Grande Cache Coal Corporation
TSX : GCE

Grande Cache Coal Corporation

February 09, 2011 08:00 ET

Grande Cache Coal Corporation Announces Third Quarter Fiscal 2011 Financial and Operating Results

CALGARY, ALBERTA--(Marketwire - Feb. 9, 2011) - Grande Cache Coal Corporation (TSX:GCE) ("Grande Cache Coal" or the "Corporation") today announced its financial and operating results for the three and nine months ended December 31, 2010. The Corporation's unaudited consolidated financial statements and related management's discussion and analysis for its quarter ended December 31, 2010 are available at www.sedar.com and the Corporation's website at www.gccoal.com.

  • During the third quarter, the Corporation earned net income of $4.5 million, or $0.05 per basic share, compared to net income of $4.3 million, or $0.04 per basic share, in the same period last fiscal year. Year to date net income for the first nine months of fiscal 2011 was $22.6 million ($0.23 per basic share), up from $18.7 million ($0.19 per basic share) in the comparable period last year.

  • Coal sales during the quarter were 0.29 million tonnes, down from 0.47 million tonnes in the third quarter last fiscal year. Coal sales are being impacted by lower than expected production from the new No. 8 surface pit, which is continuing to be developed and is in the early stages of coal production. For the first nine months of the current fiscal year, coal sales were 1.18 million tonnes, compared to 1.34 million tonnes during the nine months ended December 31, 2009.

  • Revenue earned during the third quarter was $50.6 million, compared to $62.4 million in the same period last year. The reduction was primarily a result of lower sales volumes, partially offset by an increase in the selling price of coal. The average sales price for all of the Corporation's coal products during the third quarter was $174 per tonne, representing a 30% increase over $134 per tonne in the same period last fiscal year. Metallurgical coal sales accounted for 86% of the third quarter sales volumes and realized an average price of $191 per tonne (US$189 per tonne). Revenue for the first nine months of fiscal 2011 was $200.8 million ($170 per tonne), compared to $181.8 million ($136 per tonne) in the first nine months of fiscal 2010. The higher prices being achieved in the current year are a reflection of increased contract price settlements over the previous year.

  • During the third quarter, the Corporation continued work on the development and operation of the various phases of production within No. 8 pit. Mining continued to prove challenging due to operating and geological conditions in the initial phases of mining, which resulted in lower than anticipated raw coal release. Clean coal production during the third quarter was 0.32 million tonnes, compared to 0.42 million tonnes in the third quarter of fiscal 2010.

  • Cost of sales in the third quarter was $38.9 million ($134 per tonne), compared to $49.5 million ($106 per tonne) in the same period last year. The increase in the unit cost of sales was largely a result of lower sales volumes, due to lower coal production, and an increase in mining costs, particularly higher external contractor service costs and an increase in maintenance and repair costs. The unit cost of sales for the first nine months of fiscal 2011 was $122 per tonne, compared to $102 per tonne in the first nine months of fiscal 2010.

  • Grande Cache Coal anticipates its average metallurgical coal sales price for the fourth quarter will be in the range of US$185 to US$195 per tonne, which includes lower priced carryover tonnage.

  • As announced in January 2011, the Corporation reduced its anticipated sales volumes for fiscal 2011 to 1.5 to 1.6 million tonnes. The decrease was primarily due to lower than expected production from the first and second phases of No. 8 pit and delays in commencing production from the third phase of operations in No. 8 pit. In addition, the timing of shipments in the fourth quarter could be impacted by possible shipping delays at Westshore Terminals in Vancouver, B.C., where the majority of the Corporation's shipping takes place.

  • In January 2011, the Corporation announced an increase to its projected average cost of sales for fiscal 2011 to approximately $125 to $130 per tonne. The increase is primarily due to lower production volumes and increased mining costs in the initial stages of production in No. 8 pit. Operating costs are also being impacted by a lack of available skilled labour, as the demand for manpower increases in the mining and resource sector.

  • Please refer to the Outlook section below for additional forward-looking information.

"The majority of the initial development work in No. 8 pit is expected to be completed by the end of the current fiscal year ending March 31, 2011" said Robert Stan, President and Chief Executive Officer. "This will allow us to focus on increasing production over the next two years through the utilization of three separate truck and shovel fleets operating concurrently in No. 8 pit. All of the major equipment required for our strategic expansion plan has now been delivered and we continue to implement our strategy to increase our annual clean coal production to a rate of 3.5 million tonnes by the end of fiscal 2013."

