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You are right......$.12 by eod
NITE got someone to unload another 15k at $.085 by bringing the ask down to $.10 before vacating (lol). Problem is, any significant buyer will really have to pay $.10 or more. If we end over $.14, then $.25 by end of week.
We will probably trade between .9 and .14 today but I do believe will will end the day over .12 because if any news comes out after trading on any day this will open trading the next day way up. I am sure that right now someon is trying to accumuate big inder the radar. For every seller there is a buyer. The smarts ones at these prices are the buyers.
$.10's gone.........offering $.12 (eom)
Yes, I agree. This is the chance of a lifetime. They will work it out and we will be big winners.
Sellers appear to be gone.........low of $.085
Wish I had more funds in my account right now. Going up!!!
Book value was over $.60 on June 30th
They just have trouble with working capital. At $.10, the market is saying PVMCF is only worth $7.5Mil. That is crazy. Sellers here are just plain stupid at this point. I'm wiring money today to buy more. GLTA
Yes, to sell now is too late. We need to hope for a buyout. They did get the protection approval so I thenk they should be able to work out a deal. They may even already have one and that why they wanted the protection.
You might be right..........even after
the "oxidized coal" event, this is trading far below its book value.
Maybe not a bad thing if they can sell the company.
Pine Valley files for bankruptcy protection
2006-10-20 16:25 ET - News Release
Mr. Robert Bell reports
PINE VALLEY FILES FOR CREDIT PROTECTION UNDER CCAA
Pine Valley Mining Corp.'s management has concluded that, due to continuing production problems encountered at its Willow Creek mine, which problems have resulted in a significant and worsening working capital shortfall, and the company's inability to raise sufficient new financing on satisfactory terms, it is in the best interests of the company, its shareholders and its creditors for the company to apply for creditor protection under the Companies' Creditors Arrangement Act (Canada). Consequently, the company has instructed its legal counsel to file such an application in the Vancouver Registry of the B.C. Supreme Court on Friday, Oct. 20, 2006.
Pine Valley will initially seek an order effective for a period of 30 days, during which time creditors and other third parties will be stayed from terminating agreements with Pine Valley or otherwise taking steps against Pine Valley. The purpose of obtaining the order is to afford Pine Valley an opportunity to preserve the going concern value of its assets as it assesses its alternatives, including the possible sale of the company, to satisfy creditors and preserve shareholder value. The company is in the process of selecting an outside adviser to assist in that process. The company anticipates that Ernst & Young LLP will be appointed by the court as the monitor in the CCAA proceedings.
OT watch GBRIF, MDMN, CDCH MDMN should see .10 after J/V announced as early as next week!
PINE VALLEY MINING CORP
Pine Valley Reaches Agreement With An an Unaffiliated Lender On on Revised Credit Facilities
10/16/2006
VANCOUVER, BRITISH COLUMBIA, Oct 16, 2006 (MARKET WIRE via COMTEX News Network) --
Pine Valley Mining Corporation (TSX: PVM)(OTCBB: PVMCF) (the "Company" or "Pine Valley") reports that, further to the debt financing discussions first reported in its September 28, 2006 news release, Pine Valley has reached an agreement with an unaffiliated lender ("Lender") on a revised secured credit facility under which the Lender will, if the proposed transaction completes, lend to the Company and its affiliates up to CAD$25 million. The proposed facility would include a term loan of CAD$10 million at an interest rate of prime plus 4% per annum and a revolving credit facility of up to CAD$15 million at an interest rate of prime plus 4% per annum (the "Credit Facilities"). As an additional component of the consideration for the Credit Facilities, the Company will issue to the Lender, at closing, common share purchase warrants entitling the Lender to purchase up to 10% of the post-dilution common shares of the Company, exercisable for a period of 2 years from their issuance at an exercise price CAD$0.34 per share.
