Western Canadian Coal Announces First Quarter 2007 Operating Results.VANCOUVER, British Columbia British Columbia, province (2001 pop. 3,907,738), 366,255 sq mi (948,600 sq km), including 6,976 sq mi (18,068 sq km) of water surface, W Canada. Geography -- Western Canadian Coal Corp. (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :WTN WTN Watertown (Wisconsin) WTN Working Telephone Number WTN World Television Network WTN Wright Technology Network WTN World Timber Network WTN Womens' Television Network (Canada) ) (TSX:WTN.DB) (AIM:WTN) ("WCCC WCCC Westmoreland County Community College WCCC Working Connections Child Care WCCC World Computer Chess Championship WCCC Wayne County Community College (Michigan) WCCC Warren County Community College " or the "Company") is pleased to announce its operating results for the three months ending June 30, 2006: First Quarter Operating Highlights (unaudited, in Canadian dollars Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents unless otherwise indicated): --Operating profit of $7.5 million for the quarter ending June 30, 2006 on sales of $30.0 million. --Sales consisted of 320,000 tonnes of pulverized pul·ver·ize v. pul·ver·ized, pul·ver·iz·ing, pul·ver·iz·es v.tr. 1. To pound, crush, or grind to a powder or dust. 2. To demolish. v.intr. coal injection ("PCI (1) (Payment Card Industry) See PCI DSS. (2) (Peripheral Component Interconnect) The most widely used I/O bus (peripheral bus). ") coal shipped at an average price of $93.76 (US$83.11) per tonne tonne measure of weight or mass; 1 tonne=1000 kg. See also ton. . With this quarter's sales, the Company has achieved an important milestone of $100 million in sales revenues from the Dillon Mine over a period of 18 months. --Cash costs for production were $66.55 per tonne, representing a $3.46 per tonne decrease from the fourth quarter of 2006, and the third consecutive decrease in quarterly cash operating costs operating costs npl → gastos mpl operacionales . --Cash flow from operations for the quarter was $6.0 million before changes in non-cash working capital items compared to $6.8 million in the same quarter in 2005. --Net income for the quarter was $2.3 million or $0.03 per share (basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. ) compared to $4.6 million for the same quarter in 2005 or $0.06 per share (basic) and $0.05 per share (diluted). --The Wolverine wolverine or glutton, largest member of the weasel family, Gulo gulo, found in the northern parts of North America and Eurasia, usually in high mountains near the timberline or in tundra. Mine Project remains on budget and start-up commenced in late July 2006 in line with previously announced expectations. During the quarter, WCCC received the amended Environmental Assessment Certificate, and in July received the amended Mine Permit, both of which now allow for an increase in production of hard coking coal at the Wolverine Mine Project to 2.4 million tonnes per annum Per annum Yearly. . --Spending on capital equipment and project construction at the Wolverine Mine Project totaled $64.7 million for the three months ended June 30, 2006. Gary K. Livingstone, President & Chief Executive Officer of the Company will host a conference call and webcast to discuss the first quarter results on Wednesday, August 16, 2006 at 8:00am Pacific/11:00am Eastern. The conference call can be accessed by calling 416-644-3420 or toll-free on 1-800-814-4861 prior to the scheduled start time. An archived recording of the call will be available for two weeks after the completion of the call by dialing 416-640-1917 or 1-877-289-8525, both using passcode 21200191 followed by the number sign. A live and archived audio webcast of the conference call will also be available on the Company's website at www.westerncoal.com. News Release This news release is prepared as at August 15, 2006 and should be read in conjunction with the Company's 2006 audited financial statements for the year ended March 31, 2006 and notes contained therein, and Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial (MD&A) for the same period. This news release does not constitute MD&A as contemplated by relevant securities rules. Western Canadian Coal Corp.'s First Quarter Report and MD&A for the three months ending June 30, 2006 are filed on SEDAR SEDAR System for Electronic Document Analysis and Retrieval SEDAR Southeast Data, Assessment, and Review and are available at www.sedar.com.
