The company said production will be slashed for the next six months from its current annual output rate of 1.3 million tonnes.
Some of its shipments scheduled for delivery by March 31 will be deferred into the 2010 fiscal year.
“The uncertainty in the market is also having a negative impact on the corporation's contract negotiations for the upcoming coal year beginning April 1,” officials noted.
“The global slowdown is expected to reduce the amount of coal the corporation's customers will require under new contracts, at least in the initial months of fiscal 2010.”
Grand Cache said it will review levels on an ongoing basis as its fiscal 2010 contracts are negotiated. In the meantime, it will place focus on its operations where production costs can be minimised and the greatest cash flow level can be realised based on next fiscal year’s prices.
“The continued uncertainty in the marketplace and further indications of lower demand for coal has led us to our decision to reduce production in the short term,” company president Robert Stan said.
“It is unfortunate that these measures have to be taken, however they are necessary and prudent, and will allow us to preserve capital and better position the corporation to weather the current downturn and succeed in the next recovery.”
According to the producer’s financial statements, it had a cash balance of $US88 million and no debt as of the last day of 2008.
Grande Cache hold coal leases encompassing more than 22,000 hectares in the Smoky River coalfield of west-central Alberta.