FRIEDENS, Pa.,
Nov. 3, 2021 /CNW/
- Corsa Coal Corp. (TSXV: CSO) (OTCQX: CRSXF) ("Corsa" or the
"Company"), a premium quality metallurgical coal producer, today
reported financial results for the three and nine months ended
September 30, 2021. Corsa has filed its unaudited
condensed interim consolidated financial statements for the three
and nine months ended September 30, 2021 and 2020 and related
management's discussion and analysis under its profile on
www.sedar.com.
Unless otherwise noted, all dollar amounts in this news
release are expressed in United
States dollars and all ton amounts are short tons (2,000
pounds per ton). Pricing and cost per ton information is
expressed on a free-on-board, or FOB, mine site basis, unless
otherwise noted.
Third Quarter 2021 Highlights
- Key financial results and operational statistics are
shown below:
|
|
Three months
ended
|
|
Nine months
ended
|
|
|
September
30,
|
|
September
30,
|
|
(in millions
except per share, per ton and sales tons)
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Net and comprehensive
income (loss)
|
|
$
|
0.9
|
|
$
|
(3.6)
|
|
$
|
(1.3)
|
|
$
|
(50.7)
|
|
Non-cash asset
impairment adjustment (included above)
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
(41.7)
|
|
Diluted earnings
(loss) per share
|
|
$
|
0.01
|
|
$
|
(0.04)
|
|
$
|
(0.01)
|
|
$
|
(0.47)
|
|
Adjusted
EBITDA(1)
|
|
$
|
4.1
|
|
$
|
(4.8)
|
|
$
|
7.0
|
|
$
|
5.8
|
|
EBITDA(1)
|
|
$
|
6.2
|
|
$
|
1.8
|
|
$
|
13.3
|
|
$
|
(32.6)
|
|
Cash (used in)
provided by operating activities
|
|
$
|
4.2
|
|
$
|
(10.3)
|
|
$
|
3.0
|
|
$
|
10.9
|
|
Total
revenue
|
|
$
|
36.4
|
|
$
|
23.6
|
|
$
|
91.4
|
|
$
|
111.7
|
|
|
|
|
|
|
|
|
|
|
Average realized
price per ton of metallurgical coal sold(1)
|
|
$
|
112.75
|
|
$
|
66.54
|
|
$
|
97.46
|
|
$
|
81.73
|
|
Cash production cost
per ton sold(1)
|
|
$
|
92.24
|
|
$
|
77.15
|
|
$
|
83.00
|
|
$
|
70.13
|
|
|
|
|
|
|
|
|
|
|
Company produced
sales tons
|
|
286,678
|
|
286,944
|
|
828,260
|
|
1,008,622
|
|
Value added services
sales tons
|
|
11,760
|
|
617
|
|
31,833
|
|
32,619
|
|
Sales and Trading
sales tons
|
|
-
|
|
-
|
|
-
|
|
136,663
|
|
Total sales
tons
|
|
298,438
|
|
287,561
|
|
860,093
|
|
1,177,904
|
|
|
|
|
|
|
|
|
|
- Corsa's average realized price for the third quarter 2021
is the approximate equivalent of between $174 to $179 per
metric ton on an FOB vessel basis(2).
For the third quarter 2021, Corsa's sales mix included 41% of sales
to domestic customers and 59% of sales to international
customers.
- In the third quarter 2021, the Company's U.S.
subsidiaries, Wilson Creek Holdings, Inc. and Wilson Creek Energy,
LLC, received full forgiveness of the Paycheck Protection Program
loans received in April 2020. The Company previously
recognized $7.2 million of grant
income in the three months ended September
30, 2020 and the remaining $1.1
million was recognized as grant income in the three months
ended September 30,
2021.
|
(1)
|
This is a non-GAAP
financial measure. See "Non-GAAP Financial Measures"
below.
|
|
(2)
|
Similar to most U.S.
metallurgical coal producers, Corsa reports sales and costs per ton
on an FOB mine site basis and denominated in short tons. Many
international metallurgical coal producers report prices and costs
on a delivered-to-the-port basis (or "FOB vessel basis"), thereby
including freight costs between the mine and the port.
