CanAm looks ahead

CANAM Coal is estimating 2013 coal sales of 700,000-900,000 tons, representing growth of between 54% and 98%.

Staff Reporter

Announcing its 2013 forecasts the company attributed the upsurge to the full-year impact of increased ownership of Birmingham Coal and Coke as well as increased production at the company’s three newest mines.

“Realized sales for 2013 are a function of the timing associated with the completion of mine development and build-out of our new mines,” CanAm said in a statement.

“Old Union 2 and Knight are currently producing but not at full production yet and Posey Mill 2 is targeted to start production in April.

“That said, we expect to have reached full production at all mines before the end of the second quarter.”

The company has sales commitments for at least 750,000t to five key customers within the local Alabama market, substantially hedging its production.

In late 2012, CanAm was awarded two thermal sales contracts and shipments to industrial customers starting in January 2013.

Both customers operate in the local Alabama market and the company believes it has an opportunity to grow volumes with each customer over time.

In February 2013, CanAm and its primary metallurgical coal customer mutually agreed to terminate their sales contract due to coal specification issues.

The termination impacted about 4000 tons per month of production but CanAm anticipates it will be able to market the high quality coal to other customers and is currently investigating options.

The termination will not greatly affect pricing for 2013 as the contract represented only a minor portion of total 2013 sales volumes forecast.

President and chief executive officer Jos De Smedt said CanAm was very excited about the company's positioning for 2013.

“We anticipate sales volume growth of at least 50% and, depending on when our new mines reach full production, we have the potential to as much as double production over 2012,” he said.

“As well, substantially all of this production is sold at premium pricing because of the high quality of our coal and the markets we serve.

"With our three new mines now open, or close to open, an excellent customer base and an almost fully contracted sales position through 2014, an updated equipment fleet and a high quality coal product, we are excited by our future prospects.”

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