Calgary, AB / ACCESSWIRE / May 30, 2014 - CanAm Coal Corp.
(TSXV: COE) ("CanAm" or the "Company") has filed its condensed
interim consolidated financial statements and related management
discussion and analysis for the period ended March 31, 2014.
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
first quarter 2014 financial results for the period ending March
31, 2014. Revenue and EBITDA from operations for the quarter were
$16.5 million and $2.7 million respectively as compared to $13.9
million, $1.9 million in the prior year. Loss for the quarter was
$1.5 million as compared to $1.8 million in the prior year. Sales
for the quarter were 168,000 tons as compared to 149,000 tons in Q1
2013 or an increase of 12%.
Click Image To View Full Size
Operational Highlights
The first quarter of 2014 was
characterized by an extremely challenging operating environment
resulting from the harsh winter conditions experienced in most of
the Eastern US including Alabama, especially in January and
February. These conditions resulted in temporary closures of many
of our customers' facilities, road closures which prevented coal
shipments to our customers and production challenges associated
with equipment operating conditions and employee mobility. Despite
these challenges, the Company achieved sales growth of 12% and
EBITDA from Operations growth of 42%. Overall, production was lower
than expected and production costs were higher resulting from
inefficiencies created by the challenging operating environment
described above.
Sales and Customer Highlights
Towards the end of 2013 and into the
first quarter of 2014, the Company entered into discussions with a
number of customers to either renew or extend its current off-take
agreements. As a result, the Company has now off-take contracts in
place ranging from one to as much as five year commitments. For the
period 2014 to 2016, production has been sold into such contracts
in excess of 95% for 2014 and in excess of 70% for 2015/2016. For
the period 2017 to 2020, close to 50% of the Company's production
has been contracted for.
In addition, the harsh winter
experienced at the start of the year throughout most of the Eastern
US has resulted both in low coal and gas inventories and higher gas
prices which will bode well for overall coal demand in 2014 and the
potential for an improved pricing environment.
Liquidity and Financial Position
Highlights
As at March 31, 2014, the Company
had a working capital deficit of $25 million. A significant portion
of the deficit relates to repayment of approximately $12 million in
debentures due in May 2014.
During the quarter the Company
initiated a number of initiatives to improve this working capital
situation and its overall financial position. Such initiatives were
completed in April and May and consisted of:
Additional US $3 million financing by
major US Financial Institution
Effective April 18, 2014, the
Company amended its equipment financing agreement with its main
banking and equipment lender. The main changes were to increase the
principal amount of the loan by US $3 million (54 month term) and
to reset the amortization period for the outstanding amount of the
original loan (US $13.2 million outstanding at April 2014) to 48
months. The blended interest rate on the facility is
4.04%.
Conversion of
2016 debentures into equity
Effective May 16, 2014, the Company
entered into binding agreements with certain holders of its 9.5%
unsecured non-convertible debentures, due August 7, 2016, to
repurchase, at par, an aggregate amount of approximately $7.3
million of the 2016 debentures. The Company has entered into these
agreements in relation to certain obligations of the Company to
satisfy debt under its existing equipment financing agreement with
its US banking partner. The binding commitments represent 50%+ of
the total outstanding $13.1 million debenture debt that matures in
August 2016. The anticipated closing date of the transactions
contemplated by the binding agreements is July 25, 2014.
Private placement
financing of $14 million
Effective May 23, 2014, the
Company closed a brokered private placement of 14 million units for
gross proceeds of $14 million. Each unit is comprised of $1,000
principal amount of non-convertible secured debentures and 670
common share purchase warrants. The debentures mature 48 months
from the date of issuance and will bear interest at a rate of 12%
per annum, payable semi-annually. As part of the financing,
approximately 9.4 million warrants were issued that entitle the
holders to purchase one common share of CanAm at a price of $0.065
per share for a period of 4 years from the closing date. The
proceeds from the offering were primarily used for the repayment of
the Company's 10% and 9.5% debentures and related interest which
matured on May 8, 2014 and on May 9, 2014.
Summary impact
The impact of the additional
equipment financing, the extension of the equipment financing loan
term, a successful refinancing of the May debentures and other
measures taken by the Company will reduce the working capital
deficit by approximately $18 million. In addition, long-term debt
will be reduced by a minimum of $7.3 million resulting from the
debt to equity conversion.