Financial Overview

(millions of dollars) As at
December 31
2010
As at
March 31
2010
Balance Sheet    
  Cash and cash equivalents 40.5 87.4
  Total assets 411.0 337.7
  Long-term liabilities 95.5 54.4
  Shareholders' equity 277.5 250.8
  Three months ended
December 31
Nine months ended
December 31
(millions of dollars, except per share amounts) 2010 2009 2010 2009
Statement of Net Income and Comprehensive Income        
  Revenue 50.6 62.4 200.8 181.8
  Cost of sales 38.9 49.5 145.0 136.3
  Income from operations 3.9 5.5 29.1 25.7
  Net income and comprehensive income 4.5 4.3 22.6 18.7
  Basic net income per share 0.05 0.04 0.23 0.19
  Diluted net income per share 0.05 0.04 0.23 0.19
  Three months ended
December 31
Nine months ended
December 31
(millions of tonnes, except per tonne amounts) 2010 2009 2010 2009
Statistics        
  Clean coal production (tonnes) 0.32 0.42 1.02 1.19
  Coal sales (tonnes) 0.29 0.47 1.18 1.34
  Average sales price (US$/tonne) 179 131 167 128
  Average sales price (CDN$/tonne) 174 134 170 136
  Cost of product sold ($/tonne) 113 76 97 74
  Distribution costs ($/tonne) 21 30 25 28
  Cost of sales ($/tonne) 134 106 122 102

Revenue

The Corporation's third quarter revenue was $50.6 million, compared to $62.4 million in the same period last year. The decrease in revenue was mainly due to a decrease in sales volumes from 0.47 million in the third quarter of fiscal 2010, to 0.29 million tonnes in the current quarter of fiscal 2011. For the current fiscal year to date, revenue was $200.8 million, up from $181.8 million in the first nine months of fiscal 2010, reflecting higher coal prices in the current year. Coal sales for the current fiscal year to date were 1.18 million tonnes, down from 1.34 million tonnes in the comparable period, which was largely a result of lower production volumes.

The average sales price in the third quarter was $174 per tonne, up from $134 per tonne in the comparable period. Metallurgical coal sales accounted for 86% of the third quarter sales volumes and realized an average price of $191 per tonne (US$189 per tonne). The remaining sales volume related to thermal coal sales, some of which were sold in US dollars. For the current fiscal year to date, the average selling price was $170 per tonne, a 25% increase over $136 per tonne in the same period last fiscal year. The higher price during the current fiscal year reflects an increase in contract price settlements, which are primarily being negotiated on a quarterly basis, offset by a portion of lower priced thermal coal and lower priced carryover tonnage from fiscal 2010. The average Canadian dollar sales price on US dollar denominated sales is continuing to be negatively affected by a stronger Canadian dollar in relation to the US dollar, as the average exchange rate was 1.03 during the first nine months of fiscal 2011, compared to 1.12 in the same period last year.

Cost of Sales

Cost of sales was $38.9 million, or $134 per tonne, in the current quarter compared to $49.5 million, or $106 per tonne, in the same period last year. The cost of sales in the third quarter consisted of cost of product sold of $32.7 million ($113 per tonne) and distribution costs of $6.2 million ($21 per tonne). In the comparable quarter of fiscal 2010, the cost of product sold was $35.3 million ($76 per tonne) and distribution costs were $14.2 million ($30 per tonne).

The unit cost of product sold continues to be affected by lower than expected production volumes, due to challenging operating and geological conditions in the initial phases of mining in No. 8 pit. Operating costs are also being impacted by a lack of available skilled labour as the demand for manpower increases in the mining and resource sector, causing an increase in contractor services. The initial coal mined from No. 8 pit has been realizing a low plant yield due to the quality and characteristics of coal that is close to the surface, further affecting clean coal production levels. The distribution unit cost was lower during the third quarter of fiscal 2011 due to a portion of the sales volumes being sold from the mine site, whereby the customer incurred the rail and port costs.

Cost of sales for the fiscal year to date was $145.0 million, or $122 per tonne, compared to $136.3 million, or $102 per tonne in the first nine months of last year. Included in the current year was cost of product sold of $114.9 million ($97 per tonne) and distribution costs of $30.2 million ($25 per tonne). In the comparable period of fiscal 2010, the cost of product sold was $98.4 million ($74 per tonne) and distribution costs were $37.9 million ($28 per tonne).

