NCC has another tough quarter

APPALACHIAN producer National Coal Corporation has suffered a net loss of $US7.9 million in the first quarter, an improvement on its $10.1 million loss in the same period last year, partly due to a 25% increase in coal prices.
NCC has another tough quarter NCC has another tough quarter NCC has another tough quarter NCC has another tough quarter NCC has another tough quarter

National Coal's Baldwin Preparation Plant, located in Devonia, TN.

Blair Price

NCC had a first quarter revenue of $35.1 million, not far off the $35.7 million yielded in the March quarter last year.

Production was 380,000 tonnes, 21.4% down from the 2008 first quarter, but the Tennessee-based company achieved an average sales price of $72.68 per ton, far eclipsing the $52.96/t received last year.

In a conference call, NCC president and chief executive officer Daniel Roling said the company realised higher prices after finishing the majority of its 2008 coal deliveries.

He said the company fell behind last year due to production problems addressed at year-end, including a dragline that was down in Alabama.

However, NCC has locked in 1.9 million tons for the full year at an average price of $76.01/t and another 300,000t for the 2010 calendar year at an average of $77.70/t.

Roling said the first quarter was difficult, affected by the closure of two mines and then moving into new mines in Tennessee and Alabama, which were up and running by the end of March.

“However, our production levels have increased since March and are on track to achieve anticipated levels,” he said.

Given the relocation of operations, NCC estimates its capital expenditure for 2009 to be in the range of $13-16 million, while for the first quarter the company has spent about $4.1 million in equipment and mine development.

For the rest of the year the company is also planning to finance $5.9 million of capital expenditure to replace mining equipment and to incur an additional $3.6 million to maintain existing assets.

On April 9, NCC executed an agreement with Next View Partners for a credit facility of $10 million, using the producer’s assets as collateral.

NCC said the facility was to be used for general corporate purposes and had an annual interest rate of 13% for amounts outstanding up to $5 million and a rate of 15% for amounts above that level.

About 20.8% of NCC’s production for the quarter was from underground mining, with the rest from surface and highwall operations.

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