Additionally, Corsa reports sales and costs per short ton, which is
approximately 10% lower than a metric ton. For the purposes
of this figure, we have used an illustrative freight rate of
$45-$50 per short ton. Historically, freight rates rise and
fall as market prices rise and fall. As a note, most
published indices for metallurgical coal report prices on a
delivered-to-the-port basis and denominated in metric
tons.
|
Bob Schneid, President and
Chief Executive Officer of Corsa, commented, "The third quarter of
2021 appears to have marked a turning point for Corsa as the
metallurgical coal market rebounded, spot pricing continued to rise
and our mines started to return to pre-pandemic operating
levels. We started to see the impact of the strong spot
market for our low volatile metallurgical coal during the third
quarter of 2021 and our average selling price increased
accordingly. The majority of our shipments during the
quarter, however, were delivered to customers with below market
contracts. Our average selling price is expected to rise as
all of these below market contracts expire by the end of this
year."
"Our cash costs per ton sold increased significantly
during the quarter due to: (1) planned outages which lowered
production and increased repair and maintenance expenditures, (2)
challenging conditions at two of our underground mines that slowed
advance rates and increased costs, (3) a reduction in lower cost
surface mine production as we transitioned our Schrock Run surface
mine to a new mining area, and (4) the inefficiencies associated
with hiring and training new, less experienced, employees.
Corsa is committed to making the investments in our people and our
assets that will position us to take full advantage of the improved
metallurgical coal market and to generate the returns for our
shareholders."
Financial and Operations Summary
|
For the three
months ended
September 30,
|
|
For the three
months ended
September 30,
|
|
|
|
|
|
Increase
|
|
|
|
|
|
Increase
|
|
(in
thousands)
|
2021
|
|
2020
|
|
(Decrease)
|
|
2021
|
|
2020
|
|
(Decrease)
|
|
Revenues
|
$
|
36,380
|
|
$
|
23,586
|
|
$
|
12,794
|
|
$
|
91,425
|
|
$
|
111,651
|
|
$
|
(20,226)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
$
|
35,448
|
|
$
|
32,004
|
|
$
|
3,444
|
|
$
|
92,238
|
|
$
|
117,502
|
|
$
|
(25,264)
|
|
Cost of sales - asset
impairment
|
-
|
|
-
|
|
-
|
|
-
|
|
41,684
|
|
(41,684)
|
|
Total cost of
sales(2)
|
$
|
35,448
|
|
$
|
32,004
|
|
$
|
3,444
|
|
$
|
92,238
|
|
$
|
159,186
|
|
$
|
(66,948)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expense
|
$
|
2,293
|
|
$
|
2,507
|
|
$
|
(214)
|
|
$
|
6,523
|
|
$
|
7,060
|
|
$
|
(537)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net and comprehensive
loss for the period
|
$
|
933
|
|
$
|
(3,579)
|
|
$
|
4,512
|
|
$
|
(1,347)
|
|
$
|
(50,681)
|
|
$
|
49,334
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash provided by
operating activities
|
$
|
4,231
|
|
$
|
(10,327)
|
|
$
|
14,558
|
|
$
|
2,976
|
|
$
|
10,882
|
|
$
|
(7,906)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA(1)
|
$
|
6,214
|
|
$
|
1,820
|
|
$
|
4,394
|
|
$
|
13,310
|
|
$
|
(32,563)
|
|
$
|
45,873
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(1)
|
$
|
4,125
|
|
$
|
(4,839)
|
|
$
|
8,964
|
|
$
|
6,967
|
|
$
|
5,821
|
|
$
|
1,146
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Coal sold -
tons
|
|
|
|
|
|
|
|
|
|
|
|
|
NAPP – metallurgical
coal
|
298
|
|
288
|
|
10
|
|
860
|
|
1,178
|
|
(318)
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) This is a non-GAAP financial
measure. See "Non-GAAP Financial Measures" below.
