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Corsa Coal Announces Financial Results for Second Quarter 2015

September 1, 2015 – Toronto, Ontario – Corsa Coal Corp. (TSXV: CSO) (“Corsa”), a premium quality metallurgical and thermal coal producer, yesterday reported financial results for the three and six months ended June 30, 2015.  Corsa has filed its unaudited Condensed Interim Financial Statements for the three and six months ended June 30, 2015 and 2014 and related Management’s Discussion and Analysis on www.sedar.com under Corsa’s profile and has posted these documents to its website www.corsacoal.com.

Three and Six Months ending June 30, 2015 Highlights

George Dethlefsen, Chief Executive Officer, commented, “Corsa continued its focus on cost reductions and asset optimization in the second quarter, while at the same time as positioning the company for the future.  At the NAPP Division, we successfully completed the three-month crossing of the Casselman River at our Casselman Mine in July.  This initiative grants us access to the main body of the coal reserve at the mine and positions us well for the remainder of the year and beyond.  We were pleased to restart the Quecreek Mine after securing local thermal coal contracts.  Our efforts in the thermal coal space diversify our revenue sources and protect against a further weak metallurgical coal price environment.

The CAPP Division showed outstanding cost performance across all operations, and also substantially completed the face up for the new Cooper Ridge deep mine.  The mine represents the future of the division and will strategically reposition the division over time into the premium-priced specialty and industrial coal markets.

With metallurgical coal prices at 11 year lows, financial distress has overtaken many domestic producers.  We estimate that approximately 70% of domestic low volatile metallurgical coal supply is being sourced from producers either in the process of selling their mines or in a bankruptcy process.  This situation should accelerate production rationalization and lead to a rebalancing of supply and demand.  Consistent with our strategy, Corsa is well positioned to grow during this market trough, with advantaged operating costs, coal qualities, logistics, and financial sponsorship.  We will aggressively seek out opportunities to grow both organically and through acquisitions over the next 12 months.”
 


Weak Chinese demand for imported metallurgical coal, in combination with a strong U.S. dollar and low dry bulk freight rates, have continued to put downward pressure on seaborne metallurgical coal pricing.  The third quarter 2015 coking coal benchmark pricing decreased to $93.00 per metric ton, representing a decrease of approximately 15% from the second quarter of calendar 2015 and a year-over-year decrease of approximately 23%. The third quarter price is the first time the benchmark settlement was below $100 per metric ton since 2007, on a nominal basis, and represents a point on the cost curve where analysts estimate half of the global seaborne production is unprofitable.

Metallurgical coal sales in 2015 are expected to be in the range of 725,000 to 775,000 tons. As of the date of this press release, approximately 90% of these sales are committed at the midpoint of the range. Actual sales will depend on customer demand and market conditions. Vessel nominations for export sales are determined by customers and concluded on a month-by-month basis.

CAPP will continue to target the industrial market segment as it transitions from a utility supplier to an industrial supplier during 2015. The planned opening of the Cooper Ridge mine will position CAPP to service the industrial specialty coal markets. These specialty markets are well suited for CAPP’s coal qualities and relatively protected from natural gas prices and historically reflect higher pricing than the thermal markets.

The CAPP coal sales for 2015 are expected to be in the range of 775,000 to 825,000 tons. As of the date of this press release, approximately 96% of these sales are committed at the midpoint of the range. Actual sales will depend on customer demand and market conditions. CAPP also has sales contracts in place for 500,000 tons in 2016.

Non-GAAP Measures

Management uses realized price per ton sold, cash production cost per ton sold and adjusted EBITDA as internal measurements of operating performance for Corsa’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 Corsa.  Reference is made to the Management’s Discussion and Analysis for the three and six months ended June 30, 2015 for a reconciliation of non-GAAP measures to GAAP measures.


Refer to Corsa’s unaudited Condensed Interim Consolidated Financial Statements for the three and six months ended June 30, 2015 and 2014 and related Management’s Discussion and Analysis, filed on www.sedar.com under Corsa’s profile and posted to Corsa’s website www.corsacoal.com, for details of the financial performance of Corsa and the matters referred to in this news release.


Corsa is one of the leading suppliers of premium quality metallurgical coal, an essential ingredient in the production of steel, which is necessary for the secular trends in global urbanization.  Our core business is supplying metallurgical coal with the highest safety, yield, and strength characteristics to domestic steel producers while being a strategic source of supply in the Atlantic and Pacific basin markets.  Corsa also offers high heat content, low delivered cost coal to major utilities and industrial users in the Southeast region of the U.S.



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.