Corsa announces 2012 sales meet guidance, provides current 2013 outlook and updates reserves and resources
TORONTO, Jan. 21, 2013 /PRNewswire/ - Corsa Coal Corp. (TSXV: CSO) ("Corsa" or the "Company") is pleased to announce that during the fourth quarter of 2012 the Company sold 57,000 tons of metallurgical coal at an average realized price of US$123 per ton in line with its published increased guidance of 55,000 tons. For the fiscal year ended November 30, 2012, the Company has sold 332,000 tons of metallurgical coal at an average realized price of $148 per ton. As well, the Company sold 26,000 tons of thermal coal during the quarter at an average price of $39 a ton for a total for the fiscal year of 122,000 tons of thermal coal at an average realized price of $35 a ton. For the 2012 fiscal year, the Company produced a total of 373,000 tons of raw met coal from its own mines and purchased a total of 218,000 tons of raw met coal from third parties.
While the met coal market, as expected, continued to be weak for 2012 calendar Q4 and into calendar 2013 Q1, the Company has continued to be successful in achieving sales as a result of the quality of its low volatile met coal product. In addition to meeting its Q4 guidance, as at December 31, 2012 the Company already has sales contracts and purchase orders for 170,000 tons of met coal for 2013 of which approximately 25,000 tons have been shipped. This represents approximately 50% of 2012 sales already contracted for 2013. The Company continues to actively market its high quality low vol metallurgical coal and is in discussions with domestic and international buyers. The Company is currently shipping coal and continues to match its production to actual sales and does not have unnecessary inventories of unsold coal. For these reasons, the Company is not in a position to provide a full production, sales and cost guidance for 2013 beyond the sales it has currently under contract until sales levels can be more accurately forecast. The Company continues to be successful in reducing its cash cost.
Reserve and Resource Update
The Company has received the results of an updated technical review on the Acosta Deep Project and on the Keyser Deep Property as well as its surface projects. This review, together with the previously updated Casselman Report, indicate that the Company has total proven reserves, probable reserves and indicated resources of low volatile metallurgical coal as set out in the chart below. The Company will be filing a technical report within the meaning of NI 43-101 on this updated review on Sedar within 45 days.
METALLURGICAL COAL (1)
|ACOSTA DEEP||18,340, 142||10,585,208||28,925,350|
- Reserves are recoverable tons and resources are in place tons.
- This is the total of proven reserves, probable reserves and indicated resources. Indicated resources are exclusive of proven and probable reserves.
The Casselman Mine is an underground metallurgical coal mine located in Garrett County, Maryland. This mine is approximately 31 miles by road from the Company's coal preparation plant. The mine commenced operations in late July 2011 and operates with two continuous mining units operating as a super section.
The Casselman Report determined the Casselman Mine has a proven reserve of 9.9 million tons of low volatile metallurgical coal from an indicated resource of 15.6 million tons.
A technical report (the "Casselman Report") to satisfy the requirements of NI 43-101 was filed on www.sedar.com with respect to the Casselman Mine and is entitled the "Wilson Creek Energy, LLC Technical Report on Coal Reserves, Casselman Mine Site, Garrett County, Maryland, USA, June 13, 2012". Reference is made to the Casselman Report for the full details of the economic analysis.
The Company continues to look to expand this mine and has obtained leases on 711 acres and options to lease an additional 736 acres adjoining or in close proximity of the current permitted area for this mine. These areas will require exploration and assessment before the Company determines if it will exercise these options to lease. These additional areas are not contained in the Casselman Report.
Acosta Deep Project
The Acosta Deep Project is located 20 miles by road from the Company's coal preparation plant. It is comprised of an approximately 6,540 acre property of which 940 acres is by lease and the balance (previously referred to as the Alumbaugh extension) is owned, with indicated resources and probable reserves of low volatile metallurgical coal as follows:
|Upper Kittanning||5,299,322 tons||3.24|
|Middle Kittanning||8,772,357 tons||2,663,000 tons||3.17|
|Lower Kittanning||4,268,453 tons||7,922,000 tons||3.36|
- Indicated Resources are exclusive of Probable Reserves.
The Upper Kittanning reserve is from an indicated resource of 8,743,843 tons, the Middle Kittanning reserve is from an indicated resource of 13,728,735 tons and the Lower Kittanning reserve is from an indicated resource of 6,934,260 tons.