Under the proposed Credit Facilities, if the Company is able to raise an additional CAD$10 million in new equity or other financing subordinate to the Credit Facilities within 30 days of the initial Credit Facilities closing, then the maturity date of the Credit Facilities will be July 31, 2007, otherwise the maturity date will be February 28, 2007. If the Company does not raise the additional CAD$10 million it will issue additional common share purchase warrants entitling the Lender to purchase up to an additional 25% of the post-dilution common shares of the Company, exercisable for a period of 2 years from their issuance at an exercise price CAD$0.34 per share.
Proceeds from the Credit Facilities will be used to repay certain existing debts of the Company, including the entire balance owing to Royal Bank Asset Based Finance, a Division of Royal Bank of Canada, as well as providing additional working capital.
The completion of the above described Credit Facilities transaction is subject to several conditions including, the acceptance of the Toronto Stock Exchange, the completion of the Lender's due diligence investigations, final negotiation of satisfactory credit documentation, and ancillary agreements with certain of the Company's existing lenders.
The securities the Company proposed to issue under the above-described transactions have not nor will they be registered under the United States Securities Act of 1933 or any U.S. state securities laws, and unless so registered may not be offered or sold in the United States, except pursuant to an exemption from, or in a transaction subject to, the registration requirements of the Securities Act of 1933 and applicable state securities laws. This press release is issued pursuant to Rule 135Copyright of the Securities Act of 1933, and does not constitute an offer to sell, or the solicitation of an offer to buy, nor shall there be any sale of any such securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
This news release contains certain "forward-looking statements", as defined in the United States Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties including but not limited to economic, competitive, governmental and geological factors effecting the Company's operations, markets, products and prices and other risk factors. There can be no assurances that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Factors that could cause future results to differ materially from those anticipated in these forward-looking statements include the Company's dependence on the steel industry, volatility in coal prices, accidents and other risks associated with mining operations, the Company's need for and availability of additional financing, the restrictions imposed under the Company's existing debt arrangements and its debt service requirements and the other risk factors discussed in greater detail in the Company's various filings with the Securities and Exchange Commission and Canadian securities regulators, including the Company's Form 20-F dated June 21, 2006.
PINE VALLEY MINING CORPORATION
Robert Bell, President and Chief Executive Officer
Contacts: Pine Valley Mining Corporation Robert (Bob) Bell President & Chief Executive Officer (604) 682-4678 Pine Valley Mining Corporation Martin Rip Vice President Finance and CFO (604) 682-4678 Email: pinevalley@pinevalleycoal.com Website: www.pinevalleycoal.com
SOURCE: Pine Valley Mining Corporation
mailto:pinevalley@pinevalleycoal.com http://www.pinevalleycoal.com
Copyright 2006 Market Wire, All rights reserved.
OT Sorry its mckycat@yahoo.com
O.T. You 've got mail Mickey.EOM
Thanks for the tip.
Put GLIF on radar!! Got in Friday myself....huge huge news expected next week. Good luck. ..not many investors on IHUB noticed about it .
OT Vero, I could not private reply back to you. I sent an email to your yahoo but it bounced. Send me your email and I will provide you wit MM picks. NEOM is not one of them but I consider it a hugh potential winner down the line. My email is: mcktcat@yahoo.com
Just bought more @ .30. I think MM is intentionally dumping below the bid/ask to keep the price down. When I have seen this in the past it usually means MM is trying to shake out investors and acumulate. When they are done the price flys.
me too....I have bought enough....just wish to see more people buying at these undervalued prices
Yes, the coal reserves are the key here. I plan to sit and wait. I hope we don't see a .25 bottom, my hope is we just hit it.
I think we must be at or near bottom....take a look at a 2 or 3 year chart....it seems to me that .25-.30 is a support price...what do you think?
T.S. is possitive on PVMCF that they can make it work, but our only insurance is coal reserves
Ouch, we have to be at a bottom now! Wonder if TS is selling this one too. All the bad news has to be in this price. The coal reserves have to be worth at least 2 bucks a share.