(2) Cost of sales consists of the
following:
|
For the three
months ended
|
|
For the nine
months ended
|
|
September
30,
|
|
September
30,
|
|
(in
thousands)
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Mining and processing
costs
|
$
|
24,628
|
|
$
|
21,012
|
|
$
|
64,685
|
|
$
|
66,147
|
|
Purchased coal
costs
|
1,529
|
|
39
|
|
4,002
|
|
13,613
|
|
Royalty
expense
|
1,775
|
|
1,509
|
|
4,222
|
|
5,204
|
|
Amortization
expense
|
4,670
|
|
4,966
|
|
12,726
|
|
16,490
|
|
Transportation costs
from preparation plant to customer
|
1,570
|
|
3,426
|
|
4,294
|
|
12,835
|
|
Idle mine
expense
|
190
|
|
129
|
|
493
|
|
294
|
|
Tolling
costs
|
281
|
|
221
|
|
518
|
|
793
|
|
Change in estimate of
reclamation provision
|
-
|
|
-
|
|
-
|
|
278
|
|
Limestone
costs
|
282
|
|
(24)
|
|
708
|
|
316
|
|
Write-off of advance
royalties and other assets
|
-
|
|
65
|
|
-
|
|
484
|
|
Other
costs
|
523
|
|
661
|
|
590
|
|
1,048
|
|
Cost of
sales
|
$
|
35,448
|
|
$
|
32,004
|
|
$
|
92,238
|
|
$
|
117,502
|
|
Cost of sales - asset
impairment
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
41,684
|
|
Total cost of
sales
|
$
|
35,448
|
|
$
|
32,004
|
|
$
|
92,238
|
|
$
|
159,186
|
|
|
|
|
|
|
|
|
|
For the three
months ended
September 30,
|
|
For the nine
months ended
September 30,
|
|
2021
|
|
2020
|
|
Variance
|
|
2021
|
|
2020
|
|
Variance
|
|
Realized price per
ton sold(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
NAPP – metallurgical
coal
|
$
|
112.75
|
|
$
|
66.54
|
|
$
|
46.21
|
|
$
|
97.46
|
|
$
|
81.73
|
|
$
|
15.73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash production cost
per ton sold(1)(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
NAPP – metallurgical
coal
|
$
|
92.24
|
|
$
|
77.15
|
|
$
|
(15.09)
|
|
$
|
83.00
|
|
$
|
70.13
|
|
$
|
(12.87)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash cost per ton
sold(1)(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
NAPP – metallurgical
coal
|
$
|
92.55
|
|
$
|
77.01
|
|
$
|
(15.54)
|
|
$
|
83.03
|
|
$
|
71.63
|
|
$
|
(11.40)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash margin per ton
sold(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
NAPP – metallurgical
coal
|
$
|
20.20
|
|
$
|
(10.47)
|
|
$
|
30.67
|
|
$
|
14.43
|
|
$
|
10.10
|
|
$
|
4.33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA(1)(000's)
|
|
|
|
|
|
|
|
|
|
|
|
|
NAPP
|
$
|
7,140
|
|
$
|
2,569
|
|
$
|
4,571
|
|
$
|
16,241
|
|
$
|
(30,140)
|
|
$
|
46,381
|
|
Corporate
|
(926)
|
|
(749)
|
|
(177)
|
|
(2,931)
|
|
(2,423)
|
|
(508)
|
|
Total
|
$
|
6,214
|
|
$
|
1,820
|
|
$
|
4,394
|
|
$
|
13,310
|
|
$
|
(32,563)
|
|
$
|
45,873
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(1)(000's)
|
|
|
|
|
|
|
|
|
|
|
|
|
NAPP
|
$
|
4,828
|
|
$
|
(4,346)
|
|
$
|
9,174
|
|
$
|
9,147
|
|
$
|
7,729
|
|
$
|
1,418
|
|
Corporate
|
(703)
|
|
(493)
|
|
(210)
|
|
(2,180)
|
|
(1,908)
|
|
(272)
|
|
Total
|
$
|
4,125
|
|
$
|
(4,839)
|
|
$
|
8,964
|
|
$
|
6,967
|
|
$
|
5,821
|
|
$
|
1,146
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
This is a non-GAAP
financial measure. See "Non-GAAP Financial Measures"
below.
|
|
(2)
|
Cash production cost
per ton sold excludes purchased coal. This is a non-GAAP
financial measure. See "Non-GAAP Financial Measures"
below.
|
|
(3)
|
Cash cost per ton
sold includes purchased coal. This is a non-GAAP financial
measure. See "Non-GAAP Financial Measures" below.
