TORONTO, ONTARIO — (Marketwire) — 05/15/12 — Lipari Energy, Inc. (TSX: LIP) (“Lipari” or the “Company”), a thermal coal producer with current operations and additional development properties in the Central Appalachian region of the United States, is pleased to announce its operating results for the three months ended March 31, 2012. All figures are in U.S. dollars unless otherwise stated.
First quarter 2012 tons sold decreased by 17.6% and production decreased by 20.0% over first quarter 2011 from 286,424 tons to 229,000. First quarter revenues decreased by 18.7%, as a result of the decrease in tonnage sold. Lipari generated earnings before interest, taxes, depreciation, depletion and amortization (“EBITDA”) of $0.28 million during the first quarter of 2012. Adjusted EBITDA, after accounting for a change in the fair value of warrants, lease expenses and other adjustments, was $0.62 million during the first quarter of 2012.
“Our first quarter results were down due to a decrease in demand for coal brought on by a mild winter and low natural gas prices. We idled one surface mining operation during the quarter in an effort to reduce costs; however, we continue to be pleased with the highwall miner production at the Barger Branch Mine, as we are now in our second full month of production. We are continuing to maintain a low debt ratio as we continue to prospect and develop our mineral reserve base,” said John Liperote, CEO of Lipari.
Selected First Quarter 2012 Operating and Financial Highlights
Review of Operating Performance
During the first quarter of 2012, Lipari–s operations sold 216,977 tons of high quality thermal coal, a 17.6% decrease over the prior year–s quarter of 263,385 tons. The average realized sales price per ton of coal sold was $72.05 per ton, an 1.3% decrease over the prior year–s quarter average realized price of $73.01 per ton. The economic slowdown, milder weather, and lower natural gas prices decreased the demand for energy and the tonnage sold for the quarter.
Balance Sheet Highlights
Production and Sales Contract Portfolio
Lipari has sales commitments in place for 100% of its planned 2012 production and approximately 75% of its planned 2013 production at prices averaging approximately $72 per ton for 2012 and $78 per ton for 2013. The Company has determined it will constrain production to match contracted sales for 2012, in response to the decline in market prices.
Interim Consolidated Financial Statements and Management–s Discussion and Analysis for the three months ending March 31, 2012 and 2011 have been posted on SEDAR and are available at .
Core Values
Lipari remains focused on the importance of safety in our workplace through continued training and equipment upgrades at all jobsites; “our employees are a key asset to our organization and our success, therefore we take great pride and effort in supporting their surroundings and ability to perform at a high level,” said Richard Liperote, President of Lipari.
Use of Non-IFRS Financial Measures
Our financial results are prepared in accordance with IFRS. This document refers to EBITDA and Adjusted EBITDA, which are not measures recognized under IFRS. EBITDA is earnings attributable to shareholders before interest and financing expenses, income taxes, depreciation, depletion and amortization. Adjusted EBITDA equals EBITDA exclusive of loss on debt extinguishment, IPO costs, warrant expense, stock compensation expense, equipment lease expense, and change in fair value of warrants. We disclose these measures, which have been derived from our financial statements and applied on a consistent basis, because we believe it is of assistance in understanding the results of our operations and financial position and are meant to provide further information about our financial results to investors. Management believes that Adjusted EBITDA is a valuable indicator of the Company–s ability to generate liquidity by producing operating cash flow to fund working capital needs, service debt obligations and fund capital expenditures.
The table below presents EBITDA and Adjusted EBITDA and reconciles these non-IFRS measures from net income (loss):
About Lipari Energy:
Lipari is a thermal coal producer with current operations and additional development properties in the Central Appalachian region of the United States. Lipari has been in production since 2008 and has diversified surface and highwall mining operations. Lipari coal sales are predominantly to utilities through a mix of forward contracts and short-term sales. Lipari–s growth strategy includes continued growth of its organic reserves through its enhanced drilling program, as well as from its focused and disciplined approach to strategic acquisitions. Lipari–s corporate office is located in London, Kentucky.
This news release and the information contained herein does not constitute an offer of securities for sale in the United States and securities may not be offered or sold in the United States absent registration or exemption from registration.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This news release contains “forward-looking information” that includes information relating to future events and future financial and operating performance, including management–s assessment of Lipari–s future outlook. Forward-looking information should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by which, that performance or those results will be achieved. Forward-looking information is based on information available at the time it is made and/or management–s good faith belief as of that time with respect to future events, and such information is subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking information. Important factors that could cause these differences include but are not limited to: changes in contracted sales, the business of the Company may suffer as a result of uncertainty surrounding the coal market; the Company may be adversely affected by other economic, business, and/or competitive factors; the worldwide demand for coal; the price of coal; the price of alternative fuel sources; the supply of coal and other competitive factors; the costs to mine and transport coal; the ability to obtain new mining permits; the costs of reclamation of previously mined properties; the risks of expanding coal production; the ability to bring new mines on line on schedule; industry competition; the Company–s ability to continue to execute its growth strategies; and general economic conditions. These and other risks are more fully described in the Company–s filings with the Canadian Securities Administrators, including its Annual Information Form for the year ended December 31, 2011, available on SEDAR at . You should not put undue reliance on any forward-looking information. We assume no obligation to update forward-looking information to reflect actual results, changes in assumptions or changes in other factors affecting forward looking information, except to the extent required by applicable securities laws. If we do update one or more forward-looking information, no inference should be drawn that we will make additional updates with respect to those or other forward-looking information.
Contacts:
Lipari Energy, Inc.
Richard Liperote
President
606.877.1800