Calgary, AB - November 28, 2013
- CanAm Coal Corp. (TSXV: COE) (OTCQX: COECF)
("CanAm" or the "Company") has filed its condensed interim
consolidated financial statements and related management discussion
and analysis for the period ended September 30, 2013. These Q3 2013
financial statements include a restatement of the comparative Q3
2012 financials which is discussed in detail in the Q3 Management
& Discussion Analysis ("MD&A"). Definitions of commonly
used non-IFRS financial measures (EBITDA from operations and Free
Cash Flow) are included at the end of this press
release.
The Company announced
today its third quarter 2013 financial results for the period
ending September 30, 2013. Revenue, EBITDA from operations and loss
for the quarter were $17.9 million, $3.4 million and ($0.9) million
respectively as compared to $14.7 million, $3.3 million and ($1.0)
million in the prior year. Sales for the quarter were 195,750 tons
as compared to 157,900 tons in Q3 2012 or an increase of
24%.
For the nine month
period ended September 30, 2013, revenue, EBITDA from operations
and loss were $47.3 million, $7.9 million and ($4.3) million
respectively as compared to $40.8 million, $7.1 million and ($3.8)
million in the prior year. Sales for the six month period were
513,691 tons compared to 405,609 tons in the prior year, an
increase of 27%.
As previously
discussed, our first and second quarter were mainly considered
transition quarters as we migrated the majority of our operations
into a new mine complement: Knight, Posey Mill 2 and Old Union 2.
Together with our existing Powhatan mine, the productive capacity
of this new mine complement is expected to consistently be in the
range of 60,000 to 80,000 tons per month. Our mine transition was
completed towards the end of Q2 and therefore we were able to run
steady state level production at all of our mines during this
quarter. As a result, the Company was able to deliver a record
quarter of production, revenue, EBITDA and free cash flow. We
achieved records at all levels of our operations:
![](http://www.thenewswire.ca/client_files/tnwfHEbI5_.png)
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Note: Refer to the definition of
EBITDA from operations and Free Cash Flow on the last page of this
press release.
With steady state and
consistent production at our mines, we are now looking to optimize
our cost structure and drive operational efficiencies across all of
our mines. In this context, we are also targeting to closely match
our production to our projected monthly and quarterly sales in
order to minimize coal inventories. Although our costs have been
coming down over the last couple of quarters, from $56/ton in Q1 to
$51/ton in Q3, we are targeting to bring the average production
cost per ton at or below $50/ton.
Third Quarter and YTD 2013 Financial Results
![](http://www.thenewswire.ca/client_files/tnwMnXeV7_.png)
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Key quarterly
statistics for 2013 and Q3 2012 are as follows:
![](http://www.thenewswire.ca/client_files/tnwI3Y7Z9_.png)
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Note: Operating cash flow is before
changes in non-cash working capital
-
-.Sales for the quarter were 195,750 tons, an increase of 16% over
Q2 2013 sales and 31% over Q1 2013 sales. Record sales of 67,500
tons were achieved in July.
-
-.Long term off-take contracts continue to enable the Company to
achieve better than market pricing for our high quality coals.
Average sales price per ton for Q3 was consistent with prior 2013
quarters. The slightly lower average price as compared to last year
is a result of our changing coal mix (i.e. a higher ratio of
thermal coal versus metallurgical coal) and the termination of a
met coal contract in early 2013.
-
-.All of our production is currently committed into our off-take
contracts with our customers and we are fully contracted for the
remainder of the year.
-
-.Average production cost per ton continues to trend down and was
$51/ton as compared to $56/ton in Q1 of 2013 or a decrease of 9%.
With all mines at steady state production now and with an ongoing
focus on operational efficiencies, we are targeting to achieve an
average cost per ton of at or below $50/ton. Q3 production costs
were unfavorably impacted primarily by higher than anticipated fuel
costs, mainly as a result of the spike of WTI oil prices during the
third quarter, and higher than anticipated equipment
repairs.
-
-.Operating cash flow of $2.0 million was double the cash flow
achieved in the comparable quarter of 2012.
