Western Canadian Coal Announces Fourth Quarter 2008 and Fiscal 2008 Operating Results



    VANCOUVER, June 17 /CNW/ - Western Canadian Coal Corp. (TSX: WTN, WTN.DB
& WTN.WT and AIM: WTN) announces its operating results for the three and
twelve month periods ending March 31, 2008. Caused by difficult winter weather
conditions and a continued labour shortage, the Company faced reduced
production volumes and higher production costs in the fourth quarter ending
March 31, 2008. However, 2008 was a record year for sales and production with
over 300 per cent. increases over the past two years. 2008 was also the second
year of a five-year growth plan towards annual production target of 7 million
tonnes.
    Sales for 2008 were $252.5 million or 88% higher than the prior year.
Coal volumes sold for the year were 3,043,000 tonnes or 116% higher. The
average realized price was $82.97 per tonne in 2008, 13% lower than in 2007
due to the stronger Canadian dollar, the impact of being a new coal producer
and previously contracted coal prices. Coal volumes produced were
3,007,000 tonnes in the year, or 126% higher than the prior year. Cash costs
for the year were $86.10 per tonne, or 7% higher than the prior year's cash
costs.
    Sales for the fourth quarter 2008 were $75.3 million or 37% higher than
the third quarter 2008. Coal volumes sold for the fourth quarter were
865,000 tonnes or 25% higher than the third quarter. The average realized
price of $87.04 per tonne in the quarter was 9% higher than the third quarter.
    In the final quarter of 2008, the Company suffered higher cash costs for
production due to lower production volumes, which were exacerbated by extreme
winter conditions in its Northern British Columbia mines, and a continued
shortage of experienced labour. Cash costs for the fourth quarter 2008 were
$94.50 per tonne or 17% higher than the third quarter's cash costs. Coal
volumes produced were 672,000 tonnes in the quarter or 13% lower than the
prior quarter.
    Net loss for the year was $106.0 million or a loss per share of $0.95 as
compared to a net loss of $13.0 million or a loss per share of $0.14 in 2007.
The 2008 results include $23.6 million, or $0.21 per share of one-time
adjustments. These adjustments include the write-off of future income taxes,
terminated contract expense, investment impairment, abandoned transaction
expenses and penalty fees on long-term debt. Losses were also impacted by the
strengthening Canadian dollar in relation to the US dollar. During fiscal
2008, the Canadian dollar strengthened by over 10%, which impacted revenues by
$29 million.
    Turning to fiscal 2009 contractual hard coking coal agreements reached
prices of over US$300 per tonne, or 253% higher than the prior year pricing.
Ultra-low volatile PCI pricing for fiscal 2009 have been settled at prices of
US$248 per tonne, which are over 267% higher than prior year contracts. All of
the Company's expected hard coking coal production and ultra low-vol PCI
production for fiscal year 2009 is already under contract and will be sold at
these prices.
    On March 31, 2008, shareholders approved the acquisition of the Willow
Creek mine at Falls Mountain Coal Inc. The acquisition allows the Company to
begin the work needed to commence production of ultra low-volatile PCI coal in
the third fiscal quarter of 2009 at an annual rate of 900,000 per year.
    "Overall, 2008 was a watershed year for the Company", said Mr. John Hogg,
President and CEO of Western Canadian Coal Corp. "We have continued our rapid
growth in coal production with a three-fold increase in just two years. We
believe we can continue that rapid growth in these strong market conditions as
we work towards our goal of producing over 7 million tonnes of coal per year
by 2012. The Company was able to satisfy 95% of its 2008 coal year contractual
commitments in fiscal 2008 with the remaining volumes sold by May 2008.
Therefore, the Company will be in a position to benefit from the record 2008
coal year prices in the first quarter of fiscal 2009. With record coal prices
this year now expected to continue into the next fiscal year, Western Canadian
Coal expects to generate high positive cash flows in the near term and for the
upcoming years."

