Hillsborough Resources Limited

Hillsborough Resources Limited

May 15, 2009 10:18 ET

Hillsborough Resources Issues Financial Results for First Quarter of Fiscal 2009

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 15, 2009) - Hillsborough Resources Limited (TSX:HLB) is pleased to announce its interim financial results for the quarter ended March 31, 2009.


For the three months ended March 31, 2009, Hillsborough Resources Limited ("Corporation") recorded net earnings of $2,565,558 ($0.03 per share) compared to a net loss of $1,632,084 ($0.02 per share) for the same period in 2008. Included in the net earnings for the three months ended March 31, 2009 is tax expense of $1,552,865 and equity earnings of $1,114,628 resulting from the Corporation's 13.36% interest in the PRC. The future income tax expense for the three months ended March 31, 2009 was $1,330,865 compared to a future income tax recovery of $229,611 for the same period in 2008.


Demand for the quality thermal coal produced by Quinsam remained very strong during the quarter. Due to the terms of domestic cement supply contracts, which rely on the Producer Price Index as an escalator, the Corporation was unable to obtain increased prices from one of its two remaining cement customers. These low prices, however, were offset by significantly higher prices realized on the international thermal coal shipment delivered in March 2009. One major cement contract came to an end in November 2008, and this coal is now being directed into the international market.

Quinsam's average revenue per tonne of coal sold during the three months ended March 31, 2009 was $118.82 (March 31, 2008 - $51.99). The average revenue per tonne was lower than the expected average of $125 per tonne due to a quality penalty received on the international shipment. The contribution margin on coal sales during the three months ended March 31, 2009 was $6.38 million, 38.5% (March 31, 2008 - loss of $0.17 million (3.8%)), reflecting the impact of the international shipment completed in March 2009.

Production Cost

At the Quinsam mine, clean coal production for the three months ended March 31, 2009 was 118,789 tonnes (March 31, 2008 - 108,679 tonnes), from raw coal production of 205,090 tonnes for the three months ended March 31, 2009 (March 31, 2008 - 189,936). The cost per tonne of production in the first quarter of 2009 was $73.09 (Q1 2008 - $53.95). The annual cost per tonne for 2008 was $64.43 with a cost per tonne of $86.28 in the fourth quarter of 2008. Positively affecting the production cost of coal during the first quarter of 2009, compared to the last quarter of 2008, was the effect of the depillar tonnes mined versus the development tonnes mined. The cost per tonne of production continues to be greater than historical costs due to thinner seams found in the current mining production area.

Peace River Coal Activities

During the first quarter of 2009, PRC finalized the $104 million capitalization program to acquire and operate its own mining equipment fleet. By carrying out its own mining operations, PRC expects to increase production and significantly reduce its operating costs per tonne. The Corporation recorded equity income for the first quarter of 2009 of $1.1 million related to its PRC investment.

As previously released, on January 5, 2009, the Corporation received a PRC cash call notice in the amount of $3,576,661. In an effort to conserve cash, the Corporation did not fulfill its obligation in respect of the January 2009 PRC cash call and accordingly accepted dilution in its investment in PRC by 0.78%. The Corporation's interest in PRC is now held at 13.36%.

During the first quarter of 2009, a net $0.4 million was contributed by the Corporation to PRC in respect of cash calls made to cover both operating costs as well as certain capital expenditures. As a result, the Corporation's 13.36% interest has remained intact.

Certain statements and information herein, including all statements that are not historical facts, contain forward-looking statements and forward-looking information within the meaning of applicable securities laws. Such forward-looking statements or information include but are not limited to statements or information as to estimates, forecasts, future financial or operating performance of the Corporation, future production, costs of production, capital requirements, operating expenditures, reserve potential, exploration drilling, exploitation activities and activities and events or developments that we expect to occur. Often, but not always, forward-looking statements and information can be identified by the use of words such as "may", "will", "should", "plans", "expects", "intends", "anticipates", "believes", "budget", "forecasted" and "scheduled" or the negative thereof or variations thereon or similar terminology.

With respect to forward-looking statements and information contained herein, we have made numerous assumptions including among other things, assumptions about prices, anticipated costs and our ability to achieve our goals. In particular, our statements regarding future production expectation is based on current existing current resource/reserve estimates, production contracts in place, historical costs and mining conditions.

Forward-looking statements and information are necessarily based upon a number of estimates and assumptions that, while considered by management to be reasonable and to be based on reasonable assumptions, are inherently subject to significant business, economic and competitive uncertainties and contingencies and involve known and unknown risks. Readers are cautioned that any such forward-looking statements and information are not guarantees and there can be no assurance that such statements and information will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Corporation's expectations include adverse exploration or development results; interruptions in the ability of the Corporation to produce coal from any of its mines; inability to meet production volumes required; adverse due diligence findings; re-assessments of corporate or development objectives and requirements; additional technical developments and considerations; unexpected increases in the costs of producing coal; changes in international coal or transportation markets; a rapid change in the value of the Canadian dollar particularly with respect to the US dollar; a fundamental slow down in the North American, Asian or worldwide economies; and other factors. See our recent annual information form and quarterly and annual management's discussion and analysis filed on SEDAR for additional information on risks, uncertainties and other factors relating to the forward-looking statements and information.

Although we have identified factors that would cause actual actions, events or results to differ materially from those disclosed in the forward-looking statements or information, there may be other factors that cause actual results, performance, achievements or events not to be as anticipated, estimated or intended. Accordingly, readers should not place undue reliance on the forward-looking statements or information. We expressly disclaim any intention or obligation to update or revise any forward-looking statements and information whether as a result of new information, future events or otherwise, except as required by law. All written and oral forward-looking statements and information attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements.

Contact Information

  • Hillsborough Resources Limited
    David Slater
    President & C.E.O.
    (604) 684-9288
    Hillsborough Resources Limited
    Ian Kirk, C.A.
    (604) 684-9288
    (604) 684-3178 (FAX)