Western Canadian Coal Announces Fourth Quarter 2006 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 Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. 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) (LSE LSE - Language Sensitive Editor : 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 and twelve months ending March 31, 2006: Financial Summary: --The Dillon Mine generated cash flow of $1.2 million on sales of $11.1 million for the quarter ended March 31, 2006, before depletion depletion n. when a natural resource (particularly oil) is being used up. The annual amount of depletion may, ironically, provide a tax deduction for the company exploiting the resource because if the resource they are exploiting runs out, they will no longer be able , 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 . Fiscal 2006 cash flow from the Dillon Mine was $22.5 million on sales of $59.6 million. --Sales for the quarter were 142,000 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 at an average price of $78.21 (US$68.25) per tonne tonne measure of weight or mass; 1 tonne=1000 kg. See also ton. and for the year were 548,000 tonnes at an average price of $108.67 (US$90.48). --Cash costs per tonne for production were $70.01 for the fourth quarter of fiscal 2006, compared to $70.95 and $72.11 in the third and second quarters, respectively. --Net loss for the quarter was $1.9 million compared to a net loss of $3.4 million for the comparable period ending March 31, 2005. Net income for the 2006 fiscal year of $7.5 million compared to a loss of $11.0 million for fiscal 2005. --Carryover PCI tonnage TONNAGE, mar. law. The capacity of a ship or vessel. 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 fiscal 2006 into fiscal 2007 was approximately 175,000 tonnes and sales in Q1-2007 exceeded 300,000 tonnes and averaged US$83/tonne. --On March 23, 2006, the Company raised $125 million by way of a 7.5% subordinated Convertible Debenture Convertible Debenture Any type of debenture that can be converted into some other security. Notes: For example, a convertible bond can be converted into stock. . Proceeds to the Company, net of expenses and first year's interest in escrow escrow Instrument, such as a deed, money, or property, that constitutes evidence of obligations between two or more parties and is held by a third party. It is delivered by the third party only upon fulfillment of some condition. , were $119.6 million. 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 to complete 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. project development is expected to close in July 2006. --Wolverine equipment and project construction costs totaled $99.8 million and $197.9 million respectively, for the three and twelve month periods ending March 31, 2006. The Company is on budget and on schedule to complete the majority of the Wolverine construction during July 2006. --As at March 31, 2006, the Company's working capital position was $60 million, compared to $119 million in the prior year. --Total assets more than doubled, from $150 million to $341 million, year over year. Gary K. Livingstone, President & Chief Executive Officer of the Company will host a conference call and webcast to discuss the fourth quarter results on Thursday, July 6, 2006 at 8:00am Pacific/11:00am Eastern. The conference call can be accessed by calling 416-644-3420 or toll-free on 1-800-814-4853 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 21194997 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 June 29, 2006 and should be read in conjunction with the Company's March 31, 2006 audited financial statements and notes contained therein, as well as the interim unaudited financial statements and MD&A's for the three, six and nine months ended June 30, September 30, and December 31, 2005. This news release does not constitute 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 as contemplated by relevant securities rules. Western Canadian Coal Corp.'s March 31, 2006 audited financial statements and MD&A and the interim financial statements and MD&A's for the periods referred to above are available on SEDAR SEDAR System for Electronic Document Analysis and Retrieval SEDAR Southeast Data, Assessment, and Review at www.sedar.com under the Company's profile.