    News Release

    This news release is prepared as at June 17, 2008 and should be read in
conjunction with the Company's audited financial statements for the year ended
March 31, 2008 and notes contained therein, and Management's Discussion and
Analysis (MD&A) for the same period. This news release does not constitute
MD&A as contemplated by relevant securities rules. Western Canadian Coal
Corp.'s audited financial statements and MD&A and the interim financial
statements and MD&As for the periods referred to above are available on SEDAR
at www.sedar.com under the Company's profile.

    
    Financial Summary - unaudited:

    (In thousands of Canadian
     dollars, except tonnes                              March 31,  March 31,
     and per share data)                                     2008       2007
    -------------------------------------------------------------------------
    Cash & cash equivalents                             $  14,137  $  35,272
    Inventory                                              24,173     28,522
    Other current                                          16,242     29,803
    Total Assets                                          453,324    438,575

    Current liabilities                                 $ 126,891  $  75,063
    Long-term liabilities                                 207,443    190,130
    Shareholders' equity                                  118,990    173,382
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                 Three months ending    For the year ending
    -------------------------------------------------------------------------
                                        March 31,             March 31,
    -------------------------------------------------------------------------
                                     2008       2007       2008       2007
    -------------------------------------------------------------------------
    Tonnes sold                     865,000    474,000  3,043,000  1,410,000

    Revenue                       $  75,291  $  44,760  $ 252,489  $ 134,121
    Cost of goods sold               90,495     45,869    293,128    125,231
    (Loss) profit from
     mining operations              (15,204)    (1,109)   (40,639)     8,890
    Other expenses                   22,597      5,965     51,968     27,999
    Income tax expense (recovery)         -     (3,785)    13,380     (6,124)
    Net income (loss)             $ (37,801) $  (3,289) $(105,987) $ (12,985)

    Earnings (loss) per
     share, basic                 $   (0.33) $   (0.03) $   (0.95) $   (0.14)
    Earnings (loss) per
     share, diluted               $   (0.33) $   (0.03) $   (0.95) $   (0.14)

    Average coal prices
     realized (US$ per tonne)     $   86.84  $   79.16  $   80.67  $   82.99
    Average cash cost
     (C$ per tonne)               $   94.50  $   86.55  $   86.10  $   80.80
    Production (tonnes)             672,000    496,000  3,007,000  1,331,000
    Average CAD/USD rate             1.0023     1.1688     1.0286     1.1461
    -------------------------------------------------------------------------
    

    Included in the above balances and results are the Company's
proportionate share of its interest in the results from the Belcourt Saxon
joint venture.

    Revenues

    For the quarter ended March 31, 2008, total revenues were $75,291,000
from the sale of 865,000 tonnes of coal. The average sales price was $87.04 or
US$86.84 per tonne. Revenues for the quarter ended March 31, 2007 of
$44,760,000 were realized on sales of 474,000 tonnes of coal with an average
price of $92.52 or US$79.16 per tonne.
    For the year ended March 31, 2008, total revenues were $252,489,000 from
the sale of 3,043,000 tonnes of coal. The average price per tonne realized
during the year was $82.97 or US$80.67 while for the year ended March 31,
2007, total revenues were $134,121,000 from the sale of 1,410,000 tonnes of
coal. The average price per tonne realized during the period was $95.12 or
US $82.99.
    The primary reason for the increase in the Company's total revenues over
the comparable period in the prior year is the increase in sales volume from
the Perry Creek mine as sales have been made from this mine for the full
twelve months in fiscal 2008 compared to only six months in the prior fiscal
year. Realized revenues per tonne were adversely affected by a stronger
Canadian dollar and lower sales prices compared to the year ended March 31,
2007.

    Cost of goods sold

    Cost of goods sold for the quarter ended March 31, 2008, including costs
of product, transportation, and depletion, amortization and accretion charges
totaled $90,495,000 or approximately $104.62 per tonne compared to $45,868,000
or approximately $96.77 per tonne in the fourth quarter of fiscal 2007. Cost
of goods sold includes cost of production, transportation, and depletion,
amortization and accretion charges as presented in the table below:

    
    (In thousands of                   For the three months ending march 31,
     Canadian Dollars)
                                       2008    $/tonne       2007    $/tonne
    -------------------------------------------------------------------------

