Western Canadian Coal Reports Fiscal Fourth Quarter and Fiscal 2009 Operating and Financial Results



    VANCOUVER, June 25 /CNW/ - Western Canadian Coal Corp. (TSX: WTN, WTN.DB
& WTN.WT and AIM: WTN) (the "Company") announces its operating results for the
three and twelve month period ended March 31, 2009. During this period, the
Company's financial position continued to strengthen as a result of strong
cash flow from operations. Net income for the fourth quarter of fiscal 2009
was $47.6 million or earnings per share of $0.23, on a basic and diluted
basis. For the year ended March 31, 2009, the Company earned net income of
$214.5 million or earnings per share of $1.17 and $1.14 on basic and diluted
basis, respectively.
    Income from mining operations increased to $58.8 million in the fourth
quarter of 2009. This compares to the loss from mining operations of $15.2
million in the similar period of the previous year. The increase over the
fourth quarter 2008 was achieved primarily as a result of higher coal prices
realized from the current coal year contracts and favourable foreign exchange
rates, which led to coal sales of $111.7 million. These sales were 48% higher
than in the same quarter a year ago.
    Coal shipments for the fourth quarter 2009 were 346,000 tonnes or 60%
lower than the same quarter of 2008. The average realized price of $316 per
tonne in the current quarter was 263% higher than the same quarter of 2008.
Favourable exchange rates also aided to the improved prices realized from the
sale of the Company's coal in this quarter over previous quarters. The lower
shipment levels were the result of lower production levels and customer orders
being deferred into subsequent quarters.
    Coal production for the fourth quarter 2009 was 501,000 tonnes or 28%
lower than the same quarter of 2008. Cash costs in the fourth quarter 2009
were $136 per tonne as compared to $95 per tonne in the fourth quarter 2008.
The increase in the fourth quarter 2009 over the same period a year ago was
primarily due to higher stripping ratios.
    The balance sheet of the company continues to strengthen. When comparing
the March 31, 2009 financial position to the March 31, 2008 position, the
Company's working capital position improved by $218.0 million to a positive
working capital position of $145.6 million, including approximately $75
million of cash in the bank. The Company's debt to shareholders' equity ratio
improved to 0.42 from 2.81 over the same period a year ago.
    On June 24, 2009, the Company's shareholders approved the acquisition of
Cambrian Mining Plc (see May 20, 2009 and June 24, 2009 press release). The
acquisition is expected to close on July 13, 2009. Upon closing, Western will
issue approximately 89 million shares to Cambrian shareholders, 72.1 million
shares of Western owned by Cambrian will be cancelled, $29 million of
Western's convertible debentures owned by Cambrian will be cancelled,
Western's loan to Cambrian of $40.6 million plus interest will be forgiven,
and five days after closing, Western will redeem US$ 27 million of Cambrian's
notes.
    The acquisition adds immediate value through the creation of a larger,
stronger, and more diversified coal mining company. The new Western will have
globally diversified operations in three key coal producing regions, product
diversification with the inclusion of thermal coal, a more globally balanced
sales program, an expansion of coal reserves and resources by 39% and 50%,
100% increase to current year coal production, significant cost savings, and
will simplify the Company's corporate structure.
    John Hogg, President & CEO stated, "The fortunes of the Company have
greatly improved with the record coal prices in fiscal 2009. The Company took
advantage of these record prices to strengthen its financial position, and
catch up on waste removal, which resulted in higher stripping ratios and
corresponding higher cash costs during fiscal 2009. The investment in waste
removal has paid off as it has allowed the Company to remain competitive in
these difficult market conditions. As an example, Wolverine's strip ratio
since year-end has rapidly fallen towards the expected strip ratio of 12:1 for
fiscal 2010. As such, all of the Company's operations are currently cash
positive. The Company is in a position to react quickly to increased demand
levels which we have already started to experience. We now expect to sell
approximately 2.2 million tonnes of metallurgical coal, which is up from our
previous guidance of 2.0 million tonnes for fiscal 2010. Our stronger balance
sheet has also allowed us to grow the Company with the recent acquisition of
our largest shareholder, Cambrian Mining Plc. The acquisition allows us to
grow, strengthen and diversify our business to be even better positioned when
market conditions improve."

