For the period ended December 31, the West Virginian producer’s net income was $US9.6 million, compared to a net loss of $11.3 million in the fourth quarter of 2009. Sales revenues rose to $243.4 million from $231.3 million a year earlier.
ICG also realized a 21% increase in per-ton sales margins, which were $14.67 in the fourth quarter, up from $12.11 in the corresponding quarter of 2009. The company cited a jump in metallurgical shipments for the improvement.
ICG president Ben Hatfield called the period “solid” despite isolated operational challenges and shipment delays that took hold later in the quarter.
"Although our Sentinel mine had several unplanned section moves that reduced metallurgical shipments, we were able to maintain attractive margins,” he said.
“Additionally, weather-related disruptions to rail service delayed approximately 100,000 tons of fourth-quarter shipments.”
While shipments did fall from 3.8 million tons to 3.5Mt year-on-year, the company said production remained steady at 3.6Mt. Additionally, metallurgical shipments increased by 64% year-on-year, to 571,000t.
Looking at its portfolio operations, ICG said construction at its Tygart Valley No. 1 deep mine complex was making progress despite minor weather-related delays in the quarter. Earthworks are complete and site development is expected to be completed in March.
Slope construction began last November while shaft work commenced in December. ICG is slating the fourth quarter of this year for initial production and, when at full output in early 2014, Tygart is expected to increase met sales to about 5.5Mt.
The company also wrapped a $7.7 million upgrade project at Vindex Energy’s Dobbin Ridge preparation facility. The plant began processing coal last month.
It is anticipated that the associated Bismarck deep mine will contribute about 180,000t of low-volatility met sales this year and achieve its target run rate of 250,000 tons per annum by the final quarter of 2011.
Looking ahead, Hatfield said the company’s contract position was strategic and that it was hedging its bets on continued met growth.
“While there has been general improvement in thermal prices, domestic utility spot purchases are expected to be somewhat muted until early summer of this year,” he said.
“Management believes that continued economic recovery and growing export demand, in conjunction with regulatory actions that constrain central Appalachian production, will serve as catalysts for meaningful price increases. Reflecting this market view, the company has generally limited term-contract commitments in anticipation of improved pricing.”
For this year, ICG has 12.9Mt of sales committed and priced, equal to 79% of its planned shipments, at an average $72.25/t. Uncommitted tonnage for 2011 includes about 2.5Mt thermal and 1Mt metallurgical.
In 2012, the company’s committed and priced sales total about 3.6Mt, or 21% of planned shipments, at an average $53.75/t. Uncommitted tonnages are about 10.2Mt thermal and 3.2Mt met.
In its updated guidance, the producer says it expects to produce and sell 16.1-16.7Mt this year, 3.1-3.5Mt of which will be metallurgical. The average selling price is projected to be $73-77/t or $55-57/t after expenses.
Next year, ICG’s projection and sales range is 16.5-17.5Mt, including 3.3-3.7Mt met.
Capital expenditures for this year should range between $225 million and $245 million, including about $125 million for its Tygart Valley No. 1, Illinois and Vindex development projects.
