ARCHIVE

Fewer mines hurt bottom line

WITH just one of its four mines in production during the first quarter, Xinergy's lower sales vol...

Staff Reporter
Fewer mines hurt bottom line

Xinergy announced a net loss of $US1.9 million for the three months ending March 31. This compares with a net income of $1.7 for the same three-month period last year.

The Knoxville-based company’s total coal sales revenue was down $US25.9 million, or 13.6%, to a minimal $US4.1 million for the quarter down from $29.9 million for the same period last year.

Adjusted EBITDA was $3.6 million for the March 2013 quarter, compared to $3.7 million for the previous corresponding period.

“Against a backdrop of continuing broader market weakness, Xinergy made substantial progress during the first quarter towards moving our world-class South Fork project closer to completion, while maintaining a disciplined approach towards cost containment and balance sheet liquidity,” chief executive officer Matt Goldfarb said.

Toronto Stock Exchange-listed Xinergy’s South Fork metallurgical mine in Greenbrier County, West Virginia, is the only mine it has in production.

"With South Fork anticipated to ramp production this summer, we are very pleased with unit cost trends realized late in the first quarter and early in the second quarter. Although we remain cautious on the met coal market in the short term due to weak global steel demand and steel mill overcapacity, we see production curtailments by coal producers continuing on a global basis until a more rational pricing environment prevails.

The cost of coal sales was $5.9 million for the quarter, a decrease of 19.3% from $30.5 million for the three months ended March 31, 2012. The decrease was attributable to a reduction of 365,741 tonnes sold, due to the company’s True Energy metallurgical coal operation in Wise County, Virginia and its Raven Crest thermal coal operations in Boone County, West Virginia, being idle.

And 59,956 tonnes of coal was sold at a price of $68.16 per tonne, down from sales of 425,697 tonnes at a price of $70.35 during the previous corresponding period.

Production also decreased from 380,173 tonnes to 51,152 tonnes.

“We anticipate that more balanced met coal market conditions will present opportunities for outsized returns for premium quality assets over the medium term, and are positioning our assets accordingly,” Goldfarb said.

In February, Xinergy completed the sale of its Straight Creek and Red Bird thermal mines in Kentucky to affiliates of JW Resources in a $US47.2 million deal as a strategic move to allow it to “focus on its strategy of building out a high-quality, metallurgical coal portfolio,” the company said in its report.

Xinergy closed the quarter with $27.6 million cash in the bank and a total liquidity of $37.4 million.

TOPICS:

A growing series of reports, each focused on a key discussion point for the mining sector, brought to you by the Mining Monthly Intelligence team.

A growing series of reports, each focused on a key discussion point for the mining sector, brought to you by the Mining Monthly Intelligence team.

editions

ESG Mining Company Index: Benchmarking the Future of Sustainable Mining

The ESG Mining Company Index report provides an in-depth evaluation of ESG performance of 61 of the world's largest mining companies. Using a robust framework, it assesses each company across 9 meticulously weighted indicators within 6 essential pillars.

editions

Mining Magazine Intelligence Exploration Report 2024 (feat. Opaxe data)

A comprehensive review of exploration trends and technologies, highlighting the best intercepts and discoveries and the latest initial resource estimates.

editions

Mining Magazine Intelligence Future Fleets Report 2024

The report paints a picture of the equipment landscape and includes detailed profiles of mines that are employing these fleets

editions

Mining Magazine Intelligence Digitalisation Report 2023

An in-depth review of operations that use digitalisation technology to drive improvements across all areas of mining production