Grande Cache cuts sales guidance

CANADIAN producer Grande Cache Coal is citing “more challenging than anticipated” mining conditions for its move to reduce coal sales estimates for the 2012 fiscal year.
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Courtesy Grande Cache Coal

Donna Schmidt

The company now expects to sell 2.2-2.4 million tonnes, down from an initial estimate of 2.4-2.6Mt. The average cost of sales is projected to range between $C125/t and $130/t.

The price range is steady versus its sales performance in fiscal 2011, when GCC sold 1.55Mt.

The company has already seen disappointment in the first quarter ended March 31 as sales fell from 430,000t to 370,000t. The average sales price in the period was $192/t, with metallurgical coal making up 93% of sales.

Despite the decision, GCC chief executive Robert Stan said a turnaround in the metallurgical markets was already happening.

"The outlook … over the next several years continues to be strong with record high commodity prices expected in the quarter commencing April 1, 2011," he said.

"We have substantially completed the initial development of the new No. 8 pit and have acquired the major pieces of equipment necessary to complete our expansion program. We are in the initial stages of production in this pit with three separate truck and shovel fleets operating concurrently and expect to be able to gradually increase our annual production rate up to our target of 3.5 million tonnes by the end of fiscal 2013."

In the short term, the producer has set its capital expenditures budget for fiscal 2012 at about $80 million, including expected developments at both its surface and underground mining operations as well as upgrades and refurbishments to its process plant and employee housing projects.

Projects

The producer also gave an update on its operations, including the commissioning of a new P&H 2800 electric shovel at the No. 8 pit. The shovel went into service in late March and has been matched up with a fleet of Komatsu 830E haul trucks previously purchased.

Additionally, GCC is cooperating with regulatory bodies, which are reviewing an application for the new No. 12 South B2 underground operation. That documentation was submitted in November 2009.

“All of the supplemental information requests received to date have been responded to and the corporation expects to receive the necessary approvals that will allow it to commence mining operations in the new underground mine before the end of the calendar year,” GCC said.

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