Pine Valley Enters Agreement With its Mining Contractor
Thursday October 5, 5:23 pm ET
Provides for mining services through June 30, 2007 with potential to discuss longer term arrangement
VANCOUVER, BRITISH COLUMBIA--(MARKET WIRE)--Oct 5, 2006 -- Pine Valley Mining Corporation (TSX:PVM.TO - News)(OTC BB:PVMCF.OB - News) (the "Company" or "Pine Valley") is pleased to announce that it has negotiated a new contract with Tercon Mining PV Ltd. ("Tercon"), the Company's mining services provider. The agreement provides for continued provision of mining services until June 30, 2007, at current unit rates, and maintains the possibility of discussing a longer term arrangement but not the requirement to do so.
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Bob Bell, President and Chief Executive Officer of Pine Valley, said, "We are very pleased with this agreement because it provides a stable mining situation for an extended period. This is an important development for the company as we build a platform for added shareholder value."
This news release contains certain "forward-looking statements", as defined in the United States Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties including but not limited to economic, competitive, governmental and geological factors effecting the Company's operations, markets, products and prices and other risk factors. There can be no assurances that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Factors that could cause future results to differ materially from those anticipated in these forward-looking statements include the Company's dependence on the steel industry, volatility in coal prices, accidents and other risks associated with mining operations, the Company's need for and availability of additional financing, the restrictions imposed under the Company's existing debt arrangements and its debt service requirements and the other risk factors discussed in greater detail in the Company's various filings with the Securities and Exchange Commission and Canadian securities regulators, including the Company's Form 20-F dated June 21, 2006.
PINE VALLEY MINING CORPORATION
Robert Bell, President and Chief Executive Officer
Press Release Source: Pine Valley Mining Corporation
Pine Valley Provides Update on Fines Recovery in Washplant
Friday October 6, 9:07 pm ET
An independent consulting firm has been engaged to identify and recommend improvements
VANCOUVER, BRITISH COLUMBIA--(MARKET WIRE)--Oct 6, 2006 -- Pine Valley Mining Corporation (TSX:PVM.TO - News)(OTC BB:PVMCF.OB - News) (the "Company" or "Pine Valley") provides an update on the recovery of fine coal in its washplant, as disclosed in its last Management's Discussion & Analysis dated August 11, 2006. The Company has continued to realize recoveries of fine coal that are lower than anticipated in the Company's Technical Report dated March 30, 2006 as filed on SEDAR. This is having a material impact on operating results. An independent consulting firm has been engaged to study the Company's coal washing and handling processes in order to identify and recommend methods to improve the washplant's overall coal recovery. An initial study by this consulting firm has identified areas whereby likely recovery improvements can be achieved and the Company plans to continue with this work to amend the current plant design as well as perform a more detailed study and analysis to improve the plant yield. These plans may involve capital expenditures, the value of which will not be available until more detailed work has been undertaken.
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This news release contains certain "forward-looking statements", as defined in the United States Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties including but not limited to economic, competitive, governmental and geological factors effecting the Company's operations, markets, products and prices and other risk factors. There can be no assurances that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Factors that could cause future results to differ materially from those anticipated in these forward-looking statements include the Company's dependence on the steel industry, volatility in coal prices, accidents and other risks associated with mining operations, the Company's need for and availability of additional financing, the restrictions imposed under the Company's existing debt arrangements and its debt service requirements and the other risk factors discussed in greater detail in the Company's various filings with the Securities and Exchange Commission and Canadian securities regulators, including the Company's Form 20-F dated June 21, 2006.
PINE VALLEY MINING CORPORATION
Robert Bell, President and Chief Executive Officer
Contact:
Contacts:
Pine Valley Mining Corporation
Robert (Bob) Bell
President & Chief Executive Officer
(604) 682-4678
Pine Valley Mining Corporation
Martin Rip
Vice President Finance and CFO
(604) 682-4678
Email: pinevalley@pinevalleycoal.com
Website: http://www.pinevalleycoal.com
Great news! Thanks for posting
Press Release Source: Pine Valley Mining Corporation
Pine Valley Extends Rockside Repayment Terms and Enters into Discussions with an Unaffiliated Lender for a Credit Facility Up to $37.5 Million
Thursday September 28, 5:33 pm ET
VANCOUVER, BRITISH COLUMBIA--(MARKET WIRE)--Sep 28, 2006 -- Pine Valley Mining Corporation (TSX:PVM.TO - News)(OTC BB:PVMCF.OB - News) (the "Company" or "Pine Valley") is pleased to announce that it has negotiated an extension of the due date for repayment of the debt financing provided to the Company by The Rockside Foundation ("Rockside") from September 30, 2006 to October 31, 2006 (the "extension period"). The Company currently has principal of US$8.85 million due under this facility. During the extension period interest will continue to accrue at a rate of 12% per annum.