The unit cost of product sold during the first nine months of fiscal 2011 was impacted by the transition in surface mining areas from No. 12B2 pit to No. 8 pit, as well as difficult operating conditions in the initial development and operations of No. 8 pit. The initial strip ratio in No. 8 pit has been higher than the strip ratio from No. 12B2 pit during fiscal 2010. As a result, the unit cost of product sold increased from fiscal 2010 as additional waste movement was required to release the raw coal. In addition, there were higher external contract service costs and higher maintenance and repair costs, resulting from an enhanced preventative maintenance program.

Other Operating Expenses

General and administrative expenses were $2.9 million during the third quarter, down from $3.1 million in the same period last year. General and administrative expenses included head office administrative and marketing charges of $2.0 million (fiscal 2010 - $1.8 million) and non-cash charges for stock-based compensation of $0.9 million (fiscal 2010 - $0.3 million). Also included in general and administrative expenses during the third quarter of fiscal 2010, was a $1.0 million donation to the town of Grande Cache to assist in redeveloping the local recreation centre. Fiscal year to date general and administrative expenses were $8.3 million, compared to $7.3 million in the first nine months of last fiscal year.

Depreciation, depletion and accretion charges were $4.8 million in the third quarter (fiscal 2010 – $4.4 million) and $18.4 million in the nine month period of the current fiscal year to date (fiscal 2010 - $12.5 million). The increase was primarily a result of additional capital assets, the change in value of depreciation and depletion included in coal inventory, and a one time depletion expense during the first quarter to charge remaining No. 12B2 pit development costs to income.

Other Income (Expenses)

The Corporation had a foreign exchange gain of $1.6 million in both the third quarter of fiscal 2011 and fiscal 2010. For the current fiscal year to date, the Corporation had a foreign exchange gain of $4.2 million, versus a $2.9 million loss in the first nine months of the prior fiscal year. The loss in fiscal 2010 was primarily the result of a significant strengthening of the Canadian dollar against the US dollar.

During the third quarter the Corporation recorded an unrealized foreign exchange gain of $1.6 million relating to foreign exchange forward contracts, compared to a loss $0.3 million in the same period of fiscal 2010. For the fiscal year to date, foreign exchange forward contracts have resulted in a gain of $0.3 million compared to a $2.7 million gain in the same period last year.

Interest and other income was $0.2 million in the third quarter (fiscal 2010 - $0.1 million) and $0.3 million for the fiscal year to date (fiscal 2010 - $0.3 million) and consisted primarily of interest earned on restricted cash, interest earned on short term investments and access fees charged for the use of roads and bridges belonging to the Corporation. Interest and other expenses were $0.6 million in the third quarter (fiscal 2010 - $0.4 million) and $1.3 million for the fiscal year to date (fiscal 2010 - $0.4 million). Interest and other expenses consisted primarily of interest paid on capital leases.

Taxes

The third quarter tax expense was $2.2 million, including a current tax expense of $0.4 million for provincial Crown royalties and a future income tax expense of $1.8 million. During fiscal 2010, the Corporation incurred a third quarter tax expense of $2.2 million, which included a current tax expense of $0.5 million for provincial Crown royalties and a future income tax expense of $1.7 million.

Liquidity and Capital Resources

Grande Cache Coal held cash and cash equivalents of $40.5 million at December 31, 2010. During the third quarter cash and cash equivalents decreased by $14.4 million in comparison to an increase of $20.4 million during the same period last fiscal year. The Corporation's cash position has decreased by $46.9 million during the first nine months of fiscal 2011.

Operating activities during the third quarter generated $15.7 million in cash compared to $22.5 million in the same period last year. Cash generated prior to changes in non-cash working capital was $9.5 million in the current quarter and $10.7 million during the comparable period. During the first nine months of the fiscal year, cash generated by operating activities before changes in non-cash working capital was $49.9 million, an increase from $38.0 million last year. Higher coal prices in the current fiscal year have resulted in higher net income, contributing to the higher cash generation from operating activities.