|
Coal Pricing Trends and Outlook
Price levels opened the third quarter 2021 at $198.00/metric ton ("mt") delivered-to-the-port
("FOBT") for spot deliveries of Australian premium low volatile
metallurgical coal and closed the quarter at $388.50/mt FOBT. The quarterly average
price for the third quarter of 2021 was $263.66/mt FOBT, compared to $137.46/mt FOBT in the second quarter of 2021,
and traded in a range from a high of $408.50/mt FOBT to a low of $198.00/mt FOBT. October 2021 spot market pricing opened the month
at $390.00/mt FOBT and closed the
month at $402.50/mt FOBT with trades
in a range from a high of $402.50/mt
FOBT to a low of $390.00 /mt FOBT for
an average price of $398.01/mt
FOBT.
The World Steel Association reported that through
September, global crude steel production increased by 7.8% in 2021
versus 2020 with India up 23.3%,
Brazil up 20.2%, U.S. up 19.8%,
Japan up 17.9%, Germany up 16.0%, Turkey up 15.0%, South Korea up 6.7%, Russia up 6.2% and China relatively flat at an increase of
2.0%. The largest regional increases were recognized in
Africa at 31.2%, South America at 23.9%, European Union at
19.8%, and North America at
19.2%. All other regions recorded year-to-date year-over-year
increases except for the Middle
East, which was down 3.0%. Hot-rolled steel coil
prices remained elevated throughout the third quarter and in the
first month of the fourth quarter. Pent-up demand coupled
with labor shortages and supply-chain issues continue to sustain
pricing momentum with further support from the potential of
increased infrastructure spending domestically. From the
beginning of 2021 through the end of October, hot-rolled steel coil
prices rose 87%, 53% and 30% in the U.S., Northern Europe and China, respectively.
The World Steel Association Short Range Outlook released
in October 2021 forecasted that steel
demand will increase by 4.5% in 2021 versus 2020 and increase by
2.2% in 2022 over 2021. Global steel demand in 2021 is
expected to exceed 2019 levels by over 5%, driven primarily by
Chinese increases compared to 2019. Chinese steel demand is
expected to decrease by 1.0% in 2021 as compared to 2020 and remain
flat in 2022. Excluding China, steel demand from the rest of
the world will increase by 11.5% in 2021 and increase by 4.7% in
2022. Regionally, the collective demand from the United States, Canada and Mexico is forecasted to increase by 13.7% in
2021 and increase by 5.4% in 2022; demand from the European Union
is forecasted to increase by 12.7% in 2021 and increase by 5.5% in
2022; the collective demand from Asia and Oceania (excluding China) is forecasted to increase by 11.3% in
2021 and increase by 4.3% in 2022; and the collective demand from
Central and South America is
forecasted to increase by 23.2% in 2021 and increase by 0.9% in
2022.
After opening the fourth quarter of 2021 at $398.00/mt FOBT, the forward curve for the fourth
quarter of 2021 according to the SGX TSI index is trading at
$361.00/mt FOBT with November at
$373.50/mt FOBT and December at
$348.50/mt FOBT. Forward curve
pricing for 2022 is trading at an average of $229.46/mt FOBT with the first quarter of 2022 at
a high of $298.33/mt FOBT and the
fourth quarter of 2022 at a low of $177.50/mt FOBT. The forward curve for 2023
is showing pricing at an average of $180.00/mt FOBT. Increased global steel
demand and increased global steel production are driving the demand
and supporting higher prices for metallurgical coal. Trade
tensions between China and
Australia remain and continue to
influence the international metallurgical coal market supply routes
and metallurgical coal export pricing dynamics. Domestically,
metallurgical coal consumption is expected to increase
year-over-year and according to the U.S. Energy Information
Administration (the "EIA") and is forecasted to be 18.7 million
tons in 2021 and 20.1 million tons in 2022 as compared to 14.4
million tons in 2020 and 18.3 million tons in 2019.
Metallurgical coal exports from the United State are expected to
increase to 47.0 million tons in 2021, or an 11% increase over the
42.4 million tons of metallurgical coal exported in 2020.
Metallurgical coal exports are expected to increase by 11% in
2022 over 2021 to 52.0 million tons.
See "Risk Factors" in the Company's annual information
form dated March 3, 2021 for the year
ended December 31, 2020 for an
additional discussion regarding certain factors that could impact
coal pricing trends and outlook, as well as the Company's ongoing
operations.
