Western raises outlook on huge production jump

CANADIAN producer Western Coal has upped its production guidance for the 2011 fiscal year on news of a 90% spike in second-quarter coal production.
Western raises outlook on huge production jump Western raises outlook on huge production jump Western raises outlook on huge production jump Western raises outlook on huge production jump Western raises outlook on huge production jump

Western Coal president Keith Calder.Courtesy of Western Coal.

Donna Schmidt

For the quarter ended September 30, the company’s output totaled 1.5 million tonnes, a 90% jump over 805,000t in the September quarter 2009.

As a result, Western’s adjusted outlook for the 2011 fiscal year, which will end on March 31, is now 6.1Mt, versus an initial estimate of 6Mt.

The new target is an increase of about 91% over 3.2Mt of actual production recorded in fiscal year 2010.

Company president Keith Calder said the 1.5Mt of production during the second quarter represents a new quarterly record for Western.

“Our strong performance so far, which will be further bolstered with the addition of new equipment just arriving at our mines, gives us confidence that we can achieve our new and higher volume target for the year, and that our delivery plan is working," he said.

He said the producer is especially fortunate that its British Columbian metallurgical coal mines are so close to the province’s Ridley Terminals in Prince Rupert, the closest port in North America to Asia. It is also the only major port in the word with excess capacity.

“Our partners Ridley Terminals and CN Rail are helping us to satisfy the growing demand for our metallurgical coal products in Asia," he said.

Western officials said last month that it was optimistic for the company’s current fiscal year performance, and was on track to meet its 6Mtpa goal after record production in the first quarter as well.

“Market fundamentals for metallurgical coal remain strong, both in the short and medium-term, and the company expects a continued growth in the global demand for its products during this period,” he said during Western’s annual general and special meeting.

With a comprehensive evaluation of all Western assets, the company said it was considering numerous opportunities outside North America which could further increase resources and provide it access to emerging markets.

Western chief financial officer Braam Jonker also looked ahead, confirming that the producer continues to deliver against its stated targets for the year while supporting cash flow through higher sales and lower costs.

“The company remains confident that it should be able to implement its organic growth target of producing 10Mt of coal per annum by 2013 without having to revert to the markets for financial support,” he said at the time.

The operator is continuing on a notable growth path; in August it announced it had closed a $C35.6 million acquisition of Welsh operators Energybuild. That deal was initially announced in June.

Vancouver-based Western Coal produces metallurgical coal from mines in northeast British Columbia, Canada, met and thermal output from mines in West Virginia and high quality anthracite and met product in South Wales, United Kingdom.

It also holds a 24% interest in Mandalay Resources, a 40% interest in Xtract Energy and a 20% interest in NEMI Northern Energy & Mining.