Financing activities resulted in a cash decrease of $2.8 million during the current quarter and $12.4 million for the year to date, in contrast to a cash increase of $6.6 million and $4.5 million in the comparable periods of last fiscal year. Fiscal 2011 payments towards capital lease obligations were $4.2 million in the third quarter and $14.4 million for the fiscal year to date. In the third quarter of fiscal 2010, the Corporation entered into a sale leaseback agreement for a Hitachi EX5500 hydraulic excavator that had been purchased during the second quarter of fiscal 2010, resulting in cash proceeds of $10.7 million. Also included in fiscal 2011 financing activities were cash proceeds of $1.5 million during the third quarter (fiscal 2010 - $0.2 million) and $2.0 million for the year to date (fiscal 2010 - $0.5 million), due to the exercise of share options.

Investing activities during the third quarter led to a cash decrease of $26.0 million, compared to $9.0 million in the same period of fiscal 2010. Capital additions accounted for $26.9 million (fiscal 2010 - $5.4 million) and consisted of the additions to buildings and equipment of $10.9 million (fiscal 2010 - $4.2 million) and the development of mineral properties for $16.0 million (fiscal 2010 - $1.2 million). In the first nine months of fiscal 2011, investing activities resulted in a cash decrease of $79.0 million, compared to $38.3 million in fiscal 2010, the majority of which was due to capital expenditures. Fiscal year to date buildings and equipment additions were $42.4 million while development of mineral properties was $37.4 million, the majority of which related to the development of No. 8 pit.

During the first nine months of fiscal 2011 the Corporation acquired mining equipment through capital lease agreements amounting to US$51.5 million, US$25.9 million of which were acquired during the third quarter. As at December 31, 2010, the Corporation had made deposits of US$11.2 million, and had remaining purchase commitments of US$3.7 million and $2.2 million, on mining equipment that will be financed through capital lease arrangements. Subsequent to December 31, 2010, the Corporation made deposit payments of US$3.0 million and $0.8 million towards mining equipment that will be financed through a capital lease arrangement, at which time all cash deposits will be returned to the Corporation.

Grande Cache Coal has an agreement with HSBC Bank Canada to provide the Corporation with a credit facility up to $28 million and the ability to enter into foreign exchange hedging arrangements. At December 31, 2010, the Corporation had a series of foreign exchange forward contracts to sell a total of US$24 million and US$32 million at an average rate of 1.05 and 1.06, respectively. These contracts settle in monthly installments, the last of which will mature by July 2011.

The Corporation believes that its existing cash, cash flow from operations and its operating credit facility will be sufficient to fund ongoing fiscal 2011 working capital requirements. The Corporation expects that capital expenditures during fiscal 2011 will be funded by existing cash, cash flow from operations and equipment leases.

Grande Cache Coal expects that coal inventory and coal production will be sufficient to meet anticipated coal sales volumes for fiscal 2011. At December 31, 2010, the Corporation had $23.2 million in coal inventory, compared to $13.8 million at September 30, 2010.

The Corporation did not have any off-balance sheet financing structures in place at December 31, 2010. At December 31, 2010, the Corporation had long term liabilities for asset retirement obligations with a present value of $12.1 million, future income tax liabilities of $25.3 million and capital lease obligations of $58.0 million. Grande Cache Coal's asset retirement obligations are covered by letters of credit totaling $12.7 million provided to the Alberta Government, which are presently secured by restricted cash.

In order to ensure the continued availability of, and access to, facilities and services to meet operational requirements, the Corporation has entered into multi-year agreements for the lease of coal properties, light vehicles, equipment, buildings and office space.

The Corporation has entered into various purchase commitments for mining equipment. At December 31, 2010, remaining payments owing on the mining equipment was approximately $5.9 million, which included US dollar commitments of US$3.7 million.

Future minimum undiscounted amounts payable by the Corporation under contracts existing at December 31, 2010, were:

(millions of Canadian dollars) Payments Due by Period

Contractual Obligations

Total
Less than 1 year 2-3
years
4-5
years
After
5 years
Operating Leases 3.5 0.8 1.4 0.9 0.4
Capital Leases 81.8 16.7 36.3 23.4 5.4
Purchase Obligations 5.9 5.9 - - -
Total Contractual Obligations 91.2 23.4 37.7 24.3 5.8

Summary of Quarterly Results

  Fiscal
2011
Fiscal
2010
Fiscal 2009
(millions, except per unit amounts) Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4
Clean coal production (tonnes) 0.32 0.33 0.37 0.54 0.42 0.43 0.34 0.26
Coal sales (tonnes) 0.29 0.44 0.45 0.43 0.47 0.36 0.51 0.11
Average sales price (US$/tonne) 179 177 149
 120

