TORONTO, Jan. 24, 2012 /CNW/ - Pacific Coal Resources Ltd. (TSXV: PAK)
today provided an operational update on its fourth quarter and full
year 2011 production at its La Caypa, Cerro Largo, and CI Jam mines.
Luis Carvajales, Chief Executive Officer of Pacific Coal, commented: "We
are very pleased by the Company's production progression during the
fourth quarter of 2011. The Company produced 356,542 tonnes of thermal
coal this quarter from its La Caypa and Cerro Largo mines, while
reducing stripping ratios at both properties. For the full 2011 year,
our combined production at both mines was 1,537,624 tonnes of thermal
coal, just slightly below our expectations of 1.6 million to 1.7
million tonnes. We are particularly proud of reaching these production
levels, as we achieved a new historical annual record production at La
Caypa by completing 101% of our target production and over 96% of our
expected combined total despite weather-related delays. Going forward,
we expect stabilized growth in our production. We have a strong
portfolio of cash generating assets in Colombia, with exposure to
thermal coal, coke and the commercialization of asphaltite. In terms of
margin expansion we are working towards reducing costs on a per tonne
basis. As royalty payments from La Caypa increased last quarter based
on international coal prices, these increased costs significantly. It
is important to clarify that these costs are prepaid a quarter in
advance, and they are expected to decrease in coming quarters based on
recent trends in international coal prices. Increasing efficiencies and
improving costs wherever possible are still initiatives that are key
areas of focus for the Company, and in conjunction with a fully
committed trucking fleet in place, these costs are expected to decline
as well this quarter and throughout 2012."
Current production at La Caypa
During the fourth quarter, La Caypa produced 269,245 tonnes and improved
stripping ratios. For the full year 2011, production at La Caypa
exceeded management's expectations, reaching 1,239,583 tonnes, 101.1%
of the Company's planned production.
Due to increased efficiencies at the mine, the fourth quarter strip
ratio at La Caypa continued to fall, reaching 5.79:1, versus 6.16:1 in
the previous quarter, representing an approximate improvement of 6%.
As a consequence of extreme weather conditions in the month of
September, a bridge located between La Caypa and Cuestecitas was washed
out for 45 days. The Company utilized its own resources to repair and
rebuild this bridge in order to quickly restore transportation
capabilities for its coal and limit production delays. The alternative
would have been for the Company to use a longer and more expensive
route, thereby impacting production and deliveries while awaiting
government authorities to order repairs for this bridge. The bridge
reconstruction was completed on November 12, 2011 at a cost of
US$347,000 to the Company and will be included in the Company's General
& Administrative ("G&A") expenses for the fourth quarter of 2011 as a
one-time expenditure. The Company expects that this expenditure saved
the Company approximately US$1.56 million in the fourth quarter of 2011
and saves a further US$3.26 million in each of the first and second
quarters of 2012, totalling expected savings of approximately US$8.08
million if the alternate route needed to be utilised while the
situation continued to be unresolved.
Current production at Cerro Largo - La Divisa
*Q1/2011 production of Cerro Largo was prior to Pacific Coal acquisition
In the fourth quarter of 2011, the Company made further progress at
Cerro Largo, resulting in improvements in both production and strip
ratio. Production was up quarter over quarter, improving to 87,297
tonnes versus 85,014 tonnes in the third quarter, while the strip ratio
was reduced to 17.72:1, versus 19.06:1 in the third quarter. For the
year 2011, the Company produced 6,151,724 tonnes, 56.5% of planned
production. The Company did not meet this target due to necessary
modifications implemented on the mine plan in connection with the heavy
rains of October and November to ensure safety associated with high
wall instability. The project is still in a ramp-up phase and
management estimates that Cerro Largo will increase production by 200%
(to approximately 180,000 tonnes) and improve its strip ratio by
approximately 15% during the first quarter of 2012.
Fourth quarter 2011 exports from both La Caypa and Cerro Largo totaled
CI Jam operational balance 2011
Third Party Coal Purchases
La Mona Mine
Total Coal Handled
Coal Converted to Coke (as of December 31, 2011)
Coal Ending Inventory (as of December 31, 2011)
Coal at Inventory Converted to Coke
Coke Converted at Jam Ovens with the 13,543.26 consumed
Third Party Purchase as Trial
Coke Processed on Third Party Ovens
Coke Ending Inventory
Exploration continues at all of the Company's properties with the
objective of updating its resources and reserves through the completion
of National Instrument 43-101 compliant technical reports. Drilling
programs at La Caypa, La Divisa and CI Jam were at 60% completion as of
December 31, 2011. The technical reports are expected to be completed
during the first quarter of 2012.
The Company continues to advance its asphaltite trials and is on
schedule to release results in early 2012. CAW combustion trials were
conducted during the second week of December, producing positive
results. A visitor day at the Babcock & Wilcox facilities to receive a
full briefing on trial results will be scheduled for Q1 2012. A fact
sheet on the properties, uses and commercialization opportunities for
asphaltite is available on the Company's website at www.pacificcoal.ca.
SRK has been retained as a consultant in the document elaboration,
conceptual design, tender issuance and bid evaluation for the
underground mine project at La Caypa. This process is expected to be
concluded by the end of Q2 2012 and operations to commence in 2013.
La Tigra exploration
Geophysical, metallurgic and gravimetric studies are in progress and
results are expected for the second half of February. Subsequently, a
full exploration program involving the Company's rigs, 5 in total, is
expected to be undertaken in the period of March through July 2012.
Land movement for the coal/coke yard is set to commence in the last week
of January. Engineering and design work is ongoing with Nathan and
Associates. Development work continues with the goal of having an early
operation by Q3 2012.
As at December 31, 2011 8.4 million shares have been purchased for
cancellation under the normal course issuer bid, previously announced
on July 4, 2011. The Company currently has 324.8 million shares
About Pacific Coal Resources Ltd.
Pacific Coal Resources Ltd. is a Canadian-based mining company focused
on coal, coking coal, asphalt and asphaltite exploration, development
and production from prospective producing, development-stage and
exploration-stage properties in Colombia. The Company has acquired or
entered into agreements to acquire various interests in several
operating coal mines and projects, representing a substantive coal and
asphaltite exploration and production area throughout Colombia. Pacific
Coal is committed to implementing its exploration and development
strategy with a comprehensive environment, safety and community
program, meeting international standards of best practice.
Forward Looking Information:
This news release contains "forward-looking information", which may
include, but is not limited to, statements with respect to the future
financial or operating performance of the Company and its projects.
Often, but not always, forward-looking statements can be identified by
the use of words such as "plans", "expects", "is expected", "budget",
"scheduled", "estimates", "forecasts", "intends", "anticipates", or
believes" or variations (including negative variations) of such words
and phrases, or state that certain actions, events or results "may",
"could", "would", "might" or "will" be taken, occur or be achieved.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of Pacific Coal to be materially different
from any future results, performance or achievements expressed or
implied by the forward-looking statements. Forward-looking statements
contained herein are made as of the date of this press release and
Pacific Coal disclaim, other than as required by law, any obligation to
update any forward-looking statements whether as a result of new
information, results, future events, circumstances, or if management's
estimates or opinions should change, or otherwise. There can be no
assurance that forward-looking statements will prove to be accurate, as
actual results and future events could differ materially from those
anticipated in such statements. Accordingly, the reader is cautioned
not to place undue reliance on forward-looking statements.
Neither TSX Venture Exchange nor its Regulation Services Provider (as
that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this news release.
SOURCE Pacific Coal Resources Ltd.
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