Financial Summary:
(In thousands of Canadian
dollars, except tonnes and
per share data)
March 31, March 31,
2006 2005
----------------------------------------------------------------------
Cash & cash equivalents $ 71,274 $115,186
Inventory 23,631 8,831
Other current 19,153 7,041
Total Assets 341,280 149,802
Current liabilities 53,621 11,682
Long-term liabilities 125,920 966
Shareholders' equity $161,739 $137,154
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----------------------------------------------------------------------
Three months ending For the year ending
March 31, March 31,
2006 2005 2006 2005
----------------------------------------------------------------------
Tonnes shipped 142,000 152,000 548,000 152,000
Revenue $11,094 $11,347 $ 59,594 $ 11,347
Cost of goods sold 11,057 10,309 40,296 10,772
Operating profit 37 1,038 19,298 575
Other expenses 3,562 4,388 18,364 11,547
Income tax recovery 1,585 - 6,520 -
Net income (loss) $(1,940) $(3,350) $ 7,454 $(10,972)
Earnings (loss) per share,
basic $ (0.03) $ (0.05) $ 0.09 $ (0.22)
Earnings (loss) per share,
diluted $ (0.03) $ (0.05) $ 0.09 $ (0.22)
----------------------------------------------------------------------
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 Saxon Any member of a Germanic people who lived along the Baltic coast in ancient times and later migrated west as far as the British Isles. The Saxons became pirates in the North Sea during the decline of the Roman empire, and in the early 5th century they spread through joint venture, as disclosed in note 3 to the financial statements for the year ended March 31, 2006. Revenues During the fourth quarter of the 2006 fiscal year, the Company mined 213,000 tonnes of PCI coal from the Dillon mine located within the Burnt River Burnt River may refer to:
For fiscal 2006, the Company mined 721,000 tonnes and realized FOB sales of 548,000 tonnes for total revenues of $59.6 million. The average selling price per tonne realized for the year was $108.67 or US$90.48. 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 for the three months ended March 31, 2006 totaled $11.1 million or $77.87 per tonne, and cost of goods sold for the year ended March 31, 2006 of $40.3 million or $73.47 per tonne. Cost of goods sold for the three months ended March 31, 2005 were $10.3 million or $67.83 per tonne. Cost of goods sold includes cost of production, transportation, and depletion, amortization and accretion charges as presented in the table below:
(In thousands of Canadian For the three months ending March 31,
dollars)
2006 $/tonne 2005 $/tonne
----------------------------------------------------------------------
Cost of production $ 4,619 $32.53 $ 3,258 $21.44
Transportation and other 5,322 37.48 6,140 40.40
Depletion, amortization
and accretion 1,116 7.86 911 5.99
Total cost of goods sold $11,057 $77.87 $10,309 $67.83
(In thousands of Canadian For the years ending March 31,
dollars)
2006 $/tonne 2005 $/tonne
----------------------------------------------------------------------
Cost of production $17,003 $31.00 $ 3,258 $21.44
Transportation and other 20,113 36.67 6,140 40.40
Depletion, amortization
and accretion 3,180 5.80 1,374 9.04
Total cost of goods sold $40,296 $73.47 $10,772 $70.88
Mining costs were adversely affected, commencing with the quarter ended September 2005, by a previously undefined fault in the southern end of the Dillon syncline resulting in a decrease in coal reserves of approximately 188,000 tonnes. This decrease in reserves, coupled with the concurrent increase in waste, resulted in an overall increase in cash mining costs of approximately $9.56/tonne for the year ending March 31, 2006, as compared to the prior year. Transportation and other costs include the coal haul from the Dillon Mine to the rail load-out, rail costs including surcharges, fuel allocations, port charges and various surveying and agent fees incurred in loading vessels. For the quarter ended March 31, 2006, total transportation related costs were $5.3 million or $37.48/tonne which is $2.92/ tonne less than the prior year quarter. 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. The operating profit for the fourth quarter of 2006 was $37,000 as compared to $1.0 million in the same quarter last year. Operating profit for the current quarter included the posting of an additional non-cash adjustment of $466,000 to catch up on the Dillon Mine depletion since commencement of operations. For fiscal 2006 operating profit is $19.3 million (2005 - $0.6 million) or 32.3% (2005 - 5.1%) of revenues for the year. Other expenses Other expenses, for the quarter ending March 31, 2005, were $3.562 million and include the following: For the Three Months For the Years (In thousands of Canadian Ending Mar 31, Ending Mar 31, dollars) 2006 2005 2006 2005 ---------------------------------------------------------------------- General, administration and selling $3,021 $2,421 $12,538 $ 6,703 Coal exploration 1,454 2,148 10,343 5,242 Write-off equipment deposit - - - 250 Interest expense 13 - 32 6 Other income (926) (181) (4,549) (654) ---------------------------------------------------------------------- Total other expenses $3,562 $4,388 $18,364 $11,547 ---------------------------------------------------------------------- Included in general, administration and selling costs are non-cash stock-based compensation charges of $0.5 million and $0.6 million respectively in each of the quarters ended March 31, 2006 and 2005, and $3.1 million and $1.9 million respectively in each of the years ended March 31, 2006 and 2005. 