Xinergy Ltd. Reports Second Quarter 2012 Operating Results
Toronto Stock Exchange: XRG
- Received all requisite permits at Blue Knob, enabling production at our second surface mine at South Fork
- Secured a $20.0 million financing commitment for a first lien, senior secured note with a three year maturity at an interest rate of 9.875%
- Entered into definitive documentation to acquire for a purchase price of $4 million a mid-volatility metallurgical coal property adjacent to our South Fork property, which, upon closing, would significantly increase our premium mid-vol met reserves and, upon project completion, our production.
- Idled Raven Crest and began idling True Energy mining operations due to market conditions
- Maintaining a Strong Balance Sheet with Liquidity of $53.5 million as of June 30, 2012
- Updating 2012 and 2013 Financial Guidance
KNOXVILLE, TN, Aug. 13, 2012 /PRNewswire/ - Xinergy Ltd., (TSX: XRG) ("Xinergy" or the "Company"), a Central Appalachian coal producer, today announced operating results for the three months ended June 30, 2012, together with its Management's Discussion and Analysis ("MD&A") for the corresponding period. These documents are posted on SEDAR at www.sedar.com and on the Company's website at www.xinergycorp.com.
The Company reported a second quarter net loss of $14.5 million or $0.27 per diluted share in the quarter ended June 30, 2012 as compared to a net loss of $2.8 million or $0.05 per diluted share last year. EBITDA and Adjusted EBITDA for the second quarter 2012 was $(5.4) million compared to $18.1 million and $7.1 million, respectively, for the comparable period last year. The increased net loss and decrease in EBITDA were a result of significantly lower production and sales during the second quarter of 2012.
In the second quarter of 2012, the Company reported coal revenues of $23.1 million on 363,495 tons sold ($63.37 per ton) compared to $40.6 million on 510,381 tons sold ($79.62 per ton) for the same quarter a year ago. Total cash costs were $21.6 million or $79.22 per ton produced compared to $30.0 million or $58.39 per ton a year ago.
Matt Goldfarb, Xinergy's Interim CEO, commented: "We continue to manage through near-term cyclical and secular challenges in the domestic coal industry, with the thermal coal market beginning to show signs of a recovery while the fundamentals of the metallurgical coal market have begun to reflect increasing concern surrounding growth rates in Asia and economic uncertainty in Europe. The Company remains constructive on the long-term market position of our high quality metallurgical and low-cost CAPP thermal assets, and has accordingly prioritized a measured approach to our operating portfolio and balance sheet stability as we await signs of a more pronounced recovery. Xinergy has taken decisive steps to align our operations for today's market environment, having idled our Raven Crest and True Energy operations as we continue our efforts to efficiently manage inventory. While we have attempted to relocate certain employees from idled operations to our South Fork mid-vol met operations, we regretfully had no other option than to further reduce workforce as we continued to curtail production to match a lower demand environment."
"On a positive note, we are pleased to announce that we have entered into definitive documentation to acquire for $4 million cash a mid-vol met property adjacent to our South Fork operation which we anticipate would, if consummated, significantly increase our mid-vol metallurgical production capacity in West Virginia upon project completion. In early August, we received requisite permits to begin mining operations at Blue Knob, which is our second surface mine at our South Fork complex, and further anticipate receipt of all requisite permits to commence construction of our preparation plant and rail load-out facility at South Fork during the third quarter."
Financial Overview
The following tables present selected balance sheet, statement of operations and sales and operating statistics for Xinergy.
| ($'000) | As of June 30 2012 |
As of March 31 2012 |
As of December 31 2011 |
As of June 30 2011 |
||||||||
| Balance Sheet | ||||||||||||
| Cash and cash equivalents | $ | 53,454 | $ | 69,465 | $ | 72,983 | $ | 145,592 | ||||
| Total current assets | 78,828 | 103,688 | 117,269 | 171,196 | ||||||||
| Total assets | 257,693 | 282,854 | 289,701 | 295,525 | ||||||||
| Total current liabilities | 22,368 | 30,835 | 40,309 | 36,751 | ||||||||
| Total long-term liabilities | 222,106 | 225,308 | 224,803 | 218,611 | ||||||||
| Shareholders' equity | 13,220 | 26,711 | 24,589 | 40,163 | ||||||||
| 2012 | 2011 | |||||||||||
| ($'000, except per share) | Three months ended June 30 |
Three months ended March 31 |
Six months ended June 30 |
Three months ended June 30 |
||||||||
| Statement of Operations | ||||||||||||
| Coal revenues | $ | 23,143 | $ | 29,946 | $ | 53,090 | $ | 40,637 | ||||
| Cost of coal sales | 26,372 | 30,507 | 56,879 | 29,954 | ||||||||
| Gross margin | (3,229) | (561) | (3,789) | 10,683 | ||||||||
| (Loss) income before taxes | (18,070) | 2,372 | (15,698) | (5,289) | ||||||||
