For the period ended September 30, Xinergy lost $US35.6 million, versus net income of $5.4 million in the same period last year.
Revenues fell 66% from $48.7 million on 531,724 tons sold in the third quarter of 2011, to $16.5 million on 242,390t sold in the period just ended.
Prices dropped more than a quarter in the quarter, averaging $68.16 compared to $91.50 year-on-year.
Total cash costs also rose to $17.5 million, or $95.17 per ton produced, from $31.3 million, or $59.64 per ton, in 2011’s comparable quarter.
One factor on the plus side for Xinergy: it was able to maintain a strong balance sheet over the period. This included $46.4 million in cash and an incremental $20 million in committed senior secured term loan financing.
“Challenging market conditions for both thermal and metallurgical coal persisted in the third quarter, though we believe we are seeing a bottoming in both markets,” chief executive officer Matt Goldfarb said.
“Xinergy has taken decisive steps to rationalize our cost structure by idling certain mines and cutting corporate overhead by roughly half, while at the same time positioning our shareholders to participate in the upside of our premium quality mid-vol met assets and low-cost CAPP [Central Appalachian] thermal mines as the market recovers.”
The producer has been able to make a good headway on its West Virginia mid-volume met presence since the end of the September quarter, including the receipt of permits in October for South Fork.
“[W]e began site preparation work in advance of commencing construction of our preparation plant and rail siding facility at South Fork,” Goldfarb said.
“We remain focused on pushing our South Fork project forward on an expedited basis, with construction expected to be completed during the third quarter of 2013.”
Xinergy also closed an earlier agreement to acquire a mid-vol met project in Fayette, Nicholas and Greenbrier counties in West Virginia, what is it calling Meadow River, which it has on an 18-24 month development schedule.
The underground Meadow River operation will extract from the Sewell seam and produce mid-vol output like neighbor South Fork.
“The company views Meadow River as substantially enhancing its mid-vol met reserve profile, with the potential to significantly enhance its production profile as and when market conditions warrant the required capital expenditures to bring the project into development,” Xinergy said.
Another plus mark in its efforts to de-risk its asset portfolio is its recent three-year coal supply agreement that will especially be of help as it waits for South Fork to provide a cash flow.
That deal includes 44,000 tons at $67.50 per ton in 2013 and 432,000 tons at $71.75/t in both 2014 and 2015.
