TORONTO, June 15, 2015 /CNW/ - Pacific Coal Resources
Ltd. (TSXV: PAK) has filed its audited annual consolidated
financial statements for year ended December
31, 2014, together with its management's discussion and
analysis ("MD&A") for the corresponding period. All financial
figures contained herein are expressed in U.S. dollars unless
otherwise noted. These documents will be posted on the Company's
website at www.pacificcoal.ca and under the Company's profile at
www.sedar.com.
Hernan Martinez, Executive
Chairman, commented: "2014 presented the Company with a number of
challenges including declining coal prices and unexpected adverse
geological conditions at La Caypa, however the Company has been
able to overcome these obstacles, despite the unavoidable
impairment at the Company's assets. This is evident in the
Company's plan to (i) tackle the working capital deficit at Cerro
Largo by entering into the Sloane JOA, thereby creating an income
stream for the Company; (ii) by negotiating with the operator at La
Caypa to offset the effects of the adverse geological conditions;
and (iii) further reducing the G&A run rate to surpassing the
Company's 2014 goal. In 2015, we will be working to further reduce
costs and maximize production efficiency to make our core assets
profitable."
Financial and Operating Summary
A summary of the financial and operating results for the fourth
quarter and full year of 2014 is as follows:
|
Fourth
Quarter
|
Year Ended December
31
|
(000's except per
share and operating data)
|
2014
|
2013
|
2012
|
2014
|
2013
|
2012
|
Operational
|
|
|
|
|
|
|
Tonnes of coal
produced (1)
|
349,430
|
299,378
|
274,756
|
1,187,257
|
1,317,088
|
1,268,082
|
Average Stripping
ratio - operations
|
8.04
|
11.06
|
11.11
|
10.53
|
9.31
|
10.71
|
Tonnes of coal
sold
|
266,252
|
243,847
|
304,165
|
1,206,125
|
1,170,716
|
1,270,114
|
Average realized
thermal coal price $/ tonne sold
|
$ 94.37
|
$ 94.52
|
$ 99.96
|
$ 95.91
|
$ 101.26
|
$ 98.22
|
Operating margin per
tonne sold
|
$ 21.31
|
($ 7.33)
|
($ 12.90)
|
$ 4.90
|
$ 7.49
|
($ 13.57)
|
|
|
|
|
|
|
|
Financial
|
|
|
|
|
|
|
Revenues
|
$ 25,186
|
$ 23,047
|
$ 30,401
|
$ 116,375
|
$ 119,237
|
$ 129,055
|
Adjusted EBITDA
(2)
|
4,298
|
(3,444)
|
(6,083)
|
618
|
2,417
|
(30,747)
|
Earnings (loss) from
operations (3)
|
(117,513)
|
(5,419)
|
(58,180)
|
(127,034)
|
1,483
|
(137,374)
|
Net earnings (loss)
attributed to shareholders
|
(111,641)
|
(460)
|
(49,868)
|
(125,886)
|
7,460
|
(123,752)
|
Basic and fully
diluted earnings (loss) per share
|
(2.25)
|
(0.01)
|
(1.08)
|
(2.53)
|
0.15
|
(2.69)
|
Cash
|
585
|
235
|
4,102
|
585
|
235
|
4,102
|
Mineral properties
additions - La Caypa
|
4,235
|
2,203
|
-
|
9,616
|
11,638
|
3,375
|
Total
assets
|
105,297
|
265,138
|
242,047
|
105,297
|
265,138
|
242,047
|
Total debt
(4)
|
38,055
|
53,316
|
58,584
|
38,055
|
53,316
|
58,584
|
(1)
|
Excludes 8,345 tonnes
of coal produced from underground mine in La Caypa in 2014.
