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Corsa Files 2013 Financial Results

TORONTO, March 27, 2014 /PRNewswire/ - Corsa Coal Corp. (TSXV: CSO) ("Corsa" or the "Company") announces that it has filed its Audited Consolidated Financial Statements for the years ended December 31, 2013 and 2012 and related Management's Discussion and Analysis on www.sedar.com and has posted these documents to its website www.corsacoal.com.

The Company is also pleased to announce that an updated technical report prepared in accordance with the requirements of National Instrument 43-101 – Standards of Disclosure for Mineral Projects has been prepared and filed on www.sedar.com under Corsa's profile in respect of the Kopper Glo Project, and is entitled "Technical Report on the Coal Reserve and Coal Resource Controlled by Kopper Glo Mining, LLC, Tennessee, USA – Prepared in accordance with National Instrument 43-101 Standards for Disclosure for Mineral Projects Effective December 31, 2013."

Highlights

  • Sales of 1,293,000 tons of coal at an average realized price per ton(1) of $79 in the year ended December 31, 2013.(2)  See "Sales".
  • Adjusted EBITDA(1) of $19,572,000 for the year ended December 31, 2013.(2)
  • Cash provided by operating activities of $21,393,000 in the year ended December 31, 2013.(2)
  • Sales guidance of 1,400,000 tons of coal for 2014 comprised of 1,000,000 tons of thermal coal and 400,000 tons of metallurgical coal. See "Outlook".
  • Completion of the previously announced transaction with Quintana Energy Partners.
  • Metallurgical coal production expansion at the Casselman Mine with the start-up of a continuous haulage system in January 2014.
  • Underground mining permit for the metallurgical coal deposit at the Acosta Deep Project received from Pennsylvania Department of Environmental Protection allowing the Company to commence mine development in 2014.

(1)

This is a non-GAAP measure. See "Non-GAAP Measures" below.

(2)

Given the completion of the transaction with Quintana Energy Partners on July 31, 2013, the financial results of the metallurgical coal operations of the Wilson Creek division of the Company are reported for the five month period from August 1 to December 31, 2013.

Refer to the Company's audited consolidated financial statements for the years ended December 31, 2013 and 2012 and related management's discussion and analysis for the details of the financial performance of the Company and the matters referred to in this release.

Keith Dyke, President, stated "During 2013, both the Kopper Glo thermal coal operations in Tennessee and the Wilson Creek metallurgical coal operations in Pennsylvania posted strong operating results with Kopper Glo increasing its tons sold from 2012 levels. The operations continue to improve in every area, including safety and cost reductions. Demand for our coal has remained firm in both markets and the Company expects the market pricing to improve in late 2014. We have high quality coals in each of our market segments and we continue to expand and diversify our customer base. With high quality products and low operating costs, we will continue to execute the business plan and grow our company.  The Company's balance sheet is strong with cash of $20,060,000, total assets of $202,724,000 and total debt of $19,980,000 at December 31, 2013. The strong financial position of Corsa should allow us to confidently explore potential acquisition opportunities and to take advantage of opportunities in internal expansion projects. The increase in revenue and Adjusted EBITDA year over year are encouraging, considering the market environment and in comparison to the performance of other public coal companies in North America. The dedication and skills of all our employees and the management teams are second to none in the industry."  

Sales

The Company sold 1,293,000 tons of coal at an average realized price per ton(1) of $79 for the year ended December 31, 2013. Thermal coal sales were 1,135,000 tons at an average realized price per ton(1) of $74. Metallurgical coal sales were 158,000 tons at an average realized price per ton(1) of $111.

(1)

This is a non-GAAP measure. See "Non-GAAP Measures" below.

Outlook

The Company's coal sales guidance for 2014 is approximately 1,400,000 tons. Thermal coal sales guidance is approximately 1,000,000 tons and metallurgical coal sales guidance is approximately 400,000 tons. 

Thermal Coal

As a result of colder than normal winter conditions and higher natural gas prices, the thermal coal industry has experienced an increase in demand that began in December 2013 and  continued throughout the winter with the result that both price and demand have stabilized. With this stabilization, the Company believes there may be a modest recovery in the demand and price for thermal coal beginning in the second half of 2014. While the thermal coal market continues to stabilize in early 2014, the Company has been successful in maintaining a high level of contracted sales. The current guidance for thermal coal sales in 2014 is approximately 1,000,000 tons for which sales contracts of 980,000 tons are currently in place. In the first quarter of 2014, thermal coal sales of 240,000 to 250,000 tons are expected. The Company continues to actively market coal to domestic utilities and industries.

Metallurgical Coal

During 2013, the Company was able to demonstrate the value of its metallurgical coal to domestic and international steel producers. As a result of the positive quality and reliability of its metallurgical coal, the Company has been awarded term supply agreements for 2014 and beyond. The current guidance for metallurgical coal sales in 2014 is approximately 400,000 tons for which sales contracts of 312,000 tons are currently in place. In the first quarter of 2014, metallurgical coal sales of 40,000 to 55,000 tons are expected. Prices in the domestic metallurgical coal markets for 2014 have fallen from 2013 levels by about 10% and prices for export shipments in 2014 have declined about 5% from 2013 levels. The Company also has sales contracts for 150,000 tons in 2015 and 38,000 tons in 2016. The Company continues to actively market metallurgical coal to domestic and international steel producers.

