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Cloud Peak swings to red on transportation bottlenecks

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World Coal,

Power River Basin (PRB) miner, Cloud Peak Energy, swung into the red in the first six months of this year, losing US$17.8 million compared to US$20.1 million profit for the same period last year. But performance improved on Q1 with the company only losing US$2.1 million compared to US$15.6 million in the first three months of the year.

The company has been particularly hard hit by infrastructure bottlenecks in the PRB with revenue from its logistics and related activities down US$19.7 million. In contrast, income from its mining operations was down only US$2 million as prices for its coal held up at US$10.56 per short t, down only US$0.02 from H1 2013.

“We were disappointed that rail service interruptions continued to impact our shipments in the second quarter,” said Colin Marshall, President and CEO of Cloud Peak.

“We are continuing to work diligently with the railroad to understand their plans for improvement. In the meantime, customer stockpiles of PRB coal are at low levels and PRB coal remains a lower cost fuel source compared to natural gas. We will continue to focus on controlling costs as we await improved rail service to allow us to ship our contracted tons through the rest of the year.”

The company expects to sell 85 – 89 million short t of coal through this year, a reduction of 1 million short t on previous guidance – a result of the challenging transportation environment. But the company expects things to improve: “We are optimistic that the second half of the year will improve over the first half and that increased shipments will allow coal burn to normalise leading to improved pricing for future years,” concluded Marshall.

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