ADVERTISEMENT
In addition, the Company has entered into discussions with and signed a term sheet with an unaffiliated lender ("Lender") under which, Lender will, if the transaction completes, lend to the Company and its affiliates up to $37.5 million. The proposed facility would include a term loan of $20 million and a revolving credit facility of up to $17.5 million (the "Credit Facilities") with a maturity date of September 30, 2007. The Credit Facilities also contemplate an option to extend the maturity date to March 31, 2008.
The completion of the above described Credit Facilities transaction is subject to certain conditions including the completion of due diligence processes and negotiation of documentation. Any debt offered as part of the Credit Facilities financing will not be registered under the U.S. Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
Proceeds from the Credit Facilities will be used to repay existing debts, including the entire balance owing to Royal Bank Asset Based Finance, a Division of Royal Bank of Canada and a portion of the balance due to Rockside, as well as providing additional working capital. Furthermore, upon completion of the Credit Facilities, the remaining portion of the Rockside loan repayment will be extended to October 1, 2007 or April 1, 2008 should the new Credit Facilities be extended.
This news release contains certain "forward-looking statements", as defined in the United States Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties including but not limited to economic, competitive, governmental and geological factors effecting the Company's operations, markets, products and prices and other risk factors. There can be no assurances that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Factors that could cause future results to differ materially from those anticipated in these forward-looking statements include the Company's dependence on the steel industry, volatility in coal prices, accidents and other risks associated with mining operations, the Company's need for and availability of additional financing, the restrictions imposed under the Company's existing debt arrangements and its debt service requirements and the other risk factors discussed in greater detail in the Company's various filings with the Securities and Exchange Commission and Canadian securities regulators, including the Company's Form 20-F dated June 21, 2006.
PINE VALLEY MINING CORPORATION
Robert Bell, President and Chief Executive Officer
Contact:
Contacts:
Pine Valley Mining Corporation
Robert (Bob) Bell
President & Chief Executive Officer
(604) 682-4678
Pine Valley Mining Corporation
Martin Rip
Vice President Finance and CFO
(604) 682-4678
pinevalley@pinevalleycoal.com
http://www.pinevalleycoal.com
Source: Pine Valley Mining Corporation
My cost is a lot higher too. I have just been getting more every time I think we bottomed. So I am hoping this is it, otherwise....I will just close my eyes...
It better hold. I have alot at a much higher cost. The potential with this stock is hugh. Easy 10 to 20 bagger when met coal picks up.
it's holding around .50
Hope too this is bottom....there is no significant volume lately
vero
putting more in the piggy bank?...good. I have already added enough, always averaging down...let's just be patient...:)
I doubled down today. I have a feeling this is the bottom.
just added some more @.75....good luck¡
Pine Valley Announces Fiscal 2007 First Quarter Results
Aug 14, 2006 17:09:28 (ET)
VANCOUVER, BRITISH COLUMBIA, Aug 14, 2006 (MARKET WIRE via COMTEX) -- Pine Valley Mining Corporation (PVMCF, Trade ) (the "Company" or "Pine Valley") announces its results for the three months ended June 30, 2006. The Company's unaudited consolidated financial statements and its management's discussion and analysis ("MD&A") are available under the company profile on SEDAR at www.sedar.com or may be accessed through the Company web site at www.pinevalleycoal.com .
Robert (Bob) Bell, President & Chief Executive Officer of Pine Valley, will host a conference call and webcast to discuss the quarterly results on Tuesday, August 15, 2006 at 8:00 a.m. PDT / 11:00 a.m. EDT.