 131

 120

 129
292
Average sales price (CDN$/tonne) 174 185 152 118 134 124 147 364
Cost of product sold ($/tonne)
113
98 86
66

76

57

84
72
Distribution costs ($/tonne) 21 27 26 28 30 27 27 24
Cost of sales ($/tonne) 134 125 112 94 106 84 111 96
                 
Revenue ($) 50.6 81.2 69.0 50.7 62.4 44.8 74.6 38.7
Income from operations ($) 3.9 16.6 8.5 1.0 5.5 9.5 10.7 24.5
Net income ($) 4.5 14.1 4.0 1.4 4.3 9.3 5.1 18.9
Basic net income per share ($) 0.05 0.15 0.04 0.01 0.04 0.10 0.05 0.20
Diluted net income per share ($) 0.05 0.14 0.04 0.01 0.04 0.09 0.05 0.20

Clean coal production during fiscal 2011 has been lower than the last three quarters of fiscal 2010, largely due to the transition in the surface mining areas and lower than anticipated production from No. 8 surface pit. Sales volumes are being impacted by the production volumes, most significantly in the third quarter of fiscal 2011. The average US dollar sales price has been increasing in recent quarters reflecting an increase in contract price settlements compared to the preceding coal year when prices were negotiated during the global economic downturn. The average cost of sales has been increasing during fiscal 2011, largely due to the transition in the surface mining areas and challenging operating conditions in the initial phases of No. 8 pit, which has caused a reduction of clean coal production. Also contributing to the cost increase has been higher repair and maintenance costs and an increase in external contractor services.

Outlook

Late in the third quarter of fiscal 2011, Grande Cache Coal began producing coal from the second phase of development in the No. 8 surface pit. The first phase of No. 8 surface pit began producing coal during the second quarter of fiscal 2011. Both phases are in the early stages of production with ongoing development activities continuing to be necessary. As a result, production volumes are increasing gradually from these two phases of development. As expected, a relatively higher percentage of the production has been partially oxidized coal, which is sold as a thermal coal product. Lower production levels during the third quarter and year to date have impacted the sales volumes for these periods. Production levels from the first two phases are expected to increase in the fourth quarter of fiscal 2011 as development activities decrease, operations progress and the stripping ratios improve.

Development of the third phase of production in No. 8 surface pit will continue throughout the fourth quarter of fiscal 2011 with production expected to commence in the first quarter of fiscal 2012. Coal production from this phase of development has been delayed by slower than anticipated progress in the construction of access roads, which has resulted in lower than expected volumes of waste removal.

As a result of lower than expected production from each phase of No. 8 pit, in January 2011 the Corporation revised its fiscal 2011 sales volume guidance to a range of 1.5 to 1.6 million tonnes, down from the previous range of 1.7 to 1.9 million tonnes. Sales volumes are contingent upon achieving expected production levels from No. 8 pit and receiving adequate rail and port services. The timing of shipments in the fourth quarter could be impacted by possible shipping delays due to congestion at Westshore Terminals in Vancouver, B.C., where the majority of the Corporation's shipping takes place.

Industry benchmark pricing for the quarter beginning January 1, 2011 was settled at US$225 per tonne for the highest quality product. Grande Cache Coal anticipates its average metallurgical coal sales price for the fourth quarter will be in the range of US$185 to US$195 per tonne, which includes lower priced carryover tonnage.

As announced in January 2011, the average cost of sales for fiscal 2011 is now anticipated to be approximately $125 to $130 per tonne, up from the previous guidance of $110 to 115 per tonne. The increase is primarily due to lower production volumes and increased mining costs in the initial stages of production in No. 8 pit. Operating costs are also being impacted by a lack of available skilled labour as the demand for manpower increases in the mining and resource sector. Lower than expected production levels, lower than expected sales volumes or a further escalation of mining input costs would continue to have a negative impact on the projected cost of sales.

The Corporation anticipates that its sales volumes will be in the range of 2.4 to 2.6 million tonnes for fiscal 2012, as demand for metallurgical coal is expected to remain strong and production from No. 8 pit is expected to increase. Sales volumes are contingent upon the Corporation achieving expected production levels and being provided with adequate rail and port services.

The Corporation continues to anticipate capital additions of approximately $165 million during fiscal 2011, consistent with previous guidance. The Corporation anticipates that these capital expenditures will be funded by existing cash balances, cash flow from operations and equipment leases. Grande Cache Coal plans to increase its annual production rate to 3.5 million tonnes by the end of fiscal 2013.