Financial Summary - unaudited:
(In thousands of Canadian dollars, June 30, March 31,
except tonnes and per share data) 2006 2006
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Cash $ 3,081 $ 71,274
Other current 43,151 19,153
Inventory 8,441 23,631
Total Assets 350,353 341,280
Current liabilities 50,946 53,621
Long-term liabilities 129,652 125,920
Shareholders' equity $ 169,755 $ 161,739
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Three months ending June 30
2006 2005
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Tonnes sold 320,000 168,000
Revenue $ 29,982 $ 19,515
Cost of goods sold 22,444 11,544
Operating profit 7,538 7,971
Other expenses 3,669 3,379
Income tax expense 1,562 -
Net income $ 2,307 $ 4,592
Earnings per share, basic $ 0.03 $ 0.06
Earnings per share, diluted $ 0.03 $ 0.05
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Included in the above balances and results are the Company's proportionate pro·por·tion·ate adj. Being in due proportion; proportional. tr.v. pro·por·tion·at·ed, pro·por·tion·at·ing, pro·por·tion·ates To make proportionate. share of its interest in and results from the Belcourt Saxon joint venture, as disclosed in note 4 to the interim unaudited financial statements for the three months ended June 30, 2006 and 2005 respectively. Revenues The Company mined 111,000 tonnes and realized FOB FOB 1) adj. short for Free on Board, meaning shipped to a specific place without cost. 2) Friend of Bill (Clinton). (See: Free on Board) sales of 320,000 tonnes for total revenues of $29,982,000 for the quarter ended June 30, 2006. The average selling price The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. per tonne realized during the quarter was $93.76 or US83.11. These sales comprised solely of PCI coal from the Dillon Mine, located within the Burnt River Burnt River may refer to:
2. The act of congress of March 2, 1799, s. 64, 1 Story's L. U. S. 630, directs that to ascertain the tonnage of any ship or vessel, the surveyor, &c. from the previous coal year. During the quarter ended June 30, 2005, the Company mined 201,000 tonnes and realized FOB sales of 168,000 tonnes for total revenues of $19,515,000. The average selling price per tonne realized during the quarter ended June 30, 2005 was $116.17 or US$93.63. Cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold Cost of goods sold during the three months ended June 30, 2006 totaled $22.4 million or $70.18 per tonne compared to $11.5 million $68.72 per tonne in the first quarter of fiscal 2006, as follows: (In thousands of June 30, June 30, Canadian dollars) 2006 $/tonne 2005 $/tonne ---------------------------------------------------------------------- Cost of production $ 10,940 $ 34.21 $ 3,714 $ 22.11 Transportation and other 10,342 32.34 6,333 37.70 Depletion, amortization and accretion 1,162 3.63 1,497 8.91 Total cost of goods sold $ 22,444 $ 70.18 $ 11,544 $ 68.72 ---------------------------------------------------------------------- The increase in cost of product sold for the period ended June 30, 2006 over the prior year period was due to the discovery of a previously undefined fault at the southern end of the Dillon syncline during the 2nd quarter of fiscal 2006. Its impact was a decrease in the Dillon reserves and an increase in overall estimated waste thus causing production costs to increase in the second quarter of 2006 and in subsequent quarters. The decrease in transportation and other costs for the period ended June 30, 2006 over the prior year period was the result of a renegotiated coal haul contract and reduced service-road maintenance costs during the quarter. Cash costs during the quarter, which exclude depletion, amortization and accretion The act of adding portions of soil to the soil already in possession of the owner by gradual deposition through the operation of natural causes. The growth of the value of a particular item given to a person as a specific bequest under the provisions of a will between the , were $66.55 per tonne compared to $59.81 per tonne for the quarter ended June 30, 2005. Since the increase in mining costs in the second quarter of 2006 for the reason described above, cash mining costs have decreased in subsequent quarters from $72.11/tonne, $70.95/tonne, $70.01/tonne to $66.55/tonne in each of the last four quarters. Operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. Operating profit for the period ended June 30, 2006 amounted to $7,538,000 or 25.1% of total sales. This was a result of sales of 320,000 tonnes at an average price of $93.76 per tonne, for total revenues of $29,982,000, net of cost of goods sold of $22,444,000 at an average cost of $70.18/tonne. Operating profit for the period ended June 30, 2005 amounted to $7,971,000 or 40.9% of total sales. This was a result of sales of 168,000 tonnes at an average price of $116.17 per tonne, for total revenues of $19,515,000, net of cost of goods sold of $11,544,000 at an average cost of $68.71/ tonne. Other expenses Other expenses for the quarter ending June 30, 2006 were $3,669,000 and include the following: Three months ending June 30, (In thousands of Canadian dollars) 2006 2005 ---------------------------------------------------------------------- General, administration and selling $ 2,982 $ 2,436 Coal exploration 1,266 1,708 Interest expense 21 4 Other income (600) (769) ---------------------------------------------------------------------- Total other expenses $ 3,669 $ 3,379 ---------------------------------------------------------------------- Included in general, administration and selling costs are non-cash stock-based compensation charges of $404,000 for the quarter ended June 30, 2006 (2005 - $258,000). Also included in general, administration and selling costs are salaries, benefits, and other remuneration REMUNERATION. Reward; recompense; salary. Dig. 17, 1, 7. , which increased from $946,000 to $1,126,000, and professional and other consulting costs that remained fairly consistent at $439,000 and $449,000 for the quarters ending June 30, 2006 and 2005, respectively. Coal exploration expenditures for the period ended June 30, 2006, including the Company's proportionate share of expenses recorded by the Belcourt-Saxon joint venture of $915,000, decreased to $1,266,000 from $1,708,000 in the same period in the prior year. Exploration costs are charged to earnings in the period in which they are incurred, except where these costs related to specific properties Specific properties of a substance are derived from other intrinsic and extrinsic properties (or intensive and extensive properties) of that substance. For example, the density of steel (a specific and intrinsic property) can be derived from measurements of the mass of a steel bar for