Forbes & Manhattan Coal Corp.
TSX : FMC
JSE : FMC

Forbes & Manhattan Coal Corp.

July 16, 2012 17:30 ET

Forbes Coal Reports an Increase in First Quarter Revenue of 12% and Increase in Consolidated EBITDA of 64%

TORONTO, ONTARIO--(Marketwire - July 16, 2012) - Forbes & Manhattan Coal Corp. (TSX:FMC)(JSE:FMC) ("Forbes Coal" or the "Company") is pleased to announce its financial results for the first quarter of fiscal 2013 ("Q1 2013") (three month period ending May 31, 2012) All figures are in Canadian dollars unless specified.

First Quarter 2013 Financial Highlights:

First Quarter 2013 Fourth Quarter 2012
(March-May 2012) (December 2010-February 2011)
Revenue $20.8 million $18.5 million
Gross profit $1.81 million $0.84 million
Consolidated EBITDA (see non-IFRS measures) $2.45 million $1.54 million
Forbes Coal Dundee Stand Alone EBITDA (see non-IFRS measures) $3.15 million $2.91 million
Cash and cash equivalents $8.1 million $9.5 million

"I am pleased to report that Forbes Coal continues to grow production, revenue, and profit in the current difficult global coal environment. Our balance sheet is also strong with more than sufficient working capital to meet all of our organic growth objectives", commented Stephan Theron, President and Chief Executive Officer.

Operational Highlights

Strong operations continue to support the financial position of the Company, with continued increased production at both Magdalena and Aviemore. At Aviemore in particular, production levels indicate record run of mine and saleable tons, and domestic and export demand for Forbes Coal's anthracite product remains strong.

Operational highlights include:

  • Forbes Coal produced record tonnage in May 2012 of 148,000 tonnes ROM and total ROM production for Q1 2013 increased 28% quarter-over-quarter
  • Total saleable production for Q1 2013 increased 24% quarter-over-quarter (excluding purchased coal)
  • Aviemore Q1 2013 ROM production increased 41% quarter-over-quarter and Aviemore Q1 2013 saleable production increased 49% quarter-over-quarter
  • Total sales for Q1 2013 increased 7% quarter-over-quarter driven by a 21% increase in domestic sales for that period

ROM Production

  • Total ROM production from all operations for Q1 2013 was 387,075 tonnes, a 28% increase compared to 303,029 tonnes produced in Q4 2012.
  • ROM production from Magdalena operations, underground and open pit combined, for Q1 2013 was 262,416 tonnes, a 22% increase compared to 214,788 tonnes produced in Q4 2012. The extension of the life of mine of the opencast operations is currently under review.
  • ROM production from Aviemore operations for Q1 2013 was 124,659 tonnes, a 41% increase compared to 88,241 tonnes produced in Q4 2012. Aviemore introduced a second shift in section two in February 2012.

Saleable Production and Sales

  • Saleable coal production for Q1 2013 was 245,675 tonnes, a 10% increase compared to 223,901 saleable tonnes in Q4 2012.
  • Saleable coal bought in for Q1 2013 was 1,070 tonnes, compared to 26,864 tonnes for Q4 2012.
  • The total calculated yield from plant feed was 64.7% for Q1 2013, compared to 63.5% for Q4 2012.
  • Total sales of bituminous coal and anthracite products for Q1 2013 were 234,997 tonnes, a 7% increase compared to 219,889 tonnes sold in Q4 2012.
  • The majority of product sold to local and overseas markets continues to be thermal coal with domestic sales slightly higher than export sales for Q1 2013.
  • Export sales for Q1 2013 were 96,625 tonnes, a 9% decrease compared to 105,972 tonnes sold in Q4 2012. Domestic sales in Q1 2013 were 138,372 tonnes, a 21% increase compared to 113,917 tonnes sold in Q4 2012.

Full Financial Statements and Management Discussion and Analysis Report will be available under the company profile at www.sedar.com or at www.forbescoal.com.

SUMMARIZED FINANCIAL RESULTS OF FORBES COAL DUNDEE

Three months ended
February 29, 2012 May 31, 2012 May 31, 2011
Run of Mine (ROM) (t) 303,029 387,075 311,002
Run of Mine (ROM) coal purchased (t) 10,685 1,569 -
Saleable production (t) 204,310 244,605 207,189
Saleable coal purchased (t) 19,591 1,070 -
Plant feed (t) 321,502 379,920 303,069
Yield (%) on ROM 65.1% 62.9% 66.6%
Yield (%) on plant feed 63.5% 64.7% 68.4%
Inventory tonnes balance open 82,425 41,109 189,778
Inventory tonnes balance close 41,109 73,144 204,396
Sales (t) 219,889 234,997 190,827
Revenue 000,000's (CAD) 18.5 20.8 19.6
EBITDA 000,000's (CAD) 2.9 3.1 6.2
CAD:USD (average) 1.01 1.00 0.97
ZAR:CAD (average) 7.86 7.87 7.06
Selling price (average) / sold production tonnes (CAD) 84.11 88.51 102.71
Selling price (average) / sold production tonnes (USD) 83.19 88.60 106.12
Cash cost of sales and operating expenses 000,000's (CAD) 14.0 16.2 12.5
Cash cost of sales and operating expenses / sold production tonnes (CAD) 63.71 68.86 65.47
Cash cost of sales and operating expenses / sold production tonnes (USD) 63.01 68.92 67.64
Capital expenditures 000,000's (CAD) 2.95 1.95 1.67
Capital expenditures per t of saleable production (CAD) 14.46 7.98 8.06