Calculations, based upon anticipated permit buffers, result in estimated mineable reserve footprints of 1,704 acres for the Upper Kittanning seam, 2,996 acres for the Middle Kittanning seam, and 1,298 acres for the Lower Kittanning seam. The reserve thicknesses for each seam are based upon a total of 46 core samples, 22 of which were extracted for Corsa during confirmatory drilling in 2010 and 2011 and were subjected to analyses designed to mimic the specification of the Company's coal preparation plant, resulting in classification of the deposits as low volatile, bituminous coking coal.
The coal seams range from 100 to 600 feet deep over the reserve area, exhibiting a gentle inclination, averaging less than 4.0 degrees. All of the resource and reserve footprint is controlled for all aspects of mining and permitting is in process. The reserve footprint has been calculated, employing Carlson software modeling, utilizing the aforementioned drill holes for a resulting drilling density of 1 hole per 0.10 square mile and an in mine recovery of 62 per cent.
Based upon the pre-feasibility study, the results of discounted cash flow analysis, utilizing a long-term coal realized sales price of US $120 per ton FOB rail car, the non-discounted post-tax cash flows for the Probable Reserve at the Acosta Deep Project, assuming the mining of all reserves to exhaustion, is US $151,462,691, the net present value, applying a 12% discount rate, is US $52,497,409 (US$135,264,564 at US$ 140 a ton) and the internal rate of return has been calculated at 35.5%. This assumes a production rate of 1.2 to 1.4 million tons of clean coal per annum with operating costs of $39.99 per raw ton after screening at the mine , inclusive of preparation and refuse costs of $9.34 a raw ton, with capital costs of $7.09 a raw ton. The mine life is projected to be 15 years from site preparation to final reclamation. Closure and reclamation costs are estimated to be $0.044 per raw ton.
A technical report (within the meaning of NI 43-101) in respect of the updated information regarding the Acosta Deep Project will be filed within 45 days. This report will update the previously filed reports with respect to this project. The previous reports filed on www.sedar.com are a technical report (the "Wilson Creek Technical Report") prepared in accordance with NI 43-101 entitled "Amended and Restated Technical Report on Coal Reserves and Resources; Wilson Creek Energy, LLC; Somerset, Cambria and Washington Counties, Pennsylvania and Garrett County, Maryland, USA, dated November 16, 2010" which refers to the Acosta Underground which addresses the leased portion of this project and the technical report (the "Alumbaugh Report") prepared in accordance with NI 43-101 with respect to the Alumbaugh Extension of the Acosta Deep Property and is entitled the "Technical Report for Wilson Creek Energy, LLC, Coal Resources for the Alumbaugh Property in Somerset County, Pennsylvania, USA, Dennis A. Noll , P.G., C.P.G., Earthtech, Inc., May 5, 2011". The effective date of the estimate of the mineral resources contained in the press release for the Acosta Deep Project is December 1, 2012. The estimate of mineral reserves and resources reflects known environmental, permitting, title and other relevant matters.
The Company owns the rights to mine the Lower Kittanning coal seam under approximately 2,660 acres and has leased the rights to mine 970 acres in the Jenner and Conemaugh Townships in Somerset County, Pennsylvania. This project, referred to as the Keyser Property, is located 25 miles by road from the Company's coal preparation plant.
This Property has been drilled with a total of 24 cores extracted within and immediately adjacent to the footprint of this indicated resource. All of these core holes were drilled in 2011 under the supervision of an independent qualified person. Preliminary calculations and laboratory analysis for the Keyser Property, utilizing Carlson Mining Software and ASTM Part D laboratory methods, indicate the presence of a total of 16.0 million tons of in-place, low volatile, coking coal within 2,419 acres of the currently anticipated mineable and permittable footprint of the Lower Kittanning seam. The Lower Kittanning coal seam is located 100 to 600 feet below the surface and exhibits an average inclination of 3 degrees with an average seam thickness of 3.45 feet.
This deposit meets the definition of an indicated coal resource as per National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101"). A technical report (within the meaning of NI 43-101) will be filed in respect of the Keyser Property within 45 days. The effective date of the estimate of the mineral resources contained in the press release for the Keyser Property is December 1, 2012. The estimate of mineral resources reflects known environmental, permitting, title and other relevant matters. The footprint will require further definition in the following areas in order to achieve the classification of a coal reserve: surface and mineral control, mineability related to geologic conditions, and economic viability. The mineral resources referred to have not been classified as mineral reserves and a feasibility study has not been completed. Accordingly the economic viability of the Keyser Property has not yet been demonstrated.