which economically recoverable reserves have been established, in which case they are capitalized Net income Net income before tax for the quarter ended June 30, 2006 was $3,869,000 compared to $4,592,000 for the same quarter in the prior year. Net income before tax for the quarter ended June 30, 2006 reflects the operating profit of $7,538,000 net of other expenses totaling $3,669,000 which included general, administrative and selling expenses and coal exploration expenses, offset by other income. Net income for the quarter ended June 30, 2006 was $2,307,000 or $0.03 per share compared to $4,592,000 or $0.06 per share for the same period in the prior year. In the current quarter, the Company recorded an income tax provision of $1,562,000 which primarily reflects a drawdown Drawdown The peak to trough decline during a specific record period of an investment or fund. It is usually quoted as the percentage between the peak to the trough. Notes: of the previously recorded future income tax asset. No income tax provision or recovery was recorded for the quarter ended June 30, 2005. Financing status The Company's current cash resources and cash flows from the its Burnt River operations are not anticipated to be sufficient to fund the entire construction, commissioning and operating costs associated with the Wolverine Mine Project. As a result, the Company requires additional financing for such expenditures. In mid-July 2006, the Company received and accepted a commitment from BNP Paribas BNP Paribas (Euronext: BNP, TYO: 8665 ) is one of the main banks in Europe and France. It was created on 23 May 2000 through the merger of Banque Nationale de Paris (BNP) and Paribas. to arrange and underwrite To insure; to sell an issue of stocks and bonds or to guarantee the purchase of unsold stocks and bonds after a public issue. The word underwrite has two meanings. a senior debt financing Debt Financing When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise to repay for up to $90 million. By agreement, the facility has been established at $75 million, which is all the Company will require to complete the project funding Project Funding reflects the overall financial analysis and entails the analysis that is needed in order to get the financial means approved and funds made available to be able to perform the discipline of project management. . The Company expects that the debt financing will be completed in August 2006. In the event that debt financing is not completed as and when expected, the Company will need to complete further equity financings Equity Financing The act of raising money for company activities by selling common or preferred stock to individual or institutional investors. In return for the money paid, shareholders receive ownership interests in the corporation. or seek alternate funding sources. Outlook and guidance As previously reported, with the Company's success in two recent international tenders, to supply 600,000 tonnes of Wolverine hard coking coal to Steel Authority of India, the Company has now secured total commitments for in excess of 1,000,000 tonnes, representing greater than 80% of its projected hard coking coal sales of 1.25 million tonnes for the coal year ended March 31, 2007. The Company has also granted two companies options for a total of 250,000 tonnes over the current coal year. Further, negotiations are continuing for additional Wolverine hard coking coal contracts to other steel mills in the region, as well as in the North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. market. The Company is actively pursuing commitments for the remainder of the fiscal year's production. Should the balance of the remaining hard coking coal be placed at prices similar to the commitments received to date, the average price to be realized for the current fiscal year on such sales would be approximately US100 per tonne. Including production from the remaining Dillon Mine reserve, approximately 340,000 tonnes of ultra low volatile PCI coal are available to be sold in the remaining nine months of the fiscal year ended March 31, 2007. Such sales of Dillon PCI coal are expected to be at prices in the mid-to-high US$60's per tonne and are expected to occur by December 31, 2006. A significant proportion of Burnt River PCI coal is already committed under a term contract agreement. As previously reported, if the Company is satisfied that PCI coal prices and transportation costs will support the development of the Brule mine project and the necessary permits can be obtained, the Company will make a determination as to whether to proceed with plans to initially develop and operate the Brule mine using the same infrastructure as the Dillon Mine. On this basis, the Company estimates production at the Brule mine could be at the rate of up to one million tonnes per year. The Company anticipates that it will make such a determination by September 30, 2006. Forward-Looking Information This release may contain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that may involve risks and uncertainties. Such statements relate to the Company's expectations, intentions, plans and beliefs. As a result, actual future events or results could differ materially from those suggested by the forward-looking statements. Readers are referred to the documents filed by the Company on SEDAR. Such risk factors include, but are not limited to changes in commodity prices; strengths of various economies; the effects of competition and pricing pressures; the oversupply o·ver·sup·ply n. pl. o·ver·sup·plies A supply in excess of what is appropriate or required. tr.v. o·ver·sup·plied, o·ver·sup·ply·ing, o·ver·sup·plies of, or lack of demand for, the Company's products; currency and interest rate fluctuations; various events which could disrupt the Company's construction schedule or operations; the Company's ability to obtain additional funding on favourable terms, if at all; and the Company's ability to anticipate and manage the foregoing factors and risks. Additionally, statements related to the quantity or magnitude of coal deposits are deemed to be forward-looking statements. The reliability of such information is affected by, among other things, uncertainties involving geology of coal deposits; uncertainties of estimates of their size or composition; uncertainties of projections related to costs of production; the possibilities in delays in mining activities; changes in plans with respect to exploration, development projects or capital expenditures; and various other risks including those related to health, safety and environmental matters. WESTERN CANADIAN COAL CORP. "Gary K. Livingstone" President and Chief Executive Officer |
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