Production delays cut into Grande Cache outlook

CANADIAN producer Grande Cache Coal has pointed to production delays in its Alberta coalfields as well as port congestion for a reduction in its whole-year sales volume outlook.
Production delays cut into Grande Cache outlook Production delays cut into Grande Cache outlook Production delays cut into Grande Cache outlook Production delays cut into Grande Cache outlook Production delays cut into Grande Cache outlook

A train leaving a GCC operation. Courtesy Grand Cache Coal.

Donna Schmidt

For the three-month period ended September 30, the company sold 440,000 tons, and 890,000t over the first half, compared with 360,000t and 870,000t for the same periods in the previous fiscal year.

During the second quarter, GCC began producing from its No. 8 surface operation, which officials said has not progressed positively thus far.

“Notwithstanding extensive testing and engineering completed during pit plan development, operating conditions thus far have proven to be more difficult than anticipated, resulting in lower than expected production levels as well as additional costs,” officials said.

The company is now revising its sales volume guidance for the 2011 fiscal year and now anticipates producing 1.7-1.9 million tonnes, down from the previous range of 2.0- 2.2Mt.

However, average sales price for the output is now expected to be on the rise, ranging between $C110-115/t versus the previous estimate of $105.

GCC said the adjustment was due primarily to increased mining costs for initial production phases at the No. 8 mine, along with reductions in expected sales volumes.

The producer held steady on its capital expenditure budget of $166 million for fiscal 2011.

"Unfortunately the delay in realizing increased production volumes from No. 8 pit will have a negative impact on our total production for fiscal 2011; however it is not expected to affect our anticipated production volumes for fiscal 2012 or our ability to achieve our annual production goal of 3.5 million tonnes in fiscal 2013," GCC president Robert Stan said.

"The market outlook for metallurgical coal continues to remain strong and we are well positioned to take advantage of that market with a strong balance sheet, a new fleet of equipment and the resources necessary to deliver on our company's growth plans."

loader