Financial Statements and Management's Discussion and
Analysis
Refer to Corsa's unaudited condensed interim consolidated
financial statements for the three and nine months ended
September 30, 2021 and 2020 and related management's
discussion and analysis, filed under Corsa's profile on
www.sedar.com, for details of the financial performance of Corsa
and the matters referred to in this news release.
Non-GAAP Financial Measures
Management uses realized price per ton sold, cash
production cost per ton sold, cash cost per ton sold, cash margin
per ton sold, EBITDA and adjusted EBITDA, as both terms are defined
below, as internal measurements of financial performance for
Corsa's mining and processing operations. These measures are
not recognized under International Financial Reporting Standards
("GAAP"). Corsa believes that, in addition to the
conventional measures prepared in accordance with GAAP, certain
investors and other stakeholders also use these non-GAAP financial
measures to evaluate Corsa's operating and financial performance;
however, these non-GAAP financial measures do not have any
standardized meaning and therefore may not be comparable to similar
measures presented by other issuers. Accordingly, these
non-GAAP financial measures are intended to provide additional
information and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
GAAP. Reference is made to the management's discussion and
analysis for the three and nine months ended September 30,
2021 for a reconciliation and definitions of non-GAAP financial
measures to GAAP measures.
Corsa defines adjusted EBITDA as EBITDA (earnings before
deductions for interest, taxes, depreciation and amortization)
adjusted for change in estimate of reclamation provision for
non-operating properties, impairment and write-off of mineral
properties and advance royalties, gain (loss) on sale of assets and
other costs, stock-based compensation, non-cash finance expenses
and other non-cash adjustments. Adjusted EBITDA is used as a
supplemental financial measure by management and by external users
of our financial statements to assess our performance as compared
to the performance of other companies in the coal industry, without
regard to financing methods, historical cost basis or capital
structure; the ability of our assets to generate sufficient cash
flow; and our ability to incur and service debt and fund capital
expenditures.
Qualified Person
All scientific and technical information contained in this
news release has been reviewed and approved by Peter Merritts, Professional Engineer and the
Company's Chief Operating Officer, who is a qualified person within
the meaning of National Instrument 43-101 – Standards of
Disclosure for Mineral Projects.
Caution
Potential developments and market conditions discussed in
this news release are considered to be forward looking
information. Readers are cautioned that actual results may
vary from this forward-looking information. See
"Forward-Looking Statements" below.
Information about Corsa
Corsa is a coal mining company focused on the production
and sales of metallurgical coal, an essential ingredient in the
production of steel. Our core business is producing and selling
metallurgical coal to domestic and international steel and coke
producers in the Atlantic and Pacific basin markets.
Forward-Looking Statements
Certain information set forth in this press release
contains "forward-looking statements" and "forward-looking
information" (collectively, "forward-looking statements") under
applicable securities laws. Except for statements of historical
fact, certain information contained herein including, but not
limited to, statements relating to the expected price volatility of
the metallurgical coal market, the future demand for steel and its
production, and the availability of its supply, changes to sales
margins and expected profitability constitutes forward-looking
statements which include management's assessment of future plans
and operations and are based on current internal expectations,
assumptions and beliefs, which may prove to be incorrect. Some of
the forward-looking statements may be identified by words such as
"will", "estimates", "expects" "anticipates", "believes",
"projects", "plans", "capacity", "hope", "forecast", "anticipate",
"could" 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. These risks and
uncertainties include, but are not limited to: changes in market
conditions, governmental or regulatory developments as a result of
the COVID-19 pandemic or otherwise, the operating status and
capabilities of our customers and competitors; various events which
could disrupt operations and/or the transportation of coal
products, including labor stoppages, the outbreak of disease and
severe weather conditions; and management's ability to anticipate
and manage the foregoing factors and risks. 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. Corsa does not undertake to update any of the
forward-looking statements contained in this press release unless
required by law. The statements as to Corsa'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 the TSX Venture Exchange
nor its Regulation Services Provider (as that term is defined in
the policies of the TSX Venture Exchange) accepts responsibility
for the adequacy or accuracy of this release.
SOURCE Corsa Coal Corp.
