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Rhino Resources financial and operating results

Published by
World Coal,

Rhino Resource Partners have announced its financial and operating results for 1Q15, reporting a net loss of US$3.9 million and adjusted EBITDA of US$6.2 million, compared to1Q14 net income of US$125.5 million and adjusted EBITDA of US$138.2 million.

Total revenues for the quarter were US$56.2 million, with coal sales generating US$45.6 million of the total, compared to total revenues of $59.9 million and coal revenues of $51.2 million in 1Q14.

Rhino’s Pennyrile operations has completed a long-term sales contract with a local utility customer for 120 000 short t in 2015, 400 000 short t in 2016 and 550 000 short t in 2017. As well as the existing long-term contract for 800 000 short tpy, this additional long-term contract extends the sales to 1.2 million short t in 2016 and 1.35 million short t in 2017.

A second mining section has been added to the Riveredge mine at Pennyrile to increase production capacity to fulfil the current long-term contracts. The company is working on supplementary long-term sales agreements for this operation to reach its potential of 2 million short tpy.

Rhino's Pennyrile operations produced approximately 161 000 short t during 1Q15 Coal sales were approximately 156 000 short t. While mining conditions improved in 1Q15, the Pennyrile operation continued to experience higher than expected mining and coal processing costs.

Pennyrile's sales remain fully contracted through 2015 and as production continues to increase, Rhino expects the mine to be sold out through 2016.

At the company’s Northern Appalachian operations, y/y coal revenues per t decreased US$2.25 to US$58.60, while cost of operations costs per t decreased by US$3.13 to US$51.87.

Cost of operations per short ton improved y/y as mining conditions improved at Hopedale. Rhino anticipates intermittent adverse geological conditions as it develops into the 7-seam at Hopedale.

Sales dropped to 251 000 short t from 262 000 short t in the previous year and 257 000 short t in the previous quarter. At Hopedale, railroad service continued to impact production and sales during the quarter.

Sales at Rhino's Hopedale and Sands Hill operations in Northern Appalachia are fully contracted through 2015.

Coal revenue for Rhino Western in 1Q15 decreased to US$36.90/short t compared to US$41.34/short t in 1Q14 and US$40.51/short t in 4Q14.

Revenue dropped due to lower contracted prices for coal from Rhino's Castle Valley mine. Sales were 229 000 short t compared to 231 000 short t in 1Q14 and 301 000 short t in 4Q14.

Cost of operations was US$33.70/short t up from US$33.43/short t in 1Q14 but down from US$34.74/short t in 1Q14.

In Central Appalachia, coal revenue dropped to US$64.22/short t in 1Q15 versus US$72.89/short t in 1Q14 and US$69.16/short t in 4Q14. Metallurgical coal revenue was US$77.39/short t in comparison to US$81.17/short t in 1Q14 and $US75.59 in 4Q14/short t

Thermal coal revenue saw a decline to US$57.72/short t in comparison with US$70.21/short t in 1Q14 and US$65.32/short t in 4Q14. Sales volume was 237 000 t in 1Q15.

Rhino is currently evaluating its Central Appalachia operations to reduce costs at idle facilities and better utilise the Partnership's Central Appalachia properties.

Rhino also dissolved the Rhino Eastern joint venture with Patriot Coal Corp. in January 2015 and anticipates this will improve cash flow by about US$6 million in 2015.

For 1Q15, maintenance capital expenditures were approximately US$1.8 million and expansion capital expenditures were approximately US$1.3 million, which funded the completed development of Pennyrile.

Adapted from press release by Harleigh Hobbs

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