Grande Cache Coal Corporation
Consolidated Balance Sheets
(thousands of Canadian dollars)
    As at
December 31
  As at
March 31
(unaudited)   2010   2010
         
Assets        
Current assets        
  Cash and cash equivalents $ 40,506 $ 87,436
  Restricted cash   12,908   13,499
  Accounts receivable   14,448   12,483
  Inventory   30,169   33,999
  Prepaid expenses and deposits   13,432   9,114
  Future income taxes   -   232
    111,463   156,763
Capital assets   299,531   180,935
  $ 410,994 $ 337,698
Liabilities        
Current liabilities        
  Accounts payable and accrued liabilities $ 24,247 $ 25,716
  Capital lease obligations   12,885   6,744
  Future income taxes   849   -
    37,981   32,460
Asset retirement obligations   12,079   8,801
Capital lease obligations   58,045   27,515
Future income taxes   25,342   18,102
    133,447   86,878
Shareholders' Equity        
Share capital   199,736   196,232
Contributed surplus   4,573   3,945
Retained earnings   73,238   50,643
    277,547   250,820
  $ 410,994 $ 337,698
Grande Cache Coal Corporation        
Consolidated Statements of Net Income, Comprehensive Income and Retained Earnings        
(thousands of Canadian dollars, except per share amounts)        
    Three months ended
December 31
  Nine months ended
December 31
(unaudited)   2010   2009   2010   2009
                 
Revenue $ 50,619 $ 62,388 $ 200,835 $ 181,766
Expenses                
  Cost of product sold   32,685   35,259   114,851   98,411
  Distribution   6,240   14,196   30,196   37,847
  General and administrative   2,936   3,096   8,297   7,344
  Depreciation, depletion and accretion   4,820   4,367   18,433   12,484
    46,681   56,918   171,777   156,086
Income from operations   3,938   5,470   29,058   25,680
Other income (expenses)                
  Foreign exchange gain (loss)   1,644   1,646   4,233   (2,934)
  Unrealized gain (loss) on foreign exchange forward
contracts
  1,588   (266)   255   2,739
  Interest and other income   184   89   347   319
  Interest and other expenses   (646)   (403)   (1,293)   (431)
Income before taxes   6,708   6,536   32,600   25,373
Taxes                
  Current tax expense   (415)   (484)   (1,684)   (1,451)
  Future income taxes expense   (1,768)   (1,736)   (8,321)   (5,234)
Net income and comprehensive income   4,525   4,316   22,595   18,688
                 
Retained earnings, beginning of period   68,713   44,908   50,643   30,536
Retained earnings, end of period $ 73,238 $ 49,224 $ 73,238 $ 49,224
Net income per share                
  Basic $ 0.05 $ 0.04 $ 0.23 $ 0.19
  Diluted $ 0.05 $ 0.04 $ 0.23 $ 0.19
Grande Cache Coal Corporation        
Consolidated Statements of Cash Flows        
(thousands of Canadian dollars)        
    Three months ended
December 31
  Nine months ended
December 31
(unaudited)   2010   2009   2010   2009
                 
Cash provided by (used for)

Operating activities
               
  Net income and comprehensive income $ 4,525 $ 4,316 $ 22,595 $ 18,688
  Items not affecting cash                
    Stock-based compensation   863   326   2,135   957
    Unrealized foreign exchange (gain) loss   (870)   (354)   (1,178)   3,378
    Unrealized (gain) loss on foreign exchange forward
contracts
  (1,588)   266   (255)   (2,739)
    Future income taxes   1,768   1,736   8,321   5,234
    Depreciation, depletion and accretion   4,820   4,367   18,433   12,484
  Settlement of asset retirement obligations   (48)   -   (129)   -
    9,470   10,657   49,922   38,002
  Net change in non-cash working capital relating to
 operating activities
  6,235   11,832   (4,645)   32,175
    15,705   22,489   45,277   70,177
Financing activities                
  Proceeds on exercise of options   1,457   171   1,997   517
  Payments on capital lease obligations   (4,210)   (4,294)   (14,423)   (6,696)
  Net proceeds from capital lease financing   -   10,729   -   10,729
    (2,753)   6,606   (12,426)   4,550
Investing activities                
  Additions to mineral properties and development   (16,017)   (1,181)   (37,439)   (2,821)
  Additions to buildings and equipment   (10,852)   (4,240)   (42,399)   (30,340)
  Restricted cash   591   (3,570)   591   (3,570)
  Net change in non-cash working capital relating to
 investing activities
  239   (23)   220   (1,552)
    (26,039)   (9,014)   (79,027)   (38,283)
Effect of foreign exchange on cash and cash equivalents   (1,285)   272   (754)   (4,008)
(Decrease) increase in cash and cash equivalents   (14,372)   20,353   (46,930)   32,436
Cash and cash equivalents, beginning of period   54,878   80,118   87,436   68,035
Cash and cash equivalents, end of period $ 40,506 $ 100,471 $ 40,506 $ 100,471

