Corsa Coal Corp. reported financial results for the three months and full year ended December 31, 2017 and announced the completion of the sale of its Central Appalachia division.
Corsa Coal Corp. (TSXV: CSO) reported financial results for the three months and full year ended December 31, 2017. Corsa also announced the completion of the sale of its Central Appalachia division as previously announced on March 7, 2018.
Highlights are as follows:
- Corsa reported net and comprehensive income of $62.2 million, or $0.56 per share, for the fourth quarter of 2017, compared to net and comprehensive loss of $10.7 million, or $0.13 per share, for the fourth quarter of 2016. For the year ended December 31, 2017, Corsa reported net and comprehensive income of $83.7 million, or $0.72 per share, compared to net and comprehensive loss of $34.1 million, or $0.44 per share, for the year ended December 31, 2016.
- Corsa’s net and comprehensive income for the fourth quarter and full year 2017 was impacted by a net asset impairment reversal of $66.2 million which is primarily due to the improvement in the metallurgical coal market partially offset by an impairment charge at the CAPP Division as a result of the divestiture that occurred in 2018.
- Operating cash flows for the fourth quarter and year ended December 31, 2017 were $6.3 million and $31.1 million, respectively compared to cash provided operations of $4.0 million for the fourth quarter 2016 and cash used in operations of $2.7 million for the year ended December 31, 2016.
- Total revenue was $58.3 million for the fourth quarter of 2017, an improvement of 54% as compared to the fourth quarter 2016. Total revenue was $263.9 million for the year ended December 31, 2017, an improvement of 172% as compared to the 2016 year. Metallurgical coal sales volumes increased 41% compared to the fourth quarter of 2016 and 141% compared to the 2016 full year.
- Corsa’s adjusted EBITDA(1) was $9.4 million and $8.0 million at its NAPP Division and on a consolidated basis, respectively, for the three months ended December 31, 2017 and $51.9 million and $47.3 million at its NAPP Division and on a consolidated basis, respectively, for the year ended December 31, 2017.
- Corsa achieved an average realized price per ton of metallurgical coal sold(1) at its NAPP Division of $122.25 in the fourth quarter of 2017, an increase of 20% as compared to the fourth quarter of 2016. This average realized price is the approximate equivalent of $178 to $185 on a free-on-board vessel basis(2) and is comprised of a mix of 24% sales to domestic customers and 76% sales to international customers.
- The Acosta Mine successfully commenced production in early June 2017. Conditions at the mine are favorable and a fourth production shift was added in early 2018. The mine has currently reached run-rate production levels this month and is expected to produce 400,000 tons per year of low volatile metallurgical coal.
- The Horning Mine is expected to begin production this month. Located near Somerset, Pennsylvania, the Horning Mine is expected to produce approximately 125,000 to 180,000 tons per year of high quality, low volatile metallurgical coal.
George Dethlefsen, CEO of Corsa, commented:
2017 was a year of tremendous growth and record profitability for Corsa, driven by volume growth across all of our metallurgical coal platforms and a strong overall market environment for steel and metallurgical coal.
A year ago, we laid out milestones related to increasing production at our NAPP Division, expanding our Sales and Trading platform, and increasing utilization at our preparation plants. We accomplished all of these objectives in 2017. Overall, metallurgical coal sales at Corsa grew by 141%, we acquired several new international customers and one new domestic customer, and we restarted our Shade Creek preparation plant. We opened the Acosta Deep Mine in June of last year, which is going well, we opened two surface mines and this month we expect to begin production at the Horning Mine. In addition, we expect to begin production at the Keyser deep mine, another low volatile metallurgical coal mine in Somerset County, Pennsylvania in 2019. The production from these three mines, in combination with production from our existing mines, is anticipated to double Corsa’s low volatile metallurgical coal production in 2019 as compared to 2017 levels.
The sale of our CAPP Division divests Corsa of its thermal coal mining assets and establishes Corsa as a pure play metallurgical coal producer. This move enables our team to focus its time and resources exclusively on our metallurgical growth initiatives and avoids future environmental liabilities and end-of-mine closure costs in Tennessee.