The Company continues to expand this property. The report covers only the original 2,419 acres and does not include the 1,241 acres recently added to this property as further drilling and permitting assessment will be required.
There are multiple surface permits in place with several others in the permitting process. The Acosta 3 mine is a permitted site with a proven reserve of 63,324 tons of low volatile metallurgical coal and additional indicated resources of 366,151 tons of low volatile metallurgical coal. The Ankeny mine is a permitted site with a proven reserve of 187,811 tons of low volatile metallurgical. The Ash mine is currently in the permitting process and has an indicated resource of 379,686 tons of low volatile metallurgical coal. The Hamer mine is also currently in the permitting process and has a proven reserve of 49,833 tons and additional indicated resources of 207,310 tons of low volatile metallurgical coal. The Hastings (Semelsberger) mine is a permitted site with a proven reserve of 68,055 tons of low volatile metallurgical. The Hemminger mine is a permitted site with a proven reserve of 151,932 tons of low volatile metallurgical coal. While these are not material properties the technical report to be filed within 45 days will include these properties.
The mineral reserve and resource estimates have been prepared under the supervision of, and the technical information in this press release was verified and approved by, Dennis Noll of Earthtech Inc., a qualified person, as such term is defined in NI 43-101 - Standards of Disclosure for Mineral Projects. Dennis Noll is independent of Corsa and its subsidiaries. The description and results of the drilling, laboratories employed, and the quality control and quality assurance programs for the Acosta Deep Project are contained in the Wilson Creek Technical Report and the Alumbaugh Report for both portions of that project. The laboratories utilized and the quality assurance and quality control employed for the Keyser Property and the surface projects are identical to those discussed in the Wilson Creek Technical Report and Alumbaugh Report.
Information about Corsa
Corsa's main operating subsidiaries are Wilson Creek Energy LLC and Maryland Energy Resources LLC based in Somerset County, Pennsylvania. Its primary business is the mining, processing and selling of metallurgical coal, as well as actively exploring, acquiring and developing resource properties consistent with its coal business.
Certain information set forth in this press release contains "forward-looking statements" and "forward-looking information" under applicable securities laws. Except for statements of historical fact, certain information contained herein constitutes forward-looking statements which include management's assessment of future plans and operations and are based on current internal expectations, estimates, projections, assumptions and beliefs, which may prove to be incorrect. Some of the forward-looking statements may be identified by words such as "estimates", "expects" "anticipates", "believes", "projects", "plans", "outlook", "capacity" and similar expressions. These statements are not guarantees of future performance and undue reliance should not be placed on them. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause the Company's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: risks that the actual production or sales for the 2013 fiscal year will be less than projected production or sales for these periods; risks that the prices for coal sales will be less than projected or expected; liabilities inherent in coal mine development and production including restarting idled mines; geological, mining and processing technical problems; inability to obtain required mine licenses, mine permits and regulatory approvals or renewals required in connection with the mining and processing of coal; risks that the Company's coal preparation plant will not operate at production capacity during the relevant period, unexpected changes in coal quality and specification; variations in the coal mine or coal preparation plant recovery rates; dependence on third party coal transportation systems; competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel; incorrect assessments of the value of acquisitions; changes in commodity prices and exchange rates; changes in the regulations with respect to the use, mining and processing of coal; changes in regulations on refuse disposal; the effects of competition and pricing pressures in the coal market; the oversupply of, or lack of demand for, coal; inability of management to secure coal sales or third party purchase contracts; currency and interest rate fluctuations; various events which could disrupt operations and/or the transportation of coal products, including labour stoppages and severe weather conditions; the demand for and availability of rail, port and other transportation services; the ability to purchase third party coal for processing and delivery under purchase agreements; and management's ability to anticipate and manage the foregoing factors and risks. The forward-looking statements and information contained in this press release are based on certain assumptions regarding, among other things, future prices for coal; future currency and exchange rates; the Company's ability to generate sufficient cash flow from operations and access capital markets to meet its future obligations; the regulatory framework representing royalties, taxes and environmental matters where the Company conducts business; coal production levels; and the Company's ability to retain qualified staff and equipment in a cost-efficient manner to meet its demand. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The reader is cautioned not to place undue reliance on forward-looking statements. The Company does not undertake to update any of the forward-looking statements contained in this press release unless required by law. The statements as to the Company's capacity to produce coal are no assurance that it will achieve these levels of production or that it will be able to achieve these sales levels.
The TSX Venture Exchange has neither approved nor disapproved the contents of this press release. Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE Corsa Coal Corp.
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