    News Release

    This news release is prepared as at June 25, 2009 and should be read in
conjunction with the Company's audited financial statements for the year ended
March 31, 2009 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,                   March 31,  March 31,
     except tonnes and per share data)                       2009       2008
    -------------------------------------------------------------------------
    Cash & cash equivalents                            $   74,853 $   14,137
    Accounts receivable                                    39,270     11,418
    Inventory                                              62,376     24,173
    Total current assets                                  217,943     54,552
    Total assets                                          662,337    453,324

    Current liabilities                                $   72,304 $  126,891
    Convertible debentures                                 61,729    140,411
    Other long-term liabilities                            62,896     67,032

    Shareholders' equity                                  465,944    118,990
    Total liabilities and shareholders' equity            662,337    453,324

    Current ratio
     (current assets/current liabilities)                    3.01       0.43
    Debt to equity ratio
     (total debt/shareholders' equity)                       0.42       2.81
    -------------------------------------------------------------------------


                                  Three months ending   Twelve months ending
    -------------------------------------------------------------------------
                                         March 31,             March 31,
    -------------------------------------------------------------------------
                                     2009       2008       2009       2008
    -------------------------------------------------------------------------
    Tonnes sold                     346,000    865,000  2,042,000  3,043,000

    Revenue                      $  111,684 $   75,291  $ 586,093 $  252,489
    Cost of goods sold               52,838     90,495    298,211    293,128
    Income (loss) from
     mining operations               58,846    (15,203)   287,882    (40,639)
    Other expenses                    4,504     22,597     37,692     51,968
    Income tax expense                6,740          -     35,658     13,380
    Net income (loss)            $   47,602 $  (37,801) $ 214,532 $ (105,987)

    Earnings (loss)
     per share, basic            $     0.23 $    (0.33) $    1.17 $    (0.95)
    Earnings (loss)
     per share, diluted          $     0.23 $    (0.33) $    1.14 $    (0.95)
    -------------------------------------------------------------------------
    

    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 three month period ended March 31, 2009, total revenues were
$111,684,000 from the sale of 346,000 tonnes of coal. The average price per
tonne realized during the period was $323 or US$256.
    For the three month period ended March 31, 2008, total revenues were
$75,291,000 from the sale of 865,000 tonnes of coal. The average price per
tonne realized during the period was $87 or US$87.
    The primary reason for the 48% increase in the Company's total revenues
over the comparable period in the prior year is the increase in sales price
realized and the strengthening of the US dollar offset by a lower sales
volume. The increase in sales price was a result of higher coal contract
prices. The average exchange rate of the US dollar in relation to the Canadian
dollar in the three month period ended March 31, 2008 was $1.26 compared to
$1.00 in the comparable period in the prior year.

    Cost of goods sold

    Cost of goods sold for the three months ended March 31, 2009, including
costs of product, transportation, and depletion, amortization and accretion
charges totaled $52,838,000 or approximately $153 per tonne compared to
$90,495,000 or approximately $105 per tonne in the fourth quarter of fiscal
2008. The higher costs in 2009, which are higher than levels currently being
mined in fiscal 2010, was due to the higher stripping ratios incurred to
remove the waste rock required for the Wolverine mine to get back to the
life-of-mine plan. Cost of goods sold includes cost of production,
transportation, and depletion, amortization and accretion charges as presented
in the table below:

    
    (In thousands of                              Three month ended March 31,
     Canadian dollars)                 2009    $/tonne       2008    $/tonne
    -------------------------------------------------------------------------

    Cost of product sold           $ 38,722   $    112   $ 59,236   $     69
    Transportation and other          8,207         24     22,503         26
    Depletion, amortization
     and accretion                    5,909         17      8,756         10

    Total cost of goods sold       $ 52,838   $    153   $ 90,495   $    105
    

    Cost of product sold increased 62% in the current period's per unit cost
of product sold over the comparable prior period was due to lower coal
production volumes from the Company's Perry Creek Mine caused by higher
stripping ratios and a lower coal yield experienced as a result of the areas
being mined.
    Transportation and other costs have decreased due to the change in the
volumes of coal sold from the Perry Creek and Brule mines between the three
month ended March 31, 2009 and 2008.
    Depletion, amortization and accretion charges increased due to the
additional depletion, amortization and accretion charges related to the Perry
Creek mine assets that were acquired or brought into production or
commissioned during fiscal 2008.
    For the fourth quarter 2009, cash costs, which consist of cost of product
and transportation costs, which is considered a key performance indicator for
the industry, were $136 per tonne compared to $95 per tonne for the quarter
ended March 31, 2008.

    Income from mining operations

    Income from mining operations for the three months ended March 31, 2009
was $58,846,000 or 53% of sales. This compares favourably to the $15,204,000
loss from mining operations in the three months ending March 31, 2008.