Grande Cache Coal is an Alberta based metallurgical coal mining company whose experienced team of coal professionals are managing a mine that produces metallurgical coal for the steel industry and holds coal leases covering over 22,000 hectares containing an estimated 235 million tonnes of coal resources in the Smoky River Coalfield located in west-central Alberta. Grande Cache Coal's common shares are listed on the Toronto Stock Exchange under the trading symbol "GCE".

Forward-Looking Statement Advisory

In the interest of providing Grande Cache Coal's shareholders and potential investors with information regarding Grande Cache Coal, including management's assessment of Grande Cache Coal's future plans and operations, certain statements in this news release are "forward-looking statements" within the meaning of applicable Canadian securities legislation. In some cases, forward-looking statements can be identified by terminology such as "anticipate", "believe", "continue", "could", "estimate", "expect", "forecast", "intend", "may", "objective", "ongoing", "outlook", "potential", "project", "plan", "should", "target", "would", "will" or similar words suggesting future outcomes, events or performance. The forward-looking statements contained in this news release speak only as of the date of this document and are expressly qualified by this cautionary statement.

Specifically, this news release contains forward-looking statements relating to: anticipated sales volumes of metallurgical coal in fiscal 2011 and fiscal 2012; anticipated cost of coal sales in fiscal 2011; anticipated capital expenditures in fiscal 2011 and subsequent fiscal years; anticipated development activities in No. 8 pit and the anticipated timing of such activities; and, anticipated increases in production volumes from No. 8 pit and the anticipated timing thereof.

These forward-looking statements are based on certain key assumptions regarding, among other things: no material change in the geological and operating conditions in No. 8 pit; no material disruption in production from the No. 8 pit or the No. 7 underground operation; no material variation in anticipated coal sales volumes; no material variations in markets and pricing of metallurgical coal other than anticipated variations; continued availability of and no material disruption in rail service and port facilities other than as anticipated; no material delays in the current timing for completion of ongoing projects; financing will be available on terms favourable to the Corporation; no material variation in historical coal purchasing practices of customers; coal sales contracts will be entered into with new customers; parties execute and deliver contracts currently under negotiation; and no material variations in the current regulatory environment. The reader is cautioned that such assumptions, although considered reasonable by Grande Cache Coal at the time of preparation, may prove to be incorrect.

Actual results achieved during the forecast period will vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors. Such factors include, but are not limited to: uncertainties associated geological and operating conditions in the new No. 8 pit; uncertainties associated with production levels during development of the new No. 8 pit, changes in general economic, market and business conditions; uncertainties associated with estimating the quantity and quality of coal reserves and resources; commodity prices, currency exchange rates, the availability of credit facilities for capital expenditure requirements, debt service requirements; dependence on a single rail system; changes to legislation; liabilities inherent in coal mine development and production; competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel; geological, mining and processing technical problems; ability to obtain required mine licenses, mine permits and regulatory approvals required to proceed with mining and coal processing operations; ability to comply with current and future environmental and other laws; actions by governmental or regulatory authorities including increasing taxes and changes in other regulations; and the occurrence of unexpected events involved in coal mine development and production; and other factors, many of which are beyond the control of Grande Cache Coal. These risk factors are discussed in Grande Cache Coal's Annual Information Form for the fiscal year ended March 31, 2010, as filed with Canadian securities regulatory authorities.

There is no representation by Grande Cache Coal that actual results achieved during the forecast period will be the same in whole or in part as those forecast and Grande Cache Coal does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

The Toronto Stock Exchange has neither approved nor disapproved the information contained herein.

Contact Information

  • Grande Cache Coal Corporation
    Ian Bootle
    Vice President, Finance and Chief Financial Officer
    (403) 543-7070
    (403) 543-7092 (FAX)