    Cost of production            $  59,236  $   68.48  $  28,027  $   59.13
    Transportation and other         22,503      26.02     12,997      27.42
    Depletion, amortization
     and accretion                    8,756      10.12      4,845      10.22

    Total cost of goods sold      $  90,495  $  104.62  $  45,869  $   96.77



    (In thousands of                      For the years ending March 31,
     Canadian dollars)
                                       2008    $/tonne       2007    $/tonne
    -------------------------------------------------------------------------

    Cost of production            $ 180,165  $   59.21  $  73,947  $   52.44
    Transportation and other         81,840      26.89     39,991      28.36
    Depletion, amortization
     and accretion                   31,123      10.23     11,293       8.01

    Total cost of goods sold      $ 293,128  $   96.33  $ 125,231  $   88.81
    


    The increase in the current year's per unit cost of product sold over the
comparable prior year is due to the slower than anticipated start-up of the
Perry Creek mine and the requisite processing required on the Perry Creek hard
coking coal through the coal preparation plant. Further, an inventory
write-down of $7,254,000 was recorded during the period to write down the
inventory to its net realizable value, which occurred in part due to the
strengthening of the Canadian dollar.
    Transportation and other costs are comparable to the period in the prior
year.
    The increase in the period is due to the additional depletion,
amortization and accretion charges related to the Perry Creek mine assets that
have been acquired during the year ended March 31, 2008.
    For the current quarter, cash costs, a key performance indicator for the
industry, were $94.50 per tonne compared to $86.55 per tonne for the quarter
ended March 31, 2007. For the year, cash costs were $86.10 per tonne compared
to $80.80 per tonne compared to the year ending March 31, 2007.

    Operating loss from mining operations

    The operating loss from mining operations for the fourth quarter of 2008
was $15,204,000, including depletion, amortization and accretion of $8,756,000
as compared to an operating loss of $1,109,000, including depletion,
amortization and accretion of $4,845,000 in the same quarter last year.
    Operating loss from mining operations for the year ended March 31, 2008
was $40,639,000 including depletion, amortization and accretion of $31,123,000
compared to an operating profit from mining operations for the year March 31,
2007 of $8,890,000 including depletion, amortization and accretion of
$11,293,000.

    Other expenses

    Other expenses, for the quarter ending March 31, 2008, were $20,905,000
and include the following:

    
                                  Three months ending   For the years ending
    (In thousands of                    March 31,             March 31,
     Canadian dollars)               2008       2007       2008       2007
    -------------------------------------------------------------------------
    General, administration
     and selling                  $   9,804  $   3,690  $  22,512  $  13,839
    Coal exploration                  1,197        422      4,811      6,739
    Interest, accretion and
     financing fees                   9,893      5,356     27,262     10,525
    Investment impairment             1,819          -      3,319          -
    Terminated contract expense           -       (907)     2,590          -
    Other expenses (income)            (116)    (2,596)    (8,526)    (2,871)
    -------------------------------------------------------------------------
    Total other expenses          $  22,597  $   5,965  $  51,968  $  27,999
    -------------------------------------------------------------------------
    

    General, administration and selling costs increased by $6,114,000, or
169%, to $9,804,000 for the quarter ended March 31, 2008 as compared to
$3,690,000 for the quarter ended March 31, 2007. The increase is primarily
related to the stock based compensation that was recorded during the quarter
resulting from stock option grants in the fourth quarter of fiscal 2008.
    Coal exploration expenditures for the three months ended March 31, 2008
increased to $1,197,000 from $422,000 in 2007. Exploration costs are charged
to earnings in the period in which they are incurred, except where these costs
relate to specific properties for which economically recoverable reserves have
been established, in which case they are capitalized. Exploration expenditures
for the three months ended March 31, 2008, included the Company's
proportionate share of expenses recorded by the Partnership of $127,000  (2007
- $367,000), relate to properties on which the capitalization criteria have
not been met.
    Interest, accretion and deferred financing fees on long-term debt
increased to $9,893,000 compared to $5,356,000 in 2007. This increase is due
to the penalty fees incurred by the Company during the quarter and the
adjustment of the accretion of the long-term debt as a result of the change in
its estimated life.
    An additional investment impairment of $1,819,000 was recorded for the
quarter ended March 31, 2008. The Company has reassessed the fair value of
these instruments based on the available information regarding current market
conditions, the underlying assets of the Company's existing trusts and
indicative values contained in the report issued by J.P. Morgan.
    Other income amounted to $116,000 for the three-month period ended March
31, 2008, a decrease of $2,596,000 over the same period ending March 31, 2007.
The majority of the decrease relates to unrealized gains recognized on the
outstanding forward contracts at the end of fiscal 2007 in the amount of
$2,363,000.