First Quarter 2014 Financial Results
Click Image To View Full Size
-
-.Sales for the
quarter were 168,000 tons, an increase of 12% over Q1 2013 sales
and on par with Q4 2013. Improved sales are mainly attributed to
the fact that the Company's three new mines were fully operational
in Q1 2014 and that the Company has a higher contracted customer
sales base.
-
-.Long term
off-take contracts continue to enable the Company to achieve better
than market pricing for our high quality coals. Average sales price
per ton for Q1 was largely consistent with the prior year, after
exclusion of the impact of the higher US$ vs the Cdn$.
-
-.Average
production cost per ton was $60 per ton (US$54 per ton) compared to
$56 per ton (US$56 per ton) in Q1 of 2013. Although this represents
an improvement from last year, the harsh winter
conditions described above and the impact thereof on
operational efficiencies have prevented us from achieving our
target production cost of US$50/ton.
-
-.Operating cash
flow of $1.9 million was double the cash flow achieved in the
comparable quarter of 2013.
-
-.Investment in
equipment and mine development was $1.9 million as compared to $2.5
million in the comparable period last year. In Q1 2013, the Company
invested $1.2 million in mine development in conjunction with the
opening of its 3 new mines which was accomplished by the end of the
first half of 2013. Mine development in Q1 2014 was approximately
$0.3 million.
-
-.Free cash flow
at $0.8 million is significantly up from ($0.6) million in Q1 2013
and continues to improve quarter over quarter.
-
-.Repayment of
equipment financing obligations continues at a healthy pace and
during the first quarter the Company repaid $2.0 million of these
obligations.
Company President and CEO, Jos
De Smedt commented: "We are extremely pleased with our
accomplishments to date as we tackled a number of important issues
for the Company. First, we managed to deliver a good first quarter
despite extremely difficult operating and shipping conditions
experienced especially in January and February of this year.
Second, we secured additional off-take contracts with some of our
key customers and now have off-take in place for 95% of our
production in 2014 and 70%+ for 2015/2016. Last but not least, we
significantly improved our working capital situation and improved
the overall financial position of the Company as a result of our
new arrangements with our US banking partner, our successful
private placement of $14 million of secured debentures maturing in
May 2018 and our binding agreements to convert up to $7.3 million
of our 2016 debentures into equity."
Outlook for 2014
The Company is
optimistic about 2014 as the overall coal market has improved
following the colder-than-normal winter in most of North America,
especially the south-east United States. As a result thereof, gas
prices have increased, coal demand has strengthened and coal
inventories are at record lows which will bode well for coal demand
in 2014.
Notwithstanding the
challenges experienced in Q1 2104, the Company still expects coal
sales growth of approximately 10%. With 95% of 2014 production
under contract, the Company is well positioned to sell this
increased production. With an increase in sales and the Company's
continued focus on operating efficiency, it is expected that EBITDA
from Operations will grow in 2014. The Company believes that its
existing equipment fleet is sufficient for the foreseeable future
to support the existing mine plan and has therefore positioned the
Company well on a capital expenditures perspective. On this basis,
no significant new equipment purchases are planned for 2014.
On the basis of the
forgoing and the fact that the majority of 2014 production has been
sold into off-take contracts, the Company expects to consistently
generate free cash flow for the balance of 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 RAC and BCC mines. 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, world and local coal markets, changes in government
regulations or in tax laws; changes in market conditions,
variations in coal recovery rates, risks relating to international
operations, fluctuating coal prices and currency exchange rates,
changes in project parameters, the possibility of project cost
overruns or unanticipated costs and expenses, labour disputes and
other risks of the mining industry, failure of plant, equipment or
processes to operate as anticipated, the business of the companies
not being integrated successfully or such integration proving more
difficult, time consuming or more costly than expected, 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 RAC and BCC mines may be
considered a financial outlook. These forward-looking statements
were approved by management of the Company on May 29, 2014. 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)
Historical Stock Chart
Von Mai 2024 bis Jun 2024
(TSXV:COE)
Historical Stock Chart
Von Jun 2023 bis Jun 2024