Xinergy Ltd.
TSX : XRG

Xinergy Ltd.

August 13, 2013 17:33 ET

Xinergy Announces Results for Second Quarter 2013

- Second quarter 2013 revenue and adjusted EBITDA of $4.7 million and $(2.1) million, respectively, compared to $23.1 million and ($5.7) million for second quarter 2012;

- Operating efficiencies at South Fork continue to take hold, with cash costs trending below $100/ton;

- South Fork infrastructure build-out completed on schedule and within budget;

- Acquired requisite permits for Sewell Mountain mining, preparation plant, loading facility and impoundment areas in July 2013;

- Total liquidity at June 30 of $26.9 million (excluding $26.6 million in restricted cash); and

- Evaluating non-core asset sales to strengthen balance sheet and improve liquidity

KNOXVILLE, TENNESSEE--(Marketwired - Aug. 13, 2013) - Xinergy Ltd. (TSX:XRG), a Central Appalachian coal producer, today announced that it had a net loss of $9.4 million, or $0.17 per diluted share for the second quarter ended June 30, 2013. This is compared with a net loss of $14.5 million, or $0.27 per diluted share for the second quarter ended June 30, 2012. Second quarter 2013 adjusted EBITDA was $(2.1) million compared with $(5.4) million for the second quarter 2012. The Company's Condensed Consolidated Interim Financial Statements for the three months ended June 30, 2013, together with its Management's Discuss and Analysis ("MD&A") for the corresponding period, have been posted on SEDAR at www.sedar.com and on the Company's website at www.xinergycorp.com.

"Xinergy made significant strides during the quarter, as we positioned South Fork for long-term success while continuing to take steps to rationalize our cost structure and optimize our balance sheet and liquidity amidst challenging market conditions. Our West Virginia team deserves tremendous credit for bringing our South Fork project on-line in a timely and cost-efficient manner, and for achieving operating efficiencies reflected in our South Fork cash costs trending to below $100/ton," said Matt Goldfarb, Xinergy's Chief Executive Officer.

Global seaborne coking coal market conditions deteriorated further during the quarter, as the market remains in structural oversupply while demand weakness persisted due to a deceleration in anticipated Chinese steel production growth and fiscal uncertainty across Europe and other developing economies. Although domestic coking coal production curtailments may have accelerated during the quarter, the rationalization of Australian supply has been hindered by the significant depreciation in the Australian dollar since the end of the first quarter. "With spot pricing weakening during the quarter to below the $145/mt benchmark level, and then recovering somewhat in early August on the back of positive Chinese industrial production data, we view today's coking coal market as extremely dynamic and in the process of re-calibrating," continued Mr. Goldfarb. "We feel confident that our combination of premium quality and low cost position at South Fork will prove to be a valuable growth driver as market conditions normalize. In the interim, Xinergy is taking all appropriate measures to safeguard our balance sheet to withstand the duration of the current downturn including potential non-core asset sales, working capital initiatives, further fixed cost rationalization and operational discipline aimed at matching production to market demand."

Financial Overview

The following tables present selected balance sheet, statement of operations and sales and operating statistics for Xinergy.

As of As of As of As of
June 30 March 31 December 31 June 30
($'000) 2013 2013 2012 2012
Balance Sheet
Cash and cash equivalents $ 17,058 $ 27,634 $ 32,325 $ 53,454
Total current assets $ 42,296 $ 66,043 $ 50,723 $ 78,828
Total assets $ 160,271 $ 178,516 $ 188,772 $ 257,693
Total current liabilities $ 12,752 $ 20,650 $ 20,797 $ 22,368
Total long-term liabilities $ 220,093 $ 221,280 $ 229,786 $ 222,106
Shareholders' equity $ (72,574 ) $ (63,414 ) $ (61,811 ) $ 13,220
Three months ended Three months ended Six months ended Three months ended
($'000, except per share) June 30, 2013 March 31, 2013 June 30, 2012 June 30, 2012
Statement of Operations
Coal revenues $ 4,739 $ 4,086 $ 8,825 $ 23,143
Cost of coal sales $ 5,014 $ 5,930 $ 10,944 $ 26,372
Gross margin $ (275 ) $ (1,844 ) $ (2,119 ) $ (3,229 )
(Loss) income before taxes $ (9,379 ) $ (1,905 ) $ (11,284 ) $ (18,070 )
Net (loss) income $ (9,379 ) $ (1,905 ) $ (11,284 ) $ (14,474 )
Basic and diluted net income
(loss) per share $ (0.17 ) $ (0.03 ) $ (0.21 ) $ (0.27 )
Three months ended Three months ended Six months ended Three months ended
Sales & Operating Statistics June 30, 2013 March 31, 2013 June 30, 2013 June 30, 2012
Tons sold 49,270 59,956 109,226 363,495
Tons produced 53,867 51,152 105,019 272,999
Sales price/ton $ 96.19 $ 68.16 $ 80.80 $ 63.67
COGS/ton sold $ 101.77 $ 98.90 $ 100.19 $ 72.55
Gross margin/ton sold $ (5.58 ) $ (30.74 ) $ (19.39 ) $ (8.88 )
Cash costs/ton produced $ 112.03 $ 108.07 $ 110.10 $ 79.22

Capital Expenditures

Capital expenditures were $12.6 million during the second quarter, reflecting substantial completion of our South Fork infrastructure project and the beginning of the preparation plant construction at Raven Crest. Capital expenditures for the first half of 2013 stand at $26.6 million, with full year expenditures projected at approximately $40 million, inclusive of a previously unbudgeted equipment debt pay down.

Liquidity and Capital Resources

As of June 30, 2013, we had total cash and cash equivalents (excluding restricted cash) of $17.1 million, compared with $27.6 million at March 31, 2013. As of June 30, 2013 the Company's liquidity profile is as follows:

Cash $ 17.1 million
Term Loan B Commitment $ 9.8 million
Liquidity $ 26.9 million
Restricted Cash $ 26.6 million

Conference Call, Webcast and Replay

The Company will hold its quarterly conference call to discuss second quarter 2013 operating results on Wednesday August 14, 2013 at 10:00 a.m. EDT. The conference call will be open to the public toll free at (877) 317-6789. International callers should use (412) 317-6789, and Canadian callers should use (866) 605-3852. The conference call can also be accessed via webcast on the Company's website with a replay available shortly after the event.

About Xinergy Ltd.

Headquartered in Knoxville, Tennessee, Xinergy Ltd., through its wholly owned subsidiary Xinergy Corp. and its subsidiaries, is engaged in coal mining in West Virginia and Virginia. Xinergy sells high quality metallurgical and thermal coal to electric utilities, steelmakers, energy trading firms and industrial companies. For more information, please visit www.xinergycorp.com.

Contact Information

  • Xinergy Ltd.
    Matt Goldfarb
    Chief Executive Officer
    865-474-7000

    Xinergy Ltd.
    Michael R. Castle
    Chief Financial Officer
    865-474-7000
    www.xinergycorp.com