    Net loss

    Net loss for the quarter ended March 31, 2008 was $37,801,000 compared to
$3,289,000 for the same period in the prior year. Net loss before tax for the
fourth quarter of 2008 primarily reflects an operating loss of $15,204,000,
general, administration and selling costs of $9,804,000, coal exploration of
$1,197,000, interest, accretion and financing fees on long-term debt of
$9,892,000, investment impairment of $1,891,000 and other income of $114,000.
    Net loss for the year ended March 31, 2008 was $105,987,000 compared to a
net loss of $12,985,000 for the prior year.

    Market Outlook

    The financial performance of the Company is strongly influenced by the
price of metallurgical coal, which is set in a highly competitive marketplace
and impacted by numerous factors outside the control of the Company. These
include the demand for steel, developments in mining technology,
infrastructure and transportation capacity constraints, fluctuations in
currency, interest rates, political stability and overall economic growth.
    The global demand for metallurgical coal rose sharply in late 2004 and
early 2005, as crude steel production expanded in pace with buoyant economic
growth, particularly in China, India and other developing countries. At the
same time a number of supply setbacks occurred and as a result, prices for
hard coking coal ("HCC") rose sharply for the 2005/2006 coal year, to
US$125 per tonne FOB from the high US$50s in the previous year. With the
announcement of new coal mine developments (spurred by record coal prices) and
with steel mills subsequently drawing down inventories built up in early 2005
as security against supply disruption, imported coking coal demand fell,
resulting in prices retreating to between US$95 - $115 FOB per tonne in the
2006/2007 coal year. The continuance of a supply surplus into January 2007
resulted in settlements for the 2007/2008 coal year falling further to  US$85
- $98 per tonne, depending on the valuation of each brand by steel producers.
    With continued strong economic growth, driven mainly from China and
India, the global supply of hard coking coal continues to adjust to increased
demand; however, the continued shortage of transportation infrastructure in
the major coal producing countries, coupled with scarcity of key mining inputs
such as skilled labour, mining equipment and in some areas basic inputs like
water, have in recent years skewed the supply-demand balance in favour of the
producers. This trend was evident in 2007, with spot prices moving upwards as
the year progressed, enabling Australian and Canadian producers to achieve
2007 spot fixtures in the range US$120-200/tonne FOB by early December 2007.
In January 2008, and then again in early February, the market experienced
major disruptions in the supply of Australian metallurgical coal, following
two severe flooding events in Queensland. Then an unusual snow storm in China
suspended coal exports and further tightened metallurgical coal supply. As a
result, spot prices rose to unprecedented levels and have exceeded $350/tonne
FOB for hard coking coal. In this environment, the majority of coal suppliers
have settled their 2008 contract prices at an average of US$300/tonne. On May
7, 2008, the Company advised that it had settled a majority of its 2008
contracts for hard coking coal at an average of US$300 per tonne, which is
approximately 253% higher than 2007 contract prices.
    A similar situation exists in the supply-demand balance for ultra-low
volatile PCI ("ULV-PCI") coals. Constraints on mine production in key supply
areas in 2007 and into 2008 have coincided with continued demand increases. On
May 7, 2008, the Company announced that a majority of its 2008 contracts for
its ULV-PCI coal had been settled at approximately US$248 per tonne FOB, which
is 267% higher than 2007 pricing.
    In the longer term, the Company believes that the market fundamentals for
metallurgical coal will provide substantial opportunity to further increase
market diversity and market share. The Company's Wolverine hard coking coal is
now firmly established as a blend component with the world's leading steel
mills. The Company's Burnt River ULV-PCI coal is consistently ranked in the
top three PCI coals worldwide and has experienced unparalleled demand. These
coals, in conjunction with highly efficient rail and port infrastructure with
excess capacity, provides to the Company a strategic advantage to grow and
diversify.
    Long term pricing for hard coking coal and ULV-PCI will continue to be
influenced by the balance in supply and demand, and by the need for an
adequate return on capital required by new coal supply sources.