    Other expenses

    Other expenses, for the quarter ending March 31, 2009, were $868,000 and
include the following:

    
                                                Three months ending March 31,
    (In thousands of Canadian dollars)                       2009       2008
    -------------------------------------------------------------------------

    General, administration and selling                  $  9,566   $  9,804
    Coal exploration and other mine costs                   1,208      1,197
    Interest and financing fees on long-term debt           3,114      9,893
    Investment impairment                                       -      1,819
    Unrealized loss on forward exchange contracts           1,501          -
    Other (income) expense                                (10,885)      (116)
    -------------------------------------------------------------------------

    Total other expenses                                 $  4,504   $ 22,597
    -------------------------------------------------------------------------
    

    General, administration and selling costs decreased by $238,000, or 2%,
to $9,566,000 for the quarter ended March 31, 2009 as compared to $9,804,000
for the quarter ended March 31, 2008. The decrease is primarily related to the
decrease in the stock based compensation expense. Stock based compensation
expense decreased as a result of fewer stock options being issued in the
fourth quarter of the current fiscal year compared to the comparable period in
the prior fiscal year. This was offset by an increase in sales and marketing
costs due to an accrual for the Wolverine Royalty Sharing agreement which is
to allow for the potential liability in the event the Company's position is
incorrect.
    Coal exploration and other mine costs for the three months ended March
31, 2008 of $1,208,000 were consistent with costs in fiscal 2008 totaling
$1,197,000. 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. Care and maintenance costs relate to the carrying costs
of the Willow Creek mine.
    Interest, accretion and deferred financing fees on long-term debt
increased to $3,114,000 compared to $9,893,000 in 2008. In the fourth quarter
of fiscal 2008 penalty fees were incurred by the Company and an adjustment of
the accretion of the long-term debt was made a result of the change in its
estimated life. Similar charges were not incurred in fiscal 2009. This balance
has also decreased due to the conversions of convertible debentures throughout
fiscal 2009 as well as the repayment of other liabilities during the year.
    For the quarter ended March 31, 2009, the Company recorded $1,501,000 of
unrealized losses relating to its outstanding forward currency contracts. At
March 31, 2008, the company did not have any forward currency contracts
outstanding.
    Other income amounted to $10,885,000 for the three-month period ended
March 31, 2009, an increase of $10,769,000 over the year ended March 31, 2008
of $116,000. The increase mainly relates to the royalty revaluation gain of
$7,981,000 and the gain on fair value adjustment of the investment of
$1,393,000 recorded during the quarter ended March 31, 2009. In the fourth
quarter of fiscal 2008, the Company recorded an investment impairment of
$1,819,000 relating to its ABCP.

    Net Income

    Net income for the three month period ended March 31, 2009 was
$47,602,000 compared to a net loss of $37,801,000 for the same period in the
prior fiscal year. The net income reflects the previously discussed changes to
Income from mining operations and Other expenses and an income tax expense of
$6,740,000 reflecting a current income tax expense of $3,784,000 and a future
income tax expense of $3,956,000.

    Market Outlook

    All of the Company's current fiscal 2010 coal production is under
contract for sale to international steel producers. Coal prices for fiscal
2010 are approximately US$126 per tonne for hard coking coal and US$90 per
tonne for its ULV-PCI coal. Since coal deliveries during fiscal 2010 will
include certain quantities of fiscal 2009 carryover tonnages, the average
selling prices for coal to be delivered in fiscal 2010 are expected to be in
the range US$120 to US$125 per tonne, which reflects pricing for both hard
coking coal and ULV-PCI coal and carryover tonnages at fiscal 2009 prices.
    The current economic downturn has resulted in significant cutbacks in
steel production on the part of the Company's customers, in some cases as much
as 50% below 2008 levels. This has affected the short term demand for
metallurgical coal, leading to production cutbacks at the Company's
operations. Despite the significant curtailments by the Company's customers,
the Company has achieved coal sale prices that are the second highest on
record, which speaks well to the quality of the Company's coal and the service
provided to customers. The Company further expects that the economic stimulus
packages introduced by governments including the US, Japan and China will lead
to increased steel production and therefore increase the demand for
metallurgical coal. Already in China, there is higher construction activity in
the first quarter of 2009, together with increased consumer spending in
steel-based goods such as appliances and autos.
    In the longer term, the market fundamentals for metallurgical coal should
continue to improve which will provide continued opportunity for the Company
to increase market diversity and market share. The Company's Wolverine hard
coking coal forms a key blend component with many of the world's leading steel
mills, while the Brule mine ULV-PCI coal is consistently ranked among the top
PCI coals worldwide. These high quality and high demand coals, in conjunction
with the region's highly efficient rail and port infrastructure with excess
capacity, continue to provide the Company a competitive advantage to continue
to grow and diversify.

    
    Guidance

    The Company now expects to produce approximately 1,800,000 tonnes of
metallurgical coal from its two operating mines:

    -   Wolverine operations producing approximately 1,200,000 tonnes of hard
        coking coal
    -   Brule mine producing approximately 600,000 tonnes of ULV-PCI coal.
    