The call can be accessed by calling the operator at 416-695-5261 or toll free on 1-877-888-4210 prior to the scheduled start time. A playback version of the call will be available for two weeks up to August 29, 2006 at 416-695-5275 or North America toll free 1-888-509-0081, using passcode 629251.
A live webcast of the call will be available via a link at the Company's web site - www.pinevalleycoal.com .
Highlights of First Quarter Results
- The Company realized sales for the three months ended June 30, 2006 of $20.7 million, representing 147,319 tonnes of PCI product and 49,489 of coking coal at an average price of $104.95 per tonne (US$92.72). Significant milestones were reached during the current quarter as the one millionth tonne of PCI coal since commencement of operations was shipped in April 2006, and, in June, the Company successfully completed its first commercial shipment of coking coal to a customer in Europe.
- The Company produced 187,302 tonnes of PCI and coking coal product. Cash cost of production for product coal to the port was $82.13 per tonne.
- Operating profit for the first quarter was $1.5 million and positive cash flows of $1.4 million were realized from mining activities.
- Net income for the quarter was $83,000 or $0.00 per share.
SUMMARY - Presented in accordance with Canadian GAAP (unaudited)
(Thousands of dollars, Three months ended June 30,
except per unit amounts) 2006 2005
--------------------------------------------------------------------
Statement of operations
Revenues $ 20,655 $ 13,474
Income from operations $ 1,464 $ 450
Net income (loss) $ 83 $ (1,814)
Basic and diluted income
(loss) per share $ - $ (0.03)
Coal statistics - Non GAAP
Coal production (tonnes) 187,302 206,267
Coal sales (tonnes) 196,808 180,307
Average realized US$ coal
price (per tonne) $ 92.72 $ 60.74
Average realized CDN$ coal
price (per tonne) $ 104.95 $ 74.73
Balance sheet
Total assets $ 88,688 $ 70,139
Total liabilities $ 40,227 $ 42,224
Shareholders' equity $ 48,461 $ 27,915
Results of Operations
Revenues from coal sales for the quarter ended June 30, 2006 were $20.7 million based upon 196,808 tonnes of PCI and coking coal product shipped to customers (compared to $13.5 million on 180,307 tonnes of PCI product for the three months ended June 30, 2005) representing an increase from the prior period of $7.2 million or approximately 53%. The realized average sales price for the quarter was $104.95 per tonne (US$92.72) compared to $74.73 (US$60.74) for the quarter ended June 30, 2005.
The Company utilizes a non-GAAP financial measure to determine the production cost per tonne of coal sold, which includes all direct mining, processing and transportation costs to bring the coal to the port. This financial measure enables the Company to determine its average cost of production and hence efficiency with regard to mining and transportation operations, without the effect of selling costs, compliance and new product sampling costs, general and administrative overhead and non-cash charges such as depletion and depreciation, such items being outside the direct control of the mine operations. Utilizing this measure, the cash cost per tonne for product sold in the quarter relating to direct costs for mining, processing, transport and port receiving charges (the "production cost") was $82.13 (compared to $61.74 for the preceding year). To facilitate a better understanding of this measure a reconciliation of this factor to the unaudited consolidated financial statements "mining and transportation costs" for the period ended June 30, 2006 is provided in the table below.
Non-GAAP production statistics (unaudited)
(Thousands of dollars, Three months ended June 30,
except per unit amounts) 2006 2005
--------------------------------------------------------------------
Coal sales (tonnes) 196,808 180,307
Product coal produced (tonnes) 187,302 206,267
Mining and transportation costs $ 16,830 $ 11,664
Less: Selling and non-production
costs included in mining and
transportation $ (666) $ (532)
-----------------------------
Mining, transportation and port
receiving costs $ 16,164 $ 11,132
-----------------------------
-----------------------------
Mining, transportation and port
receiving cash costs (per tonne) $ 82.13 $ 61.74
-----------------------------
-----------------------------
Total cost of operations for the quarter ended June 30, 2006, was $19.1 million compared to $13 million for the three months ended June 30, 2005. The increase in production cost is attributable to the following significant factors with regards to the mining and facility operating costs:
- Average strip ratio relating to product sold during the quarter ended June 30, 2006 was 7.82:1 compared to 7.08:1 for the quarter ended June 30, 2005. The impact of this higher strip ratio amounted to an increased cost per tonne of approximately $5.22 for the June 30, 2006 quarter. This strip ratio is based on saleable coal production and has increased due to lower than expected recoveries achieved in the washplant on fine coal compared to the Company's Feasibility Study. The Company is currently reviewing coal mining and washing methods as well as handling procedures in order to implement improvements and revised methods so as to bring the recoveries into line with previously anticipated recovery rates as per the Feasibility Study.