The portion of the coal production for Norcarbon as defined in the
joint venture agreement with Sloane was 1,615 tonnes, equivalent to
8.25% of the production in Cerro Largo from Nov-Dec
2014.
|
(2)
|
The Company defines
Adjusted EBITDA as earnings from operations adding back impairment
of non-current assets, in addition to share-based compensation, and
Depreciation, depletion and amortization ("DD&A") Adjusted
EBITDA is a non-International Financial Reporting Standards (IFRS)
financial measure, does not have any standardized meaning
prescribed by IFRS and is therefore unlikely to be comparable to
similar measures presented by other companies. See "'Non-GAAP and
additional GAAP Financial Measures'" in the Company's 2014
Management Discussion and Analysis dated June 15, 2015 for a
quantitative calculation of Adjusted EBITDA.
|
(3)
|
The loss from
operations for the fourth quarter of 2014 and full year 2014
included a $120.1 million impairment write-down mainly triggered by
Cerro Largo's $34.9 million impairment. E&E properties (La
Tigra) were written down by $35.2 million as part of the Company's
impairment testing performed in 2014. The Company also recorded a
$24.3 million impairment in La Caypa due to the decrease in thermal
coal prices, and $3.0 million in Jam as a consequence of low coke
prices coupled with no significant evolution in the
market.
|
(4)
|
Total debt includes
short-term debt, long term debt, finance leases and amounts owed to
Chipalo resources by Norcarbon S.A.S.("Norcarbon") (December 31,
2014 - $9.6 million, December 31, 2013 - $18.0 million).
|
2014 Highlights
- Coal production: The Company produced 349,430
tonnes of coal in the last quarter of 2014, which represents an
increase of 23% compared to the third quarter of 2014 (285,167
tonnes). Throughout 2014, La Caypa mine produced 1,033,043 tonnes
of coal and the Cerro Largo mine produced 154,214 tonnes, for a
total production of 1,187,257 tonnes. In the fourth quarter of
2014, the operational stripping ratio for La Caypa decreased by 40%
compared to the third quarter of 2014 (7.12 vs 11.91).
- Revenues: Coal revenues for the fourth quarter of
2014 were $25.1 million, from the
sale of 266,252 tonnes at an average realized price of $94.37. Total coal revenues in 2014 were
$116.4 million which reflects the
sale of 1,206,125 tonnes at an average realized price of
$95.91 per tonne.
- Earnings (loss) from operations: In the fourth
quarter of 2014, loss from operations was $117.5 million, compared to a loss of
$4.1 million in the third quarter of
2014 and a loss of $5.4 million in
the fourth quarter of 2013. This is as a result of the impairment
of assets recorded by the Company.
- Adjusted Earnings Before Interests, Taxes, Depreciation
and Amortization ("EBITDA"): Adjusted EBITDA for the fourth
quarter of 2014 and for the year ended December 31, 2014 was a gain of $4.3 million and a total gain of $0.6 million, respectively.
- Operation of Cerro Largo mine: The Company
continued with the development of the multi-year joint operation
agreement ("Sloane JOA") for thermal coal production at the Cerro
Largo mine signed October 1, 2014
with Sloane Mining Services Sucursal Colombia ("Sloane"), whereby
Sloane took over operation of the Cerro Largo mine. Before the end
of the first half of 2015, all the conditions required for the
agreement to take effect are expected to be fulfilled, resulting in
the payment of an advance of $6.5
million by Sloane to the Company pursuant to the Sloane
JOA.
- General and administrative ("G&A") expenses:
The Company recorded $1.4 million in
G&A expenses, excluding DD&A and impairment of non-current
assets, in the three months ended December
31, 2014, a reduction of 17% compared to $1.7 million in the same period of 2013. The
Company recorded $5.3 million in
G&A expenses in the year ended December
31, 2014, a reduction of 17% and 61%, compared to
$6.3 million in 2013 and $13.5 million in 2012, respectively.
Outlook
Management is currently focused on paying the amount owed to
Chipalo Resources (formerly owed to Masering S.A.S ("Masering") for
the past operation of the Cerro Largo mine, with a balance of
$9.6 million owed at December 31, 2014, compared to $18 million owed at December 31, 2013, with proceeds from the partial
sale of the Barranquilla port being used to pay down some of the
debt.
In the fourth quarter of 2014, production at the La Caypa mine
was 336,917 tonnes and production at the Cerro Largo mine was
12,513 tonnes, of which 1,032 belong to the Company as part of the
multi-year agreement executed between Norcarbon and Sloane. Total
production of the mines in 2014 was 1,187,257 tonnes. The Company
adjusted its mining plan at La Caypa for the second half of 2014,
shifting some mine development to the first half of 2015 in order
to preserve funds after the impact on operations due to geological
issues experienced in the second quarter of 2014. This shift in
mine plan will cause higher stripping ratios in the first half of
2015. Therefore, in order to relieve the impact of the higher
stripping ratio on cash flow, management is currently in
negotiations with the mine operator to use an average stripping
ratio throughout the year as opposed to using the actual stripping
ratio, thereby stabilizing payment amounts throughout 2015.