NON-IFRS PERFORMANCE MEASURES

The Company has included in this document certain non-IFRS performance measures that are detailed below. These non-IFRS performance measures do not have any standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other companies. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate the Company's performance. Accordingly, they are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared with IFRS. The definition for these performance measure and reconciliation of the non-IFRS measure to reported IFRS measures are as follows:

EBITDA - Forbes Coal Consolidated
Three months ended Three months ended Three months ended
February 29, 2012 May 31, 2012 May 31, 2011
$000's $000's $000's
Net income (loss) for the period add back 1,193 (1,590 ) (1,005 )
Amortization and depletion 3,428 2,807 2,928
Income tax (recovery) expense (1,704 ) 278 878
Foreign exchange (gain) 578 (12 ) 308
Interest and dividend income (105 ) 582 312
Change in estimates on contingent acquisition liability (545 ) - -
Accretion (1,856 ) - 537
Business combination transaction costs - - 19
Stock based compensation 590 18 1,840
Loss on share-based payments (26 ) - -
Unrealized (gain) on marked-to-market securities (15 ) 368 -
EBITDA Forbes Coal Consolidated 1,538 2,451 5,817
EBITDA - Forbes Coal Dundee Stand Alone
Three months ended Three months ended Three months ended
February 29, 2012 May 31, 2012 May 31, 2011
$000's $000's $000's
Net income (loss) for the period add back 1,193 (1,590 ) (1,005 )
Amortization and depletion 3,428 2,807 2,928
Income tax (recovery) expense (1,704 ) 278 878
Foreign exchange (gain) 578 (12 ) 308
Interest and dividend income (105 ) 582 312
Change in estimates on contingent acquisition liability (545 ) - -
Accretion (1,856 ) - 537
Business combination transaction costs - - 19
Mineral properties investigation costs (Non-Slater) 127 7 -
Stock based compensation 590 18 1,840
Loss on share-based payments (26 ) - -
Unrealized loss (gain) on marked-to-market securities (15 ) 368 -
General and administration (Non Slater) 1,240 690 432
EBITDA Forbes Coal Dundee 2,905 3,148 6,249

About Forbes Coal

Forbes Coal is a growing coal producer in southern Africa. It holds a majority interest in two operating mines through its 100% interest in Forbes Coal (Pty) Ltd., a South African company ("Forbes Coal Dundee") which has a 70% interest in Zinoju Coal (Pty) Ltd. ("Zinoju"). Zinoju holds a 100% interest in the Magdalena bituminous mine and the Aviemore anthracite mine in South Africa (collectively, "the Forbes Coal Dundee Properties"). The mines have a substantial resource base and each mine has a projected life span in excess of 20 years. Forbes Coal is in the process of increasing production at both mines using existing infrastructure and capacity. The Company has in-place transportation infrastructure allowing its coal to reach both export corridors and the growing domestic coal market. Forbes Coal has a strong balance sheet and an experienced coal-focused management team.

Please refer to the Company's NI 43-101 compliant technical report on the Slater Properties dated March 1, 2011 entitled "Technical Report on Slater Coal and Subsidiaries, KwaZulu-Natal Province, South Africa", available on the SEDAR profile of the Company at www.sedar.com. Additional information is available at www.forbescoal.com.

Cautionary Notes:

Johan Odendaal, B.Sc.(Geol.), B.Sc.(Hons)(Min. Econ.), M.Sc. (Min. Eng.), a director of Minxcon and an independent Qualified Person, as defined in National Instrument 43-101 has reviewed and approved the scientific and technical information contained in this release.

The ability of the Company to increase production amounts has not been the subject of a feasibility study and there is no certainty that the proposed expansion will be economically feasible.

This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements with respect to the anticipated production results with respect to the Forbes Coal Dundee Properties, future financial or operating performance of the Company and its projects, statements regarding the anticipated improvements in logistical support and anticipated improvements in sales, statements made with respect to prospects for the business of the Company, requirements for additional capital, government regulation of the mineral exploration industry, environmental risks, acquisition of mining licences, title disputes or claims, limitations of insurance coverage and the timing and possible outcome of pending litigation and regulatory matters. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", " anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including but not limited to: general business, economic, competitive, foreign operations, political and social uncertainties; a history of operating losses; delay or failure to receive board or regulatory approvals; timing and availability of external financing on acceptable terms; not realizing on the potential benefits of the proposed transaction; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of mineral products; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; and, delays in obtaining governmental approvals or required financing or in the completion of activities. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

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