Wolverine, Brule to stay alive

WESTERN Canadian Coal says near record-high sales contract prices will keep its arterial Wolverine and Brule mines operating despite the economic crisis.
Wolverine, Brule to stay alive Wolverine, Brule to stay alive Wolverine, Brule to stay alive Wolverine, Brule to stay alive Wolverine, Brule to stay alive

Courtesy Western Canadian Coal Corp

Donna Schmidt

"Despite the significant curtailments taken by our customers during the current economic environment, we are pleased to achieve coal sale prices that are the second highest on record, which speaks well to the quality of our coal and the service we provide our customers,” company president John Hogg said.

 

WCC has outlined plans for 1.7 million tons of metallurgical coal to be produced – at the rate of 1.2Mt hard coking at Wolverine and 500,000t of low-volatility pulverised coal injection coal at Brule – and has allowed itself flexibility to adjust production budgets for changes in demand.

 

Its Willow Creek mine is still in a “care and maintenance” phase, the company noted.

 

WCC’s shipping expectations total 2Mt, consisting of about 1.2Mt of hard coking coal and 800,000t of ultra low-volatility PCI, at average realised prices in the range of $US120-125/t.

 

Forward sales contracts reflect even better news, coming in at $US175 million (at a rate of $C1.21 per US dollar) with monthly maturity dates between now and next April.

 

WCC will be able to shave some money off its expenses in the new fiscal year, first when it replaces the mining contractor at Wolverine with company employees on May 19.

 

Additionally, it said it had removed “considerable” waste rock at the mine this fiscal year to provide an expected average stripping ratio of 12:1 in fiscal 2010, providing for an additional fiscal advantage.

 

WCC will limit capital expenditures in the new fiscal period to $C3-4 million, aided by its existing cost-control efforts and cash preservation plan. “The mines are in good condition and do not require extensive capital at this point,” the company said.

 

Hogg said the coming year looked positive, particularly since the Wolverine waste rock had been removed, which had helped lower the mine’s cost structure.

 

"While there is still uncertainty in the markets, we believe demand for high-quality metallurgical coal may improve as the year progresses,” he said.

 

“Therefore, we will remain flexible to match production with demand conditions."

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