Regarding La Caypa mine, the Company forecasts an open pit
production of 1.1 million tonnes for 2015. Part of this
production will be used to cover our obligations under the current
contract with our main customer which is set to expire in
July 2015. The customer has indicated
an interest in entering into a new contract and negotiations are
underway with respect to pricing and volumes. Since spot
prices are currently lower than the price in the existing contract,
there can be no certainty that the Company will be able to
negotiate a new contract at the same price as the existing
contract. A lower price under the new contract might result in less
profitability at La Caypa despite management's efforts to lower
operating costs at the mine. In addition, the Company is exploring
opportunities with a number of third parties with respect to
underground mining at La Caypa with the goal of finalizing a
contract in the third quarter of 2015. Three companies with
experience in similar projects have shown interest in providing
their services to the Company in this regard.
In October 2014, the Company
executed the Sloane JOA. The agreement requires Sloane to produce a
minimum of 4,200,000 tonnes of coal during the six-year term of the
contract. As part of the Sloane JOA, Sloane will be entitled to
91.75% of the production from the mine as compensation for the
mine's thermal coal production, commercialization and associated
costs, and the Company will receive the remaining 8.25% of the
production over the term of the agreement. The Company has
agreed to sell its 8.25% share of production to Sloane at a minimum
set price of $60 per tonne subject to
market condition adjustments.
As per the agreement, Sloane will provide the Company with a
$6.5 million advance payment for the
purchase of the future coal production. The Sloane JOA is expected
to provide the Company with a steady cash flow that will be used to
improve the Company's working capital deficit position. In
addition to the advance, the Company expects to receive over
$3 million under the Sloane JOA in
2015 from sales to Sloane, of which 50% will be applied towards the
repayment of the advance with the remainder being used to pay down
the debt owed to Chipalo Resources.
In terms of G&A expenses, in line with the Company's cost
cutting objective, management was able to surpass the Company's
2014 reduction goal. Total G&A expenses were $5.3 million in 2014, compared to the Company's
forecast of $5.5 million. The Company
anticipates G&A expenses in 2015 will be approximately
$4.2 million, forecasting an 18%
reduction from 2014 levels.
In addition to an emphasis on collecting VAT receivables,
re-financing long-term debt and utilizing funds from the sale of
the Barranquilla port concession, the Company continues to focus on
operational changes and reducing G&A expenses to improve the
Company's working capital. From an operational perspective, the
Company executed the Sloane JOA which is expected to improve the
operating cash flow. The Company also plans to decrease its G&A
expenses to a quarterly run-rate of approximately $1.0 million in 2015 (compared to the quarterly
run-rate of $1.4 million in 2014).
Management believes that by implementing these strategies, the
Company will be able to continue improving its working capital
position in 2015.
About Pacific Coal Resources Ltd.
Pacific Coal Resources Ltd. is a Canadian-based mining
company engaged in the acquisition, exploration and production of
coal and coal-related assets from properties located in
Colombia. The Company's common
shares and warrants are listed on the TSX Venture Exchange and
trade under the symbol "PAK" and "PAK.WT" respectively.
Forward Looking Information:
This news release contains "forward-looking information",
which may include, but is not limited to, statements with respect
to the future financial or operating performance of the Company and
its projects. Often, but not always, forward-looking statements can
be identified by the use of words such as "plans", "expects", "is
expected", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates", or believes" or variations (including
negative variations) of such words and phrases, or state that
certain actions, events or results "may", "could", "would", "might"
or "will" be taken, occur or be achieved. Forward-looking
statements involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or
achievements of Pacific Coal to be materially different from any
future results, performance or achievements expressed or implied by
the forward-looking statements. Forward-looking statements
contained herein are made as of the date of this press release and
Pacific Coal disclaim, other than as required by law, any
obligation to update any forward-looking statements whether as a
result of new information, results, future events, circumstances,
or if management's estimates or opinions should change, or
otherwise. There can be no assurance that forward-looking
statements will prove to be accurate, as actual results and future
events could differ materially from those anticipated in such
statements. Accordingly, the reader is cautioned not to place undue
reliance on forward-looking statements.
Neither 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
oraccuracy of this news release.
SOURCE Pacific Coal Resources Ltd.