For the period ended March 31, National's total revue was $US35.7 million based on 596,732 tons of coal sold, a significant increase over last year’s first-quarter results of $19 million on 368,332t sold.
However, operational obstacles were just one of the issues cited for the company's net loss, which widened to $10.7 million from $6 million a year ago.
“The closing on the Straight Creek transaction as well as a number of anticipated operational difficulties experienced during the first quarter influenced our results," said company president Daniel Roling.
“We believe that the majority of the operational difficulties experienced during the first quarter have been resolved.
“In addition, we have engaged in several strategic initiatives designed to improve liquidity, focus on organic growth, and prove-up additional resources – the results of these efforts should, in some cases, become visible as soon as the second quarter of 2008."
In March, National completed the sale of the assets of its Straight Creek complex in Kentucky for $11 million in cash, with the buyer taking over $3.6 million in reclamation liabilities and $2.6 million in equipment debt. The entire group of assets, including mine development, had a book value of $16.1 million.
Roling called the transaction "critical" to its results.
“It is indicative of our desire to protect the interests of our shareholders as we leverage our best resources to meet demand in the strengthening market for coal," he said.
The company admitted to a shaky report in its initial quarter of the year.
“As previously disclosed in our year-end release, first-quarter 2008 operations have been impacted by a number of events, including heavy rains in both Tennessee and Alabama; cessation of operations due to the ending of an agreement with a contract miner, which has since been resolved; and the breakdown of the company’s dragline in Alabama, which may remain idle through the second quarter," said Roling.
“During the period … management successfully negotiated a new contract for future sales and renegotiated an existing coal supply agreement resulting in an increased selling price per ton.
“The impact of the new and renegotiated sales contracts are expected to begin during the second quarter, but become fully effective during the second half of the year."
Looking forward, however, National announced significant plans to take advantage of a strengthening coal market by restarting a number of its idled facilities.
Also included in its outlook is the development of new facilities – including a new underground complex in Tennessee, a decision which "will significantly contribute to our future results", according to Roling.
With that growth comes expense, officials noted. National is planning $16 million in capital expenditures this year to expand operations and another $1.2 million to maintain existing assets while expanding its production levels.
“It is our intention to rapidly increase our production from the 1.4 million ton level achieved during 2007, to 2.4 million tons in 2008, and achieve a 3 million ton per year run rate by year-end 2009," said Roling.
“By year-end 2010, it is our intention to produce at a 5 million ton run rate."
