CanAm Coal (TSX VENTURE: COE)(OTCQX: COECF) said Aug. 30 that revenue, EBITDA from operations and loss for the second quarter were $15.6m, $2.6m and minus $1.5m respectively as compared to $13.3m, $1.9m and minus $1.6m in the prior year.
Coal sales for the second quarter were 168,500 tons as compared to 130,500 tons in the year-ago quarter, or an increase of nearly 30%.
For the six month period ended June 30, revenue, EBITDA from operations and loss were $29.5m, $4.5m and minus $3.4m respectively as compared to $26.1m, $3.8m and minus $2.8m in the prior year. Sales for the six month period were 318,000 tons compared to 248,000 tons in the prior year, an increase of 28%.
During the second quarter of 2013, the company continued its transition and mine development activities at the Old Union 2, Knight and Posey Mill 2 mines in Alabama. The Old Union 2 mine reached steady state production levels early in the second quarter, the Knight mine started production in April and the Posey Mill 2 mine had first production in May. Toward the end of Q2, steady state production was achieved at all mines and this translated into increased production and sales for Q2. Average monthly coal sales for Q2 were 56,000 tons as compared to 50,000 tons for Q1 and June sales were a record 61,400 tons or an increase of 23% over the average monthly sales for Q1.
In spite of these improved production/sales levels, the company said it continued to work through transition and mine development activities in Q2 which still resulted in less than optimal operating conditions. As such CanAm was not able to achieve its normal production level efficiencies and the average production cost per ton was $55/ton, slightly lower than Q1 production cost and significantly lower than the prior year cost of $62/ton. Once the company reaches steady state production at all of its mines, starting in Q3 2013, average production cost should be about $50/ton.
Sales for the quarter were 168,488 tons, an increase of 13% over Q1 2013 sales and 29% over Q2 sales of the prior year. Record sales were achieved in June of 61,400 tons.
Long term off-take contracts continue to enable the company to achieve better than market pricing for its high quality coals. Average sales price per ton for Q2 of $92/ton was consistent with Q1 but lower than Q2 2012, when it was $102/ton. The lower average price as compared to last year is a result of a changing coal mix (i.e. a higher ratio of thermal coal versus metallurgical coal) and the termination of a met coal contract in early 2013.
All of its production is currently sold through off-take contracts with customers and CanAm said it is fully contracted for the remainder of the year.
Company President and CEO Jos De Smedt said: “Completion of the second quarter was a major milestone for the Company as by the end of Q2 we had transitioned all of our mines to a steady state level of production. As we accomplished this, the results of our hard work became evident in our June production/sales level of over 61,400 tons and, more importantly, in our July numbers of approximately 67,500 tons of sales. With a mine complement in place that has the ability to produce between 60,000 to 80,000 tons on a monthly basis, the second half of 2013 should see significant growth in sales and production. From a financial perspective, Q2 showed definitive improvement; operating cash flow was 5 times better than in the prior year, free cash flow was slightly positive compared to a deficit of $2.0 million in the prior year and first half 2013 capex was half of capex in the prior year. This combined with expected sales levels of between 60,000 to 70,000 tons on a monthly basis, should improve free cash flow significantly in the second half of 2013 and in 2014.”
CanAm is a coal producer and development company focused on growth through the acquisition, exploration and development of coal resources. CanAm’s main activities and assets include its four operating coal mines in Alabama and the Buick Coal Project, an undeveloped lignite reserve in Colorado.