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 $0.6 million to $1.3 million, and professional and other consulting costs that decreased from $0.7 million to $0.4 million. Coal exploration expenditures for the three months ended March 31, 2006 decreased to $1.5 million from $2.1 million in 2004. Exploration expenditures for the quarter include the Company's proportionate share of expenses recorded by the Belcourt-Saxon joint venture of $0.9 million (2004 - $2.1 million), and relate to properties on which the capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. criteria have not been met. Net (loss) income Net loss for the quarter ended March 31, 2006 was $1.9 million compared to $3.4 million for the same period in the prior year. Net loss for the fourth quarter of 2006 reflects a future income tax recovery of $1.6 million. Net income for the year ended March 31, 2006 was $7.5 million compared to a net loss of $11.0 million for the prior year. Net income for the 2006 fiscal year reflects: an operating profit of $19.3 million; other expenses totaling $18.4 million including general, administrative and selling expenses, coal exploration expenses, including the Company's proportionate share of coal exploration expenses recorded by the Joint Venture of $7.4 million, offset by other income; and the recording of a future income tax recovery of $6.5 million. The income tax recovery represents the unrecognized future income tax asset to be realized as a result of it being more likely than not that sufficient future taxable income Under the federal tax law, gross income reduced by adjustments and allowable deductions. It is the income against which tax rates are applied to compute an individual or entity's tax liability. The essence of taxable income is the accrual of some gain, profit, or benefit to a taxpayer. will be available to utilize such tax assets, in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with CICA CICA Competition In Contracting Act of 1984 (USA) CICA Canadian Institute of Chartered Accountants CICA Competition In Contracting Act CICA Criminal Injuries Compensation Authority (UK) Handbook
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Outlook The main focus of the Company is completing the construction of the Wolverine project which is designed to handle 3.0 million tonnes of hard coking coal per annum Per annum Yearly. . Initial throughput The speed with which a computer processes data. It is a combination of internal processing speed, peripheral speeds (I/O) and the efficiency of the operating system and other system software all working together. 1. is expected to commence in July 2006 and will quickly ramp up Ramp Up To increase a company's operations in anticipation of increased demand. Notes: A company might 'ramp up' operations if they just signed a contract creating substantially more demand for their product. See also: Demand, Economies of Scale to a rate of 2.4 million tonnes per annum. The Company applied to the BC government for an increase in the allowable production at Wolverine from 1.6 million tonnes to 2.4 million tonnes per annum and the final mine permit is expected in July 2006. Total capital costs, initially estimated to be $242 million, remain on budget despite recent increases in steel and other construction costs, and the construction completion date remains on schedule for July 2006. Additionally, of the total $83 million in initial mining equipment necessary to conduct the mining and stripping operations at Wolverine, approximately $75 million in mining equipment is currently on site with the balance expected in the first half of 2007. The Company plans to lease and ultimately own the majority of this equipment. Cash on hand and cash flow from the Company's Burnt River operations are not anticipated to be sufficient to fund the entire construction, commissioning and operating costs operating costs npl → gastos mpl operacionales associated with the Wolverine project. As a result, the Company is required to obtain additional financing. Along with the proceeds from the offering of Convertible Debentures completed in March 2006, the Company is in the process of arranging a debt facility to finance the balance of the construction, commissioning