    The increase in production levels is a result of increased demand from
our customers. As a result, the Company now expects to ship approximately
2,200,000 tonnes of metallurgical coal which will consist of approximately
1,300,000 tonnes of hard coking coal and 900,000 tonnes of ULV-PCI. The
Company has the flexibility to rapidly adjust production to respond to changes
in demand for its coal.
    The Company's Wolverine hard coking coal and Brule mine ULV-PCI coals
have been sold to major steel mills throughout Asia and Europe, with long term
supply agreements in place for the next three years.
    The Company has hedged approximately 75% (or US$195 million) of expected
fiscal 2010 revenues with foreign exchange forward contracts at an average
rate of C$1.187 per US$ 1.00. These contracts mature monthly from now to April
2010.
    With the stripping ratios in fiscal 2010 expected to be lower than in
fiscal 2009, cash costs are expected to be approximately C$110 to C$115 per
tonne.

    Liquidity and Capital Resources

    The Company's aggregate operating, investing and financing activities
during the year ended March 31, 2009 resulted in a net increase to cash of
$60,716,000. As at March 31, 2009, the Company's cash balance stood at
$74,853,000 and working capital was $145,639,000. Working capital levels have
increased over the prior year as a result of an increase in the coal prices
for fiscal 2009 as well as higher inventory levels.
    For the year ended March 31, 2009, the Company had positive cash flow of
$315,876,000 on coal sales from its Perry Creek and Brule mines of
$582,457,000 before depletion, amortization and accretion and working capital
changes, while for the year ended March 31, 2008, a cash flow deficit of
$9,516,000 on coal sales of $252,489,000 was recorded.
    As at March 31, 2009, the Company had not drawn into its short-term
credit.
    In light of the current economic situation, the Company has significantly
reduced its planned capital expenditures for fiscal 2010 to approximately
$3,000,000 to $4,000,000. Cash flow from operations is expected to fund the
fiscal 2010 capital expenditures program. The Company is closely monitoring
the current economic situation and will continue to review its capital
programs in light of the volatility.

    Conference Call - REVISED

    The Company will be hosting a conference call to discuss the fourth
quarter 2009 operating results at 7:00am (Pacific) on June 26, 2009. To
participate on the call, dial either 1-800-731-5319 or 416-644-3426. The call
will also be webcast live on the Company's website at
www.westerncanadiacoal.com. For replay access please dial either 416-640-1917
or 1-877-289-8525

    About Western Canadian Coal

    Western Canadian Coal Corp. produces high quality metallurgical coal from
mines located in the northeast of British Columbia. The coal is sold to many
of the top steelmakers in the world. The Company also has interests in various
coal properties in northern and southern British Columbia and a 50% interest
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. For more information, please
visit www.westerncanadiancoal.com

    Forward-Looking Information

    This news release contains "forward-looking information" within the
meaning of applicable securities laws. Generally, forward-looking information
can be identified by the use of forward-looking terminology such as "plans",
"expects", or "does not expect", "is expected", "budget", "scheduled",
"estimates", "forecasts", "intends", "anticipates", or "does not anticipate",
or "believes" or variations of such words and phrases or statements that
certain actions, events or results "may", "could", "would", "might", or "will
be taken", "occur", or "be achieved". Forward-looking information is based on
the opinions and estimates of management at the date the information is made,
and is based on a number of assumptions and subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking information.
Many of these assumptions are based on factors and events that are not within
the control of Western and there is no assurance they will prove to be
correct. Factors that could cause actual results to vary materially from
results anticipated by such forward-looking information include changes in
market conditions, variations in coal recovery rates, risks relating to
operations, fluctuating coal prices and currency exchange rates, changes in
project parameters, the possibility of unanticipated costs and expenses,
labour disputes and other risks of the mining industry, failure of plant,
equipment or processes to operate as anticipated, the business of the
companies not being integrated successfully or such integration proving more
difficult, time consuming or costly than expected as well as those risk
factors discussed in the Annual Information Form for the year ended March 31,
2008 for Western available on www.sedar.com. Although Western has attempted to
identify important factors that could cause actual actions, events or results
to differ materially from those described in forward-looking information,
there may be other factors that cause actions, events or results not to be
anticipated, estimated or intended. There can be no assurance that
forward-looking information will prove to be accurate, as actual results and
future events could differ materially from those anticipated in such
information. Western undertakes no obligation to update forward-looking
information if circumstances or management's estimates or opinions should
change except as required by applicable securities laws. The reader is
cautioned not to place undue reliance on forward-looking information.

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





For further information:

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

Organization Profile

WESTERN COAL CORP.

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