optimistic that further sales will be achieved, it only reports future sales guidance based on currently contracted volumes.

Work still ongoing related to Quintana deal

The company also updated its announced deal with Quintana Kopper Glo Investment LLC. Canadian regulations require the preparation of a National Instrument 43-101 compliant technical report on Kopper Glo’s material property and preparation of historical and pro forma financial statements in accordance with requirements of Canadian Securities Administrators. Corsa expects to submit a draft of a filing statement to the exchange for its review in June and to seek approval of a majority (50%) of its shareholders (by written consent) in July.

At this time shareholders holding about 50.3% of the currently outstanding shares of the company have agreed to vote in favor of the transaction, which is sufficient to achieve the required approval. The transaction is targeted to close by the end of July 2013.

Corsa announced March 21 that it had entered into a binding agreement with Quintana Kopper Glo Investments which, when the transactions contemplated are fully completed, will result in Corsa having raised a total of US$40m and acquiring Kopper Glo, a Tennessee-based coal producer, from Quintana and Quintana having acquired a control position in Corsa.

Kopper Glo is a private company formed in 2007 engaged in production and sale of high-Btu, low- and mid-sulfur thermal coal used in power, industrial and specialty applications. Its mines, prep plant and refuse site are all located in close proximity providing for efficient operations. It had sales of 975,000 tons of coal in 2012 with an average cash cost of production (unaudited) of US$56 per ton with EBITDA (unaudited) of US$16.5m and net income of US$6.8m (audited).

Kopper Glo has increased its production consistently from about 500,000 tons in 2008 to its current levels and expects to grow sales to over 1 million tons in 2013. It has a good pipeline of projects for expansion, Corsa said in the March 21 announcement. It has access to both the CSX Transportation and Norfolk Southern railroads with its own loadout and 350-ton-per-hour prep plant. It has a current priced contract in place with a major utility for 750,000 tons a year for 2013 and 2014 production at pricing between US$70 and US$80 a ton.

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.