CALGARY, ALBERTA — (Marketwire) — 08/02/11 — CanAm Coal Corp. (TSX VENTURE: COE) (OTCQX: COECF) (“CanAm” or the “Company”) has filed its unaudited condensed interim consolidated financial statements and related management–s discussion and analysis for the three month period ended April 30, 2011. Copies of these documents may be obtained via the SEDAR website.
With the primary focus of the Company on growing coal production and resources, the main activities of the CanAm team in the first quarter were devoted to transitioning and optimizing the Powhatan mine operations and on successfully completing the Birmingham Coal & Coke (“BCC”) acquisition. The Company was successful on both accounts and delivered record production and profit in the first quarter of fiscal 2012 and on May 9th, shortly after quarter end, completed the acquisition of 50% of the BCC group of companies.
“We made significant progress on all fronts in this quarter”, said Tim Bergen, CEO of CanAm. “Compared to prior year–s first quarter, we tripled coal production and coal revenue and increased income from mining operations five-fold. We also generated approximately $0.8 million of cash flow from operations and delivered $0.2 million of net income in the first quarter. At the same time, we completed the BCC acquisition which adds a 50% interest in 3 operating mines and a coal brokerage business”.
Highlights and events for the first quarter include:
Highlights and events subsequent to the first quarter ended April 30, 2011 include:
Financial results for the quarter ended April 30, were as follows:
Mine operating results for the quarter ended April 30, were as follows:
Notes:
Coal Sales
Coal sales tripled over the comparable period in the prior fiscal year and were 30,655 tons in the quarter as compared to 9,950 tons or an increase of 20,705 tons. Coal sales were up 16,022 tons from the previous quarter or more than doubled. Higher thermal coal recovery rates from the Mary Lea coal seam resulted in a 63/37% metallurgical/thermal coal mix.
Revenue, Income and EBITDA from Mining Operations
Revenue, income and EBITDA from mining operations were all up significantly as compared to the prior period as a result of the increased production and improved pricing on both the metallurgical and thermal coal. Although prices for both coals increased quarter over quarter, the average coal price was lower due to the Company–s coal mix of 63/37% metallurgical/thermal coal as compared to 84/16% in the comparable prior period. For the quarter, the Company realized an average sales price of $105/ton as compared to $110/ton in fiscal 2011. Production costs were significantly lower in the quarter due to the increased production volumes, better strip ratios and efficiencies realized following the transition of mine operations from the previous contract miner to the Company. For the quarter, average production cost per ton was $43 as compared to $67 in fiscal 2011 or a decrease of 35%. EBITDA from mining operations was $1,180,461 million or $39/ton as compared to $206,952 or $21/ton in the first quarter of fiscal 2011.
Revenue, income and EBITDA from mining operations were negatively impacted from the strengthening of the Canadian dollar. Average exchange rate for the first quarter was US$1=CDN$0.9624 as compared to US$1=CDN$1.0280 in the comparable prior period.
Other Income (Expenses)
Other expenses for the three month period ended April 30, 2011 were $539,845 as compared to $184,987 in fiscal 2010 or an increase of $354,858. The increase was mainly the result of: higher general and administrative expenses as a result of the increased activity in the Company–s operations (+$178,000), interest and costs associated with the Company–s 12% debenture which was not in place in fiscal 2011 (+$90,000), higher foreign exchange losses as a result of the strengthening of the Canadian dollar (+$16,000), higher stock based compensation expenses (+$37,000) and higher equipment interest expense (+$30,000).
The Company–s overall financial position improved as a result of the cash flow generated from mining operations and monies received in the amount of $1 million through the issue of subscription receipts in the context of the 9.5% convertible debenture financing. These funds were held in escrow by the Company until the closing of the BCC acquisition (which occurred on May 9, 2011). The Company continued its investment in its mining operations in Alabama and capital expenditures for the quarter ended April 30, 2011, were approximately $0.6 million including $0.2 million for a deposit on mine reclamation bonds.
Outlook
Since November 2009, the Company has embarked on a strategy to become an emerging coal producer and in the last year the Company has successfully completed two acquisitions: gaining control of RAC Mining LLC, a predominantly metallurgical coal producer, and acquiring a 50% ownership stake in Birmingham Coal & Coke Inc., a predominantly thermal coal producer. As a result, CanAm–s assets now comprise an ownership stake in:
With transition of mining operations to RAC completed and the acquisition of 50% of BCC, which will contribute to CanAm–s results starting May 1, 2011, the Company is estimating coal sales of between 300,000 to 350,000 for fiscal 2012 (ending January 31, 2012). The Company will also continue to evaluate other mining opportunities in North America and it is the Company–s intention to exercise its option on the remaining 50% ownership stake in Birmingham Coal & Coke, Inc.