-
-.Investment in equipment and mine development was $1.7 million as
compared to $5.2 million in the comparable period last year. On a
year to date basis, capital expenditures were $6.6 million through
the end of September or less than half of the $14.5 million in
expenditures in the comparable prior year
period. The Company does not
anticipate any significant new equipment purchases for the
remainder of the year.
-
-.Free cash flow at $1.7 million is significantly up from ($1.9)
million in Q3 2012 and from ($0.6) million and $0.2 million in Q1
and Q2 of 2013 and has turned positive following increased EBITDA
performance and significantly reduced capital
expenditures.
-
-.Repayment of equipment financing obligations continues at a
healthy pace and through September 30, 2013, the Company repaid
$5.7 million of these obligations.
-
-.Repaid $0.5 million of our August 2013 debenture and refinanced
$0.6 million with a maturity date of May 8, 2014.
-
-.Improved our financial flexibility with approximately $3.1
million of undrawn credit facilities.
-
-.Reviewing options with respect to the repayment and/or
refinancing of all or a portion of the May 2014
debentures.
Company President and
CEO, Jos De Smedt commented: "We are extremely pleased with our
quarterly results as the hard work of our team to transition from
mine development to steady state production at all of our mines is
now paying off for our Company. From an operational perspective,
record production and sales is certainly evidence that we can
operate at these levels at our new mines and, from a financial
perspective, our metrics continue to improve. Record EBITDA of $3.4
million and especially record free cash flow of $1.7 million are
additional indicators that we will be able to start building our
cash position going forward. Also, recently obtained additional
credit facility has improved our financial flexibility. We need to
continue to build upon this Q3 momentum as we close out 2013 and
position ourselves for 2014. With 85+% of our business contracted
for in 2014, we are well positioned for a successful 2014.
"
Outlook for the remainder of 2013
Although
all of our mines are now positioned to produce at optimum levels
and all of our 2013 production is committed into our off-take
contracts, we anticipate sales for Q4 to be below
Q3 levels due to plant maintenance and
other factors at three main customers and overall reduced shipping
days during the year-end holiday season. These factors are
temporary and sales at these customers are expected to revert to
normal quarterly levels in January. In this context, for November
and December, the Company has taken a decision to scale back
production in order to monetize existing inventory levels and match
our production to our anticipated sales levels and thus realize
production cost savings. Full scale production is expected to
resume in January. October production exceeded 70,000
tons.
The
Company continues to believe its existing equipment fleet is
sufficient for the foreseeable future with its existing mine plan.
On this basis, no significant new equipment purchases are planned
for the rest of 2013 and possibly all of 2014.
On the
basis of the forgoing and the fact
that all of 2013 production and the majority of 2014 production has
been sold into off-take contracts with our customers, the Company
expects to consistently generate free cash flow for the remainder
of 2013 and 2014.
For Further
Information:
CanAm Corporate Office:
Jos De Smedt,
President & CEO
Tel: 403.262.3797
Toll Free: 1.877.262.5888
Email:
jdesmedt@canamcoal.com
EBITDA from
operations and Free Cash Flow
Statements throughout this MD&A
make reference to EBITDA from operations and Free Cash Flow which
are non-IFRS financial measures commonly used by financial analysts
in evaluating financial performance of companies, including
companies in the mining industry. Accordingly, management believes
EBITDA from operations and Free Cash Flow may be a useful metric
for evaluating the Company's performance as it is a measure
management uses internally to assess performance, in addition to
IFRS measures. As there is no generally accepted method of
calculating EBITDA from operations and Free Cash Flow, the terms
used herein are not necessarily comparable to similarly titled
measures of other companies. The items excluded from EBITDA from
operations and Free Cash Flow are significant in assessing the
Company's operating results and liquidity. EBITDA from operations
and Free Cash Flow have limitations as an analytical tool and
should not be considered in isolation from, or as an alternative
to, net income or other data prepared in accordance with IFRS.
EBITDA from operations is calculated as income from mining
operations plus depreciation, depletion, accretion and amortization
less general and administrative costs. Free Cash Flow is calculated
as EBITDA from operations less financed and non-financed capital
expenditures. Other financial data has been prepared in accordance
with IFRS.
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.
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 November 26, 2013.
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.
(TSXV:COE)
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