Western Canadian Coal Corp. (TSX: WTN, WTN.DB & WTN.WT and AIM: WTN) ("Western" or the "Company") announces its operating results for the three month period ending June 30, 2008. During the first quarter of fiscal 2009, higher coal prices moved the Company firmly into a record net income position. The balance sheet was also strengthened considerably as a result of strong cash flow generation, conversion of convertible debentures, the securing of long-term bank financing and the subsequent repayment of short-term bridge financing.
The Company earned income from mining operations of $53 million in the first quarter of 2009, an increase from a loss in mining operations of $4 million in a similar period of the previous year. The increase was achieved because of higher coal prices realized from the current coal year contracts, which resulted in coal sales of $130 million. These sales were 140% higher than in the same quarter a year ago.
Coal volumes sold for the first quarter fiscal 2009 were 583,000 tonnes or 7% lower than the first quarter fiscal 2008. The average realized price of $224 per tonne in the current quarter was 166% higher than the same quarter of 2008. Approximately 159,000 tonnes of coal sold in the quarter, representing 27% of sales, was at last year's coal prices, which averaged $83 per tonne, with the balance sold at current year prices of US $300 per tonne for hard coking coal and US $248 for the low-vol PCI coal. All sales going forward in this fiscal year are at the new prices.
Net income for the first quarter 2009 was almost $60 million or earning per share of $0.42 and $0.27, on a basic and diluted basis respectively. As a result of the return to profitability and the visibility of earnings going forward, a $24 million of a possible $33 million future income tax asset which was previously written down was recovered during the quarter.
During the quarter, coal production was 614,000 tonnes or 23% lower than in the first quarter of 2008. As a result of the lower coal production volumes, higher mining contractor cost and increased fuel costs during the quarter, the Company suffered higher cash costs for production. Cash costs for the first quarter 2009 were $120 per tonne versus $81 per tonne in the first quarter 2008; however cash costs going forward are expected to decrease as the strip ratio improves over the coming months. The quarter's lower coal production was consistent with the Company's plans to use a higher coal price environment to focus on waste rock removal. Due to lower coal prices and productivity issues in the previous year, the Company did not remove the required amount of waste rock.
In the quarter ending June 30 2008, the Company increased its removal of waste material by 47% over the same quarter a year ago. Once past this phase of rock removal, the Company expects to achieve monthly production targets by the end of the second quarter 2009. The Company expects to produce 1.7 million tonnes of hard coking coal, 0.2 million tonnes of mid-vol PCI coal and 1.6 million tonnes of low-vol PCI coal in fiscal 2009.
"While it may not show up in the amount of coal produced this quarter, I am pleased with the improved productivity levels being achieved at the mines," said Mr. John Hogg, President and CEO of Western Canadian Coal Corp. "We have increased productivity at the Wolverine operation, while Brule continues to meet all expectations at its higher operating rates. Once past this phase of waste rock removal at Wolverine, we'll see coal production increase and we are confident that we will meet our production and cost goals for the year."
Mr. Hogg continues, "The second quarter is expected to be stronger as we achieve the full benefit of the current high coal price for all of our production, expect an improvement in the ratio of clean coal produced to waste removed and lower our mining costs."