Grande Cache Coal Corporation

Grande Cache Coal Corporation

October 13, 2010 08:00 ET

Grande Cache Coal Corporation Provides Operational Update and Updated Guidance for Fiscal 2011

CALGARY, ALBERTA--(Marketwire - Oct. 13, 2010) - Grande Cache Coal Corporation (TSX:GCE) ("Grande Cache Coal" or the "Corporation") today provided the following operational update and updated guidance for fiscal 2011.

Operational Update

  • Grande Cache Coal sold 0.44 million tonnes of coal during the three months ended September 30, 2010, for a total of 0.89 million tonnes for the first half of the current fiscal year, compared to 0.36 million tonnes and 0.87 million tonnes respectively in the previous fiscal year.
  • During the second quarter of fiscal 2011, Grande Cache Coal began producing coal from the first phase of development in the new No. 8 surface pit. 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.
  • Challenging operating, topographical and geological conditions are also impacting the construction of roads and the development of the next two phases of operations in No. 8 pit. Production from these two phases, which was anticipated to commence by October 1, 2010, is now expected to be delayed by approximately two months. Increased coal volumes are expected to be mined in the fourth quarter of this fiscal year when the next two phases of No. 8 pit begin production.
  • Grande Cache Coal produced 0.70 million tonnes of coal in the first six months of fiscal 2011 compared to 0.77 million tonnes in the same period last year. The decrease is primarily due to the transition in surface mining areas from No. 12B2 pit to No. 8 pit, as well as difficult operating conditions experienced in the first phase of operations in No. 8 pit.
  • The average selling price of metallurgical coal for the second quarter of fiscal 2011 was approximately US$186 per tonne, which included approximately 0.14 million tonnes of carryover tonnage at lower prices. Industry benchmark pricing for the third quarter of fiscal 2011 has been settled at US$209 per tonne for the highest quality product. Grande Cache Coal is in negotiations with its customers and anticiaptes third quarter contract settlements will follow industry trends.
  • Grande Cache Coal ships the majority of its product through Westshore Terminals port in Vancouver, B.C.. Westshore Terminals is currently experiencing some capacity constraints and has advised the Corporation that congestion issues will likely continue throughout the Corporation's third and fourth quarter, which may affect the timing and volume of the Corporation's coal shipments.

Fiscal 2011 Guidance Update

  • The Corporation is revising its fiscal 2011 sales volume guidance to a range of 1.7 to 1.9 million tonnes, down from the previous range of 2.0 to 2.2 million tonnes. The decrease is primarily due to the anticipated delay in commencing production from the next two phases of operations in No.8 pit and anticipated congestion issues at the port.
  • The average cost of sales for fiscal 2011 is now anticipated to be approximately $110 to $115 per tonne, up from previous guidance of $105 per tonne, primarily due to increased mining costs in the initial stages of production in No 8 pit and a reduction in expected sales volumes.
  • The Corporation continues to anticipate capital expenditures of approximately $165 million in fiscal 2011, which is consistent with previous guidance.
  • An updated version of the Grande Cache Coal corporate presentation dated October 2010 will be available on the Corporation's website at

"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", said Robert Stan, President and Chief Executive Officer. "Starting up an operation of the size planned for No. 8 pit in the foothills of the Rocky Mountains is a complex undertaking. It is important that we ensure that the roads and other infrastructure are properly completed to underpin a safe and efficient operation for the future." Mr. Stan also added, "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."

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; anticipated sales prices of metallurgical coal in fiscal 2011; anticipated cost of sales in fiscal 2011; anticipated capital expenditures in fiscal 2011: anticipated development activities in No. 8 pit and anticipated timing of such activities; and anticipated increases in production volumes from the next two operational phases of 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 will 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 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)