| Net (loss) income | (14,474) | 1,690 | (12,784) | (2,817) | ||||||||
| Basic and diluted net income (loss) per share | (0.27) | 0.03 | (0.23) | (0.05) | ||||||||
| 2012 | 2011 | ||||||||||||
| Three months ended June 30 |
Three months ended March 31 |
Six months ended June 30 |
Three months ended June 30 |
||||||||||
| Sales & Operating Statistics | |||||||||||||
| Tons sold | 363,495 | 425,697 | 789,192 | 510,381 | |||||||||
| Tons produced | 272,999 | 380,173 | 653,172 | 513,866 | |||||||||
| Sales price/ton | $ | 63.67 | $ | 70.35 | $ | 67.27 | $ | 79.62 | |||||
| COGS/ton sold | $ | 72.55 | $ | 71.66 | $ | 72.07 | $ | 58.69 | |||||
| Gross margin/ton sold | $ | (8.88) | $ | (1.31) | $ | (4.80) | $ | 20.93 | |||||
| Cash costs/ton produced | $ | 79.22 | $ | 66.99 | $ | 72.11 | $ | 58.39 | |||||
Outlook
Thermal & Metallurgical Coal Production and Sales
The below revised coal sales guidance is as follows:
| 2012 Thermal Coal Full Year Sales Guidance | ||||||
| Revised Guidance | Previous Guidance | |||||
| Straight Creek | 0.7—0.8 million tons | 0.6—0.8 million tons | ||||
| Raven Crest | 0.2—0.3 million tons | 0.2—0.3 million tons | ||||
| 0.9—1.1 million tons | 0.8—1.1 million tons | |||||
| 2013 Thermal Coal Full Year Sales Guidance | ||||||
| Revised Guidance | ||||||
| Straight Creek | 0.7-0.9 million tons | |||||
| Raven Crest | 0.3-0.4 million tons | |||||
| 1.0-1.3 million tons | ||||||
| 2012 Metallurgical Coal Full Year Sales Guidance | ||||||
| Revised Guidance | Previous Guidance | |||||
| South Fork | 80,000-100,000 tons | 360,000--480,000 tons | ||||
| True Energy | 40,000-- 50,000 tons | 200,000--250,000 tons | ||||
| 120,000-150,000 tons | 560,000-730,000 tons | |||||
| 2013 Metallurgical Coal Full Year Sales Guidance | ||||||
| Revised Guidance | Previous Guidance | |||||
| South Fork | 300,000-400,000 tons | 800,000 - 1,000,000 tons | ||||
| True Energy | 250,000 - 300,000 tons | |||||
| 300,000-400,000 tons | 1,050,000 - 1,300,000 tons | |||||
Estimated Capital Expenditures
We have spent approximately $24.0 million on capital expenditures for the six months ended June 30, 2012. The Company estimates an additional $12.0 million to $14.0 million in capital expenditures will be incurred during the remainder of 2012, for a total of $36.0 to $38.0 million for the full year 2012.
Of the remaining capital expenditures, $11.0 million to $12.0 million will be for the continued development and expansion of our South Fork property including the construction of a coal preparation plant and rail loading facility, the acquisition of additional reserves and the payment due the previous owners upon receipt of the Blue Knob permit. The remaining capital expenditures of $1.0 million to $2.0 million will be for maintenance capital that will be incurred at our other properties.
Liquidity
As of June 30, 2012, the Company had available liquidity of $53.5 million calculated as follows (in millions):
| Unrestricted Cash | $ 53.5 | ||||||||||||||
| Available Liquidity | $ 53.5 | ||||||||||||||
| Restricted Cash | $ 10.4 |
During July, the Company secured a $20 million financing commitment from Marret Asset Management, Inc. ("Marret") that contemplates issuance of $20 million in principal amount of first lien senior secured notes, which would bear interest at a rate of 9.875% per annum, have a three year term and be issued at an original issue discount of 98% of face amount.
Conference Call
The Company will hold a conference call to discuss second quarter 2012 results on Tuesday, August 14, 2012 at 10:00 a.m. ET. Interested parties are invited to participate in the conference call, during which prepared remarks from the Company's management team will be followed by a question and answer session. The conference call will be webcast live on the Internet with a replay available on the Company's website shortly after the event.
| Event: | Conference call to discuss second quarter 2012 financial results |
| Timing: | Tuesday, August 14, 2012 at 10:00 a.m. Eastern Time |
| Phone: | Dial In 877-317-6789 (International 412-317-6789) Canada 866-605-3852 five to ten minutes prior to scheduled start and reference Xinergy conference call |
| Internet: | Log on to the Company's website, www.xinergycorp.com five to ten minutes prior to scheduled start, follow links to Investors page. |
| Replay: | A telephonic replay will be available approximately 1 hour after conclusion of the call through August 29, 2012 at 9:00 AM ET by calling 877-344-7529 (International 412-317-0088) and entering conference number 10017141. Replay of the webcast will also be available on the Company's website. |
About Xinergy Ltd.
Headquartered in Knoxville, Tennessee, Xinergy Ltd., through its wholly owned subsidiary Xinergy Corp. and its subsidiaries, is engaged in coal mining in eastern Kentucky, West Virginia and Virginia. Xinergy sells high quality thermal and metallurgical coal to electric utilities, steelmakers and industrial companies. For more information, please visit www.xinergycorp.com.
SOURCE Xinergy Ltd.
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