Pacific Coal Resources Ltd. announces first quarter 2012 financial results

TORONTO, May 31, 2012 /PRNewswire/ - Pacific Coal Resources Ltd. (TSXV: PAK) has filed on May 30, 2012 its unaudited consolidated financial statements for the three months ended March 31, 2012, together with its Management's Discussion and Analysis ("MD&A") for the corresponding period. All financial figures contained herein are expressed in U.S. dollars unless otherwise noted. These documents will be posted on the Company's website at www.pacificcoal.ca and are available under the Company's profile at www.sedar.com.

Luis Carvajales, Chief Executive Officer, commented: "We have been proceeding according to plan on both of our producing thermal coal properties - La Caypa and Cerro Largo. Our production and stripping ratios would be in line with our full-year 2012 projections had we not experienced unforeseen and unavoidable production disruptions in the first quarter of 2012. These disruptions, while handled admirably by our personnel, did cost the Company some production. With those situations resolved, we remain committed to lowering our operating costs, improving our stripping ratios, and boosting our production. We are confident that we will achieve all three of these objectives in the coming quarters."

Financial and Operating Summary

A summary of the financial and operating results for the three months ended March 31, 2012 and 2011 is as follows:

First Quarter Highlights

• The Company produced 317,070 tonnes of coal during the first quarter of 2012. Production at the Cerro Largo mine reached 131,895 tonnes, representing an increase of more than 50% over the previous quarter. Production at La Caypa of 185,175 tonnes was negatively impacted by a two week disruption at the mine resulting from an illegal work stoppage by employees of the mine contractor which resulted in lost production of approximately 75,000 tonnes.
  
  
• The Company completed 90% of its planned drilling program at the La Caypa, Cerro Largo and C.I. Jam properties. Updated NI 43-101 compliant technical reports in respect of the Company's properties are currently in progress and are expected to be released between the third and fourth quarters of 2012.

Q1 2012 Production at La Caypa

(1)   "BCM" is Bank Cubic Metres

During the first quarter of 2012, the Company produced 185,175 tonnes at La Caypa completing 87% of its planned production for the quarter, despite a two week blockade as a consequence of an illegal strike by employees of a mine subcontractor (see Pacific Coal press releases dated January 30, 2012 and February 6, 2012). Operational stripping ratios at La Caypa are consistent with the first quarter of 2011, which was a historical low. Total stripping ratios at La Caypa now reflect waste volumes moved from the south pit.

Q1 2012 Production at Cerro Largo - La Divisa

(1) "BCM" is Bank Cubic Metres

In the first quarter of 2012, the Company made substantial progress at Cerro Largo in both production and reduction of strip ratio. Production was up over 50% from the previous quarter, improving to 131,895 tonnes from 87,297 tonnes in the fourth quarter of 2011, while the stripping ratio was reduced by 9% to 16.19:1 from 17.72:1 in the fourth quarter of 2011, marking the third consecutive quarter of declining stripping ratios.

The Company experienced some logistical disruption at Cerro Largo associated with the collapse of a bridge on the route on December 26, 2011, which forced an additional 200 kilometre detour until February 21, 2012. However, the cost impact was mitigated and transport ensured by the utilization of the Company's own truck fleet. Additional fuel and transportation charges for the first quarter of 2012 at Cerro Largo as a result of this disruption totaled $2.83/tonne.

Coal sales during the first quarter of 2012 from La Caypa, Cerro Largo and third party production totaled 260,495 tonnes.

CI Jam Operations in Q1 2012

Outlook and Revised Production Guidance

As a result of the production shortfalls in the first quarter of 2012, 2012 production at La Caypa is expected to be 1.3 million tonnes, including coal from the South Pit expansion, down from previously released guidance of 1.4 million tonnes.

At Cerro Largo, commissioning of additional equipment by the operator will allow the Company to increase production from this mine, however due to footwall instability in conjunction with heavy rainfall, planned 2012 production has been reduced from 800,000 tonnes to 700,000 tonnes.

The Company's total 2012 forecasted production is 2.0 million tonnes, a projected 40% increase from 2011 production.

The Company continues to focus on initiatives to reduce costs during 2012 and realized savings in general and administrative costs of more than 10% in the first quarter of 2012 as compared to the previous quarter. General and administrative expenses are expected to decline further in 2012. In addition, the Company has commenced a strategic review of each of its operations to identify further cost savings.

NCIB Update

As at May 30, 2012, approximately 11.2 million shares had been purchased for cancellation under the normal course issuer bid, previously announced on July 4, 2011. The Company currently has 322.1 million shares outstanding. To date, the Company has repurchased approximately 3% of its issued and outstanding common shares for cancellation.

About Pacific Coal Resources Ltd.

Pacific Coal Resources Ltd. is a Canadian-based mining company focused on coal, coking coal, asphalt and asphaltite exploration, development and production from producing, development-stage and exploration-stage properties in Colombia. The Company has acquired or entered into agreements to acquire various interests in several operating coal mines and projects, representing a substantive coal and asphaltite exploration and production area throughout Colombia. Pacific Coal is committed to implementing its exploration and development strategy with a comprehensive environment, safety and community program, meeting international standards of best practice.

Forward Looking Information:

This news release contains "forward-looking information", which may include, but is not limited to, statements with respect to the future financial or operating performance of the Company and its projects. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or believes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Pacific Coal to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements contained herein are made as of the date of this press release and Pacific Coal disclaim, other than as required by law, any obligation to update any forward-looking statements whether as a result of new information, results, future events, circumstances, or if management's estimates or opinions should change, or otherwise. 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. Accordingly, the reader is cautioned not to place undue reliance on forward-looking statements.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

 

 

SOURCE Pacific Coal Resources Ltd.