Armstrong Energy, Inc. has reported earnings for both the three and nine month periods ended 30 September 2015.
3Q15 revenue from coal sales totaled US$89.2 million and US$278.7 million for the three and nine months ended 30 September 2015 – 18.1% and 17.1% lower than the comparable periods in 2014, primarily attributable to the decrease in volume due to weak market conditions and low natural gas prices.
Costs of coal sales were US$69.8 million and US$218.8 million for the three and nine months ended 30 September 2015. This is 20.7% and 19.9% lower than the same time in the previous year because of decreases in volume and improved operating efficiency, primarily related to favourable repair and maintenance costs at the company’s underground mines, lower diesel fuel costs and better mining conditions. The operating efficiencies in the current year were partially offset by adverse weather conditions that occurred in 1Q15. Cost of coal sales per ton for the three and nine months ended 30 September 2015 totalled US$36.19 and US$36.87 – a decline of 5% and 3.7%, respectively, as compared to the same periods in 2014.
Adjusted EBITDA for the three and nine months ended 30 September 2015 has finished at US$16.1 million and US$52.8 million, respectively. This is consistent and 9.3% higher, respectively, than the comparable periods of the 2014. Positively impacting Adjusted EBITDA in the first nine months of 2015, as compared to the same period of the prior year, is the refund of previously paid Kentucky sales and use tax of US$4.5 million and lower general and administrative costs, partially offset by a y/y decline in gross margin.
New underground mine
During 3Q15, Armstrong completed development of an additional underground mine at its Parkway mine complex to extract coal from the West Kentucky No. 8 seam. Annual production capacity at the mine is eventually expected to be expanded to approximately 2.4 million short t. Capitalised development costs associated with the new mine totalled approximately US$25.2 million.
Armstrong’s short-term outlook
Due to the current weak economic environment for coal with competition from low natural gas prices and coal-fired power plants accelerated closures, Armstrong anticipates forecasted production for 2015 to be lower than actual production during 2014. Armstrong currently has 8.4 million short t priced and committed for 2015 at an average price of US$46.29/short t.
In addition, the company has reduced its expected capital spending for 2015 to be in the range of US$20 million to US$23 million. The majority of the current year expenditures incurred to date were associated with the development of its new mine at the Parkway complex, which will replace capacity that is reducing over the next several years.
Edited from press release by Harleigh Hobbs
Read the article online at: https://www.worldcoal.com/coal/13112015/armstrong-energy-reports-latest-coal-operations-results-3151/