Corsa Coal Corp., a premium quality metallurgical, thermal and industrial coal producer, has reported financial results for the three months and full year ended 31 December, 2016. Corsa has filed its audited consolidated financial statements for the years ended 31 December, 2016 and 2015, related management’s discussion and analysis and its annual information form under its profile on www.sedar.com, as well as updated technical reports for its Northern Appalachia (NAPP) Division and Central Appalachia (CAPP) Division properties.
Unless otherwise noted, all dollar amounts in this news release are expressed in United States dollars and all ton amounts are short tons (2000 lb per ton).
4Q16 and FY16 highlights
- In 2016, Corsa achieved its operational goals by significantly reducing cash production cost per ton sold at both divisions and achieving industry-leading safety and regulatory compliance rates.
- Corsa’s operations continued to achieve industry leading safety performance in 2016, with violation per inspection day (VPID) rates that were almost 50% lower than the MSHA national average and a lost time accident frequency rate that was almost 75% lower than the MSHA national average for coal mines.
- NAPP Division variable cost reduction efforts have been successful with the cash production cost per ton sold(1) for metallurgical coal decreasing 7.8% [from US$67.68 to US$62.39] in 2016 compared to the previous year.
- NAPP Division fixed costs(2) were reduced by US$14.2 million in 2016 compared to the prior year, as a result of successful negotiations with third parties, reductions in idle mine costs, water treatment costs, general and administrative expenses and a successful asset sales programme.
- CAPP Division variable cost reduction efforts have also been successful with cash production cost per ton sold(1) for thermal and industrial coal decreasing 12.6% [from US$57.53 to US$50.29] in 2016 compared to the previous year.
- Spot prices for metallurgical coal rose by approximately 200% over the course of 2016, leading to an average realised price per ton of metallurgical coal sold(1) of US$101.99 in the fourth quarter of 2016 despite 35% of Corsa’s fourth quarter 2016 metallurgical coal sales being sold on a fixed price domestic contract with pricing negotiated in late 2015 in a lower price environment.
- Metallurgical coal sales volumes increased 37% in the fourth quarter of 2016 as compared to the third quarter of 2016, marking the third consecutive quarter of nearly 25% or greater of growth in metallurgical coal sales volumes.
- In September 2016, Corsa commenced development work at the Acosta Deep Mine in Somerset County, Pennsylvania, which is forecasted to produce 400 000 tpy of low volatile metallurgical coal once fully operational. Coal production at the mine is anticipated to begin in the second quarter of 2017 and ramp up over the course of 2017.
- Corsa achieved positive adjusted EBITDA(1) of US$6663 000 and US$5359000 at its NAPP Division for the three and twelve months ended 31 December, 2016, respectively; US$1486000 and US$3329000 at its CAPP Division for the three and twelve months ended 31 December, 2016, respectively; and US$7239000 and US$5358000 on a consolidated basis for the three and twelve months ended 31 December, 2016.
- In October 2016, Corsa raised CDN$23.0 million by way of a private placement of 11 500 000 common shares of the Company (the ‘Common Shares’) (post-consolidation basis) to fund mine development and for general corporate and working capital purposes.
- For the full year 2016, Corsa raised US$26468000 of equity, net of issuance costs, by way of three private placements.
- In September 2016, the Company was notified that it was awarded US$3000000 in funding under the Pennsylvania Redevelopment Assistance Capital Programme to develop an underground coal mine in Somerset County subject to certain conditions, including but not limited to: (i) completing the Redevelopment Assistance application; (ii) confirmation that at least 50% of the required non-state funds necessary to complete the project are secured at the time of application; (iii) execution of a grant agreement; and (iv) commencement of construction within six months of the grant agreement. Once all the aforementioned conditions have been met, the grant will be released on a periodic basis and the company will be reimbursed for certain expenditures which the company will offset against the capitalised development costs.
- Corsa reached a settlement with the United States Environmental Protection Agency and the Pennsylvania Department of Environmental Protection on the alleged Clean Water Act violations in the amount of US$6.5 million. The entire US$6.5 million was released from an escrow that was established in connection with the Company’s acquisition of PBS Coals, Inc. The company was also reimbursed for its legal expenses from this escrow. As a result of this escrow release, the settlement of this matter had no impact to the cash flows of Corsa.
- Corsa completed a share consolidation on the basis of one (1) post-consolidation Common Share for each 20 pre-consolidation Common Shares effective on 7 December, 2016.
Read the article online at: https://www.worldcoal.com/coal/08032017/corsa-coal-announces-financial-results-for-4q16/