and operation of the Perry Creek Perry Creek is a tributary of the Missouri River in the state of Iowa. It rises in central Plymouth County and flows generally to the south-by-southwest, crossing the Woodbury County line at the city limits of Sioux City, north of Briar Cliff University and the Sioux City Country project in what is expected to be a $90 million senior debt facility secured by the assets of the Wolverine Project. The Company expects the debt financing to be completed in July 2006, however, in the event this debt financing is not completed as and when required, the Company will need to seek alternative funding sources. Based on the Wolverine Project Technical Report, the Company expects a life-of-mine average cash cost of US$56 per tonne in 2005 dollar terms using an exchange rate of CDN (Content Delivery Network) A system of distributed content on a large intranet or the public Internet in which copies of content are replicated and cached throughout the network. $1.11 per US$1.00. Pricing for the quality of coal expected to be produced from the Perry Creek pit exceeds US$100 per tonne for the 2006/2007 coal year. On completion of the Wolverine Project, with the construction estimates based on the accelerated schedule, the Company expects to produce approximately 1.35 million tonnes of hard coking coal during the fiscal year ended March 31, 2007. It is the Company's intent to increase production from 2.4 million tonnes to 3.0 million tonnes per year from the Wolverine group of properties within 24 months after the completion of the Wolverine Project. The extra capacity would facilitate production from future mining activities at the nearby Hermann or EB deposits. The Company's low-volatile-PCI coals have been sold to major steel mills in, China, Japan, Korea, Taiwan, and Europe, and the Company continues to secure coal supply agreements for its Wolverine hard coking coal in Asia, Europe, the Americas and most recently in India. Recently two hard coking coal contracts were secured from the Japanese Steel Mills (JSM JSM Journal of Sexual Medicine JSM Just Shoot Me (sitcom) JSM Journal of Sport Management JSM Journal of Software Maintenance JSM Jabber Session Manager JSM John Sidney McCain JSM JEOL Scanning Microscope ) and the Company's efforts in India were successful with the award of a 300,000 tonne tender to Steel Authority of India. The Company also concluded agreements with two European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. steel industry customers and a South American steel mill for the sale of Wolverine hard coking coal. 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. To date, the Company has secured sales commitments for approximately 880,000 tonnes, representing approximately 70% of its projected hard coking coal sales of 1.25 million tonnes for the coal year ended March 31, 2007. The Company is actively pursuing commitments for the remainder of the fiscal year's production and the Company's goal is to have all planned sales committed to contract by the end of August 2006. Should the balance of Wolverine's 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 US$100 per tonne. Including production from the remaining Dillon Mine reserve, approximately 671,600 tonnes of ultra low volatile PCI ("ULV-PCI") coal from the Dillon Mine are available to be sold in the fiscal year ended March 31, 2007, including 175,000 tonnes of coal originally scheduled for delivery in the fiscal year ending March 31, 2006. Of the 671,600 tonnes of anticipated Dillon Mine ULV-PCI coal sales, in excess of 300,000 tonnes has been shipped in the quarter ending June 30, 2006 at an average price of US$83 per tonne. Sales of the remaining Dillon Mine ULV-PCI coal are expected to be at prices in the mid to high US$60s per tonne. 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 are obtained, the Company will make a determination as to whether to proceed with plans to initially develop and operate the Brule mine project in a manner similar to the operation at the Dillon Mine. On this basis, the Company estimates production at the Brule mine project could be at a rate of up to 1.0 million tonnes per year. Work is being completed on identifying areas of high quality coal that can be accessed by a low stripping ratio that could be mined and processed using the existing Dillon Mine plant facilities. This would enable the Brule mine project to provide a continuity of production from the Burnt River properties following the depletion of the Dillon Mine reserves in late 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 geology, science of the earth's history, composition, and structure, and the associated processes. It draws upon chemistry, biology, physics, astronomy, and mathematics (notably statistics) for support of its formulations. 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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