James River Coal (NASDAQ: JRCC), a major producer in Central Appalachia and Indiana, had a net loss of $25.5m for the third quarter of 2013 and a net loss of $15m for the nine months ended Sept. 30, 2013.
Third quarter and the nine months ended Sept. 30, 2013 results include $23.9m and $125.1m, respectively, of pre-tax gain related to certain “Exchange Transactions.”
The 2013 results are compared to a net loss of $20.6m for the third quarter of 2012 and net loss of $62m for the nine months ended Sept. 30, 2012. Included in the third quarter and nine months ended Sept. 30, 2012, results is a gain of $22.2m from the repurchase of outstanding notes in open market purchases.
Peter Socha, Chairman and CEO, commented: “The mines are doing great. They have continued to exceed our expectations for both cost control and capital control. They have done an incredible job of adjusting to the soft market conditions and the high levels of uncertainty and concern that surround the coal industry of Central Appalachia. We have made another set of painful, but necessary, production adjustments this week. This involved idling four additional mines in eastern Kentucky. We are hopeful that these idlings can be reversed in the first half of 2014.”
Socha added: “The coal markets have stabilized during the past several weeks. Prices are still very low, but they are finally moving in a better direction. Finally, we are making progress, but have not finished our project to deleverage our balance sheet and improve our liquidity.”
Due to the continued weakness in the coal market, the company idled coal production at its McCoy Elkhorn operations, Bledsoe Coal operations and Long Branch Surface operations. Around 525 employees were originally furloughed, and on Oct. 16, WARN notices were issued to a majority of those employees after determining that the date of re-opening these operations was unknown.
On Nov. 6, the company idled two underground and two surface mines at the Buckeye complex. Approximately 200 employees and contractors were furloughed. James River Coal expects the Buckeye complex, which produced 1.0 million tons in the first nine months of 2013, to restart in 2014 depending on market conditions.
The company produced 1.9 million tons of coal in the third quarter, down from 2.2 million tons in the year-ago quarter. Out of Central Appalachia, production was 1.3 million tons, down from 1.6 million tons in the third quarter of 2012. Indiana production last quarter was 590,000 tons, down from 622,000 tons in the year-ago-quarter.
As of Nov. 6, the company had for 2014 about 1 million tons of Central Appalachia coal committed and priced at an average of $72.11/ton, with nearly 1.9 million tons of Indiana coal committed and priced at $44.86/ton. The prices for the Midwest (Indiana) are minimum base price amounts adjusted for projected fuel escalators.