Corsa Files Third Quarter 2011 Financial Results and Updates Production Guidance
TORONTO, Oct. 17, 2011 /PRNewswire/ - Corsa Coal Corp. ("Corsa") (TSXV: CSO) announces that it has filed its Interim Consolidated Financial Statements and Management's Discussion and Analysis for the three month and nine month periods ended August 31, 2011 on SEDAR and has posted these documents to its website www.corsacoal.com.
Significant achievements for the nine months ended August 31, 2011 included:
- Arrangement of Coal Sales Contract
- Purchase of the Alumbaugh Property adding an indicated resource of 29.5 million in place tons
- Purchase of the Casselman Mine with an indicated resource of 16.3 million in place tons
- Completion of $25 million Credit Facility
- Addition of a 9.04 million indicated in place ton resource at Winner property
- Commencement of Coal Preparation Plant operations and rail coal shipments with coal quality better than sales contract specifications
- Commencement of mining operations at the Casselman underground mine
Refer to the Interim Consolidated Financial Statements and Management's Discussion and Analysis filed for the details of the financial performance of the Company and the matters referred to in this release including the technical reports and independent qualified person.
Don Charter, President and Chief Executive officer stated "We are very pleased with our continued progress with our mining operations and properties and with the performance of our new state-of-the-art coal processing facility. The plant start-up has gone well and is achieving design recoveries and we have already sold and shipped 169,000 clean tons of metallurgical coal. "
Coal Preparation Plant
The Company's coal preparation plant commenced operations in June 2011 and has increased production of clean metallurgical coal each month from June to September.
The quality of coal produced to date has met or exceeded the sales contract specifications. Recovery rates during the start-up phase have been, as expected, lower than design, however, as the circuits are balanced and coal blend adjusted, the average recoveries have improved and the most recent recoveries are on target at approximately 73%. The Company's ability to achieve its coal sales target will depend in part on the Plant achieving targeted recoveries.
Coal Production, Purchases and Sales
This fiscal year to September 30, the Company has produced from its surface mines 136,000 raw tons and has purchased 156,000 raw tons of metallurgical coal. The Company expects to be within target for surface mined and purchased raw metallurgical coal production for the year.
The Casselman mine, which commenced operations in August, was originally estimated to contribute up to approximately 100,000 raw tons of metallurgical coal production for fiscal 2011. It has experienced delays due to equipment deliveries and initial mining conditions. This has slowed production and will increase costs in the near term. Management is currently reducing the expected production from this mine to approximately 50,000 raw tons for 2011.
The Company has sold 169,000 clean tons of metallurgical coal to September 30 (which includes raw metallurgical coal tons sold prior to commencement of the plant). It expects to be able to ship a further 155,000 to 160,000 clean tons of metallurgical coal for a total of 325,000 to 330,000 for the year. This represents a short fall from its targeted range of 360,000 to 400,000. The volume will be impacted by the actual results from the Casselman mine as discussed above and the frequency and timing of train arrivals in October and November.
The cash mining costs per raw ton of metallurgical coal mined (not including royalties) for the nine months ended August 31, 2011 were $58. Mining costs in the fourth quarter will be affected by higher than normal costs associated with the Casselman mine start up. The plant processing costs were $15 per clean ton sold which is higher than the expected normalized processing costs due to the start-up costs at the plant which included the double handling of raw coal while the plant raw coal area is expanded, third party refuse handling pending the start-up of the Company's Milford refuse site which is expected by the end of the year, low production rates and low recoveries normal for the start-up period of this type of plant. The cost of purchased metallurgical coal is based on a formula that is dependent on the actual sale price realized by the Company.
The Company has produced 126,000 tons of thermal coal to September 30 and expects to produce another approximately 20,000 tons to put it on target for thermal coal production. As part of the purchase of Wilson Creek a legacy out of the money thermal coal sale agreement was inherited. This required the delivery of approximately 87,000 tons at prices between $32 and $34 per ton FOB mine site. There remains less than 5,000 tons to be delivered under this contract. To September 30, the Company sold approximately 41,000 tons of thermal coal to other purchasers at an average price of $51 per ton FOB mine site. The majority of thermal coal mined is by product of the mining of metallurgical coal.
The Company has arrangements in place for the sale of 500,000 tons of metallurgical coal from April 2011 to March 2012 at current world prices which it expects will result in net prices to Corsa averaging between $165 to $170 per ton FOB rail car depending on normal industry discounts based on coal specifications. The quality of coal shipments to date has met or exceeded the sales contract specifications.
The Company has updated its estimate of its target sales of metallurgical coal for fiscal 2012 from coal mined at its operations and coal purchased. The range is estimated to be between 800,000 and 900,000 clean tons. This is based on the current mine plan for Casselman having two mining units in production by early second quarter and a third unit in production in the fourth quarter. It also is dependent on receiving permits for the Hastings and Ankeny surface projects in the first and second quarter respectively and the rate and quality of purchased coal. This estimate assumes no production from the Acosta deep project or Winner project in fiscal 2012.
The estimated coal production, purchases, sales and cash costs per ton of coal and processing costs per ton of coal sold disclosed in this press release are considered to be forward looking information. Readers are cautioned that actual results may vary from this forward looking information. There can be no assurance as to when or if the required permits will be issued. Actual production, purchase, total cash costs and sales and processing costs are subject to variation based on a number of risks and other factors referred to under the heading "Forward-Looking Statements".
The mineral resource estimates for the projects referred to in this press release 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 ("NI 43-101"). Dennis Noll is independent of Corsa and Wilson Creek Energy. The mineral resources estimates referred to in this press release were derived from the following technical reports prepared in accordance with NI 43-101: "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" ; "Technical Report for Wilson Creek Energy, LLC, Coal Resources for the Casselman Mine Site in Garrett County, Maryland, USA, Dennis A. Noll, P.G., C.P.G., Earthtech, Inc., May 5, 2011" and, "Technical Report for Wilson Creek Energy, LLC, Coal Resources for the Winner Mine Site in Garrett County, Maryland, USA, Dennis A. Noll, P.G., C.P.G., Earthtech, Inc., July 29, 2011".
The estimate of mineral resources in the report 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 a mineral reserves and a feasibility study has not been completed. Accordingly the economic viability of the proposed Casselman Mine operations and the Alumbaugh property and Winner property has not yet been demonstrated.
Information about Corsa
Corsa's main operating subsidiary is Wilson Creek Energy 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", "targets" 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 Corsa'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 fourth quarter of 2011 and for 2012 will be less than projected production or sales for these periods; risks that the prices for coal sales will be less than projected; liabilities inherent in coal mine development and production; geological, mining and processing technical problems; inability to obtain required mine licenses, mine permits and regulatory approvals required in connection with the mining and processing of coal; unexpected changes in coal quality and specification; variations in the coal preparation 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 in 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; currency and interest rate fluctuations; various events which could disrupt operations and/or the transportation of coal products, including labor 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. 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 these forward looking statements unless required to do so by law.
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.