In addition, the Company continues to pursue the development of the Buick Coal Property which holds significant coal resources, 188 million tons of indicated and 103 million tons of inferred coal resources, in Colorado, USA (see the technical report entitled “Limon Lignite Project, Elbert County, Colorado, USA,” dated October 26, 2007 and filed on SEDAR on November 2, 2007).
About CanAm Coal Corp.
CanAm is a coal producer and development company focused on growth through the acquisition, exploration and development of coal resources and resource-related technologies. CanAm–s main activities and assets include its four operating coal mines in Alabama, the exclusive rights to a proprietary Coal to Liquids technology which converts coal into liquid fuels (such as oil, jet fuel) at an economical cost with zero airborne emissions and the Buick Coal Project which holds significant coal resources, 188 million indicated and 103 million inferred resources, in Colorado, USA (see the technical report entitled “Limon Lignite Project, Elbert County, Colorado, USA,” dated October 26, 2007 and filed on SEDAR on November 2, 2007). Other coal and related opportunities continue to be evaluated on an ongoing basis.
Forward-Looking Information and Statements
This press release contains certain forward-looking statements and forward-looking information (collectively referred to herein as “forward-looking statements”) within the meaning of applicable Canadian securities laws. All statements other than statements of present or historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “could”, “should”, “can”, “anticipate”, “estimate”, “expect”, “believe”, “will”, “may”, “project”, “budget”, “plan”, “sustain”, “continues”, “strategy”, “forecast”, “potential”, “projects”, “grow”, “take advantage”, “well positioned” or similar words suggesting future outcomes. In particular, this press release contains forward-looking statements relating to: the future production of the Powhatan mine; the permitting of the Davis mine; and the potential production at the Davis mine. This forward looking information is based on management–s estimates considering typical strip mining operations, equipment requirements and availability and typical permitting timelines.
In addition, forward-looking statements regarding the Company are based on certain key expectations and assumptions of the Company concerning anticipated financial performance, business prospects, strategies, the sufficiency of budgeted capital expenditures in carrying out planned activities, the availability and cost of services, the ability to obtain financing on acceptable terms, the actual results of exploration projects being equivalent to or better than estimated results in technical reports or prior exploration results, and future costs and expenses being based on historical costs and expenses, adjusted for inflation, all of which are subject to change based on market conditions and potential timing delays. Although management of the Company consider these assumptions to be reasonable based on information currently available to them, these assumptions may prove to be incorrect.
By their very nature, forward-looking statements involve inherent risks and uncertainties (both general and specific) and risks that forward-looking statements will not be achieved. Undue reliance should not be placed on forward-looking statements, as a number of important factors could cause the actual results to differ materially from the Company–s beliefs, plans, objectives and expectations, including, among other things: general economic and market factors, including business competition, changes in government regulations or in tax laws; the early stage development of the Company and its projects; general political and social uncertainties; commodity prices; the actual results of current exploration and development or operational activities; changes in project parameters as plans continue to be refined; accidents and other risks inherent in the mining industry; lack of insurance; delay or failure to receive board or regulatory approvals; changes in legislation, including environmental legislation, affecting the Company; timing and availability of external financing on acceptable terms; conclusions of economic evaluations; and lack of qualified, skilled labour or loss of key individuals. These factors should not be considered exhaustive. Many of these risk factors are beyond the Company–s control and each contributes to the possibility that the forward-looking statements will not occur or that actual results, performance or achievements may differ materially from those expressed or implied by such statements. The impact of any one risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as these risks, uncertainties and factors are interdependent and management–s future course of action depends upon the Company–s assessment of all information available at that time.
Forward -looking statements in respect of the future production of the Powhatan and BCC mines may be considered a financial outlook. These forward-looking statements were approved by management of the Company on July 29, 2011. The purpose of this information is to provide an operational update on the company–s activities and strategies and this information may not be appropriate for other purposes.
The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this press release are made as of the date of this press release and the Company does not undertake and is not obligated to publicly update such forward-looking statements to reflect new information, subsequent events or otherwise unless so required by applicable securities laws.
Neither the 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 release.
Contacts:
CanAm Corporate Office
Tim Bergen
Chief Executive Officer
403.262.3797 or Toll Free: 1.877.262.5888
tbergen@@canamcoal.com
Brisco Capital Partners
Scott Koyich
403.262.9888