    Guidance

    The Company's Wolverine hard coking coal and Burnt River ULV- PCI coals
have been sold to major steel mills throughout Asia, Europe and South America
and its Wolverine hard coking coal is being placed in similarly diverse and
growing markets. Long term supply agreements have been concluded with top tier
steel mills for 100% of the 2008 planned output of the Brule mine and the
Wolverine mine.
    At the onset of the 2009 fiscal year, both production and rail service
have achieved targeted levels. With resources now fully deployed for coal year
2008 (the Company's fiscal 2009), the Company anticipates approximately
2 million tonnes of production from the Perry Creek Mine, of which
approximately 1.9 million tonnes will be marketed as Wolverine hard coking
coal while the balance will be marketed as Wolverine Mid-Vol PCI. The Company
anticipates 1.3 million tonnes of production from the Brule mine.
    In addition to this, recommencement of mining at the Willow Creek
metallurgical coal mine is scheduled in by the start of the fourth calendar
quarter of 2008, at a rate of approximately 60,000 tonnes per month for
ULV-PCI. The majority of this forecast ULV-PCI production has also been
committed to major international steelmills.
    All of the Company's expected hard coking coal production and ultra 
low-vol PCI production for fiscal year 2009 is already under contract and will
be sold at the prices described above.

    Conference Call

    The Company will be hosting a conference call to discuss the fourth
quarter 2008 operating results at 12:30pm (PST) on June 19, 2008. To
participate on the call, dial either 1-800-732-9307 or 416-644-3416. The call
will also be webcast live on the Company's website at www.westerncoal.com.

    Annual General Meeting

    The Company will be holding its Annual General Meeting September 4, 2008
in Vancouver, BC at the Metropolitan Hotel. The meeting will be webcast live
on the Company's website at www.westerncoal.com.

    About Western Canadian Coal

    Western Canadian Coal Corp. produces 3.7 million tonnes of high quality
metallurgical coal from three mines located in the northeast of British
Columbia. The company also has interests in various coal properties in
northern and southern British Columbia and a 50% interest in the Belcourt
Saxon Limited Partnership, which was formed to explore and develop the
Belcourt and Saxon group of properties in northern BC. Currently, these
properties provide the company with an estimated 15 years of coal reserves at
current production levels.

    Forward-Looking Information

    This release may contain forward-looking statements that may involve
risks and uncertainties. Such statements relate to the Company's expectations,
intentions, plans and beliefs. As a result, actual future events or results
could differ materially from those suggested by the forward-looking
statements. Readers are referred to the documents filed by the Company on
SEDAR. Such risk factors include, but are not limited to changes in commodity
prices; strengths of various economies; the effects of competition and pricing
pressures; the oversupply of, or lack of demand for, the Company's products;
currency and interest rate fluctuations; various events which could disrupt
the Company's construction schedule or operations; the Company's ability to
obtain additional funding on favourable terms, if at all; and the Company's
ability to anticipate and manage the foregoing factors and risks.
Additionally, statements related to the quantity or magnitude of coal deposits
are deemed to be forward-looking statements. The reliability of such
information is affected by, among other things, uncertainties involving
geology of coal deposits; uncertainties of estimates of their size or
composition; uncertainties of projections related to costs of production; the
possibilities in delays in mining activities; changes in plans with respect to
exploration, development projects or capital expenditures; and various other
risks including those related to health, safety and environmental matters.

    WESTERN CANADIAN COAL CORP.
    "John Hogg"
    President and Chief Executive Officer





For further information:

For further information: David Jan, Manager, Investor Relations &
Corporate Development, Phone: (604) 608-2692, Email: djan@westerncoal.com

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WESTERN COAL CORP.

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