Liquidity

At December 31, 2013, the Company had cash of $20,066,000. During 2013, the primary source of cash for the Company was sales collections of $101,530,000 (amounts receivable at December 31, 2012 plus sales for 2013 less amounts receivable at December 31 2013). The Company also received cash of $9,827,000 from the Quintana Transaction.

In 2013, the operating activities of the Company provided cash of $21,393,000, the investing activities provided cash of $450,000 and the financing activities used cash of $6,987,000. The increase in cash for 2013 was $14,856,000.

The Company had working capital of $7,384,000 at December 31, 2013 and a working capital deficit of $5,133,000 at December 31, 2012. Working capital at December 31, 2012 included a liability for units repayable on demand of $8,255,000. The units repayable on demand were settled on the closing of the Quintana Transaction.     

At December 31, 2013, the total debt of the Company was $19,980,000 compared with $10,366,000 at December 31, 2012.  Details of the Company's debt appear in notes 11, 12 and 14 of the audited consolidated financial statements for the year ended December 31, 2013 and 2012.

At December 31, 2013, the shareholders' equity of the Company was $129,758,000 compared with $21,478,000 at December 31, 2012. . Details of the Company's shareholder equity appear in note 18 of the audited financial statements for the year ended December 31, 2013 and 2012.

Non-GAAP Financial Measures

Management uses average realized price per ton, EBITDA (Earnings before deductions for interest, taxes, depreciation and amortization) and Adjusted EBITDA (EBITDA adjusted for finance expenses and items related to the transaction with Quintana Energy Partners) as internal measurements of operating performance for the Company's mining and processing operations. Management believes these non-GAAP measures provide useful information for investors as they provide information in addition to the GAAP measures to assist in their evaluation of the operating performance of the Company.

Reference is made to the management's discussion and analysis for the year ended December 31, 2013 for a reconciliation of non-GAAP measures to GAAP measures.

Caution

The estimated coal sales, projected market conditions and potential development disclosed in this news release are considered to be forward looking information. Readers are cautioned that actual results may vary from this forward looking information. Actual sales are subject to variation based on a number of risks and other factors referred to under the heading "Forward-Looking Statements" below as well as demand and sales orders received.

Information about Corsa

Corsa's primary business is the mining, processing and selling of thermal and metallurgical coal, as well as actively exploring,   acquiring   and   developing   resource   properties consistent with its coal business.

Forward-Looking Statements

Certain information set forth in this press release contains "forward-looking statements" and "forward-looking information" under applicable securities laws. Except for statements of historical fact, certain information contained herein relating to projected sales for the year ended December 31, 2014 constitutes forward-looking statements which include management's assessment of future plans and operations and are based on current internal expectations, estimates, projections, assumptions and beliefs, which may prove to be incorrect. Some of the forward-looking statements may be identified by words such as "estimates", "expects" "anticipates", "believes", "projects", "plans", "outlook", "capacity" and similar expressions. These statements are not guarantees of future performance and undue reliance should not be placed on them. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause the Company's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: risks that the actual production or sales for the 2014 fiscal year will be less than projected production or sales for these periods; risks that the prices for coal sales will be less than projected or expected; liabilities inherent in coal mine development and production including restarting idled mines; geological, mining and processing technical problems; inability to obtain required mine licenses, mine permits and regulatory approvals or renewals required in connection with the mining and processing of coal; risks that the Company's coal preparation plant will not operate at production capacity during the relevant period, unexpected changes in coal quality and specification; variations in the coal mine or coal preparation plant recovery rates; dependence on third party coal transportation systems; competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel; incorrect assessments of the value of acquisitions; changes in commodity prices and exchange rates; changes in the regulations with respect to the use, mining and processing of coal; changes in regulations on refuse disposal; the effects of competition and pricing pressures in the coal market; the oversupply of, or lack of demand for, coal; inability of management to secure coal sales or third party purchase contracts; currency and interest rate fluctuations; various events which could disrupt operations and/or the transportation of coal products, including labour stoppages and severe weather conditions; the demand for and availability of rail, port and other transportation services; the ability to purchase third party coal for processing and delivery under purchase agreements; and management's ability to anticipate and manage the foregoing factors and risks. The forward-looking statements and information contained in this press release are based on certain assumptions regarding, among other things, coal sales being consistent with expectations; future prices for coal; future currency and exchange rates; the Company's ability to generate sufficient cash flow from operations and access capital markets to meet its future obligations; the regulatory framework representing royalties, taxes and environmental matters where the Company conducts business; coal production levels; and the Company's ability to retain qualified staff and equipment in a cost-efficient manner to meet its demand. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The reader is cautioned not to place undue reliance on forward-looking statements. The Company does not undertake to update any of the forward-looking statements contained in this press release unless required by law. The statements as to the Company's capacity to produce coal are no assurance that it will achieve these levels of production or that it will be able to achieve these sales levels.

The TSX Venture Exchange has in no way passed on the merits of this news release.  Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Corsa Coal Corp.

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