- The Company's mining contractor (Tercon Construction Ltd.) has, during the period since mining commenced, revised coal and waste mining rates. These revised rates contributed to an increase of approximately $9.37 per tonne for coal sold in the quarter ended June 30, 2006 compared to the equivalent prior period. The increased rates charged by Tercon are directly affected by the mining strip ratios and the amount charged is reflective of the prevailing strip ratios at a point in time. The increase represents an overall rate increase of approximately $1.20 per bank cubic metre of waste mined.
- Approximately $2.20 per tonne relates to increased costs as a result of the Company operating both a raw coal crushing and handling facility and a washplant during the quarter ended June 30, 2006 compared to the three months ended June 30, 2005. The crushing and handling facility was completed in February 2005 and the washplant in December 2005.
- The Company continued to incur the cost of fuel surcharges which reflect the continued high commodity cost of oil in world markets. These surcharges relate to both rail and services provided by the Company's mining contractor. The total fuel surcharge costs in the three months ended June 30, 2006 amounted to $4.65 per tonne of product coal sold compared to $2.93 per tonne for the quarter ended June 30, 2005. These fuel surcharge costs are included in the Company's production cost per tonne.
Selling costs for the quarter totalled $4.40 per tonne ($3.97 for the quarter ended June 30, 2005). These costs include selling commissions, port charges relating to vessel loading and costs associated with coal sampling. Selling costs were higher on a per tonne basis compared to the prior year period primarily as a result of comparatively higher commission costs based on the higher average sales price realized. Administrative costs for the three months ended June 30, 2006 include a claim lodged with the Company's rail provider for coal lost in transit to the port by way of a derailment. The total claimed is $0.2 million and has been treated, net of production costs for the coal, as an offset to expenditures being in the nature of an insurance claim.
Administrative/amortization costs totaled a combined $11.07 per tonne, excluding the impact of the rail insurance claim. ($6.06 for the three months ended June 30, 2005).The increase in administrative/amortization per tonne costs relates to the increased charges for depreciation of plant and equipment given the operation of the washplant since December 2005.
General and administrative expenses not directly related to mining operations at the Willow Creek mine totalled $1.1 million for the quarter ended June 30, 2006. This represents an increase of $0.28 million from the three months ended June 30, 2005. This overall decrease is described in further detail below.
Salaries and stock-based compensation for the quarter ended June 30, 2006 decreased by $0.25 million compared to the three months ended June 30, 2005. Stock-based compensation expense, included in the total expense, decreased by $0.35 million for the quarter compared to the prior period. This decrease resulted from the valuation calculated using the Black-Scholes method for options granted on March 21, 2006. The assumptions used in the calculation are described in Note 10 to the unaudited consolidated financial statements at June 30, 2006.
Actual salary expense increased by $0.1 million for the three months to June 30, 2006 compared to June 30, 2005 as a result of the Company's continuing to build its capabilities through the addition of new personnel.
Office and general expenses increased from $0.1 million for the quarter ended June 30, 2005 to $0.2 million for the three months ended June 30, 2006. The increased expenditures are reflective of the increased volume of activity at the Company and specific additional areas are insurance coverage (primarily Directors and Officers liability and property insurance for the mine infrastructure).
Professional fees decreased for the quarter from $0.2 million (June 30, 2005) to $0.1 million (June 30, 2006). This decrease arose as the Company, in the prior year period, was engaged in many activities requiring the services of legal counsel (such as refinancing, negotiation of contracts relating to the operations at the Willow Creek Mine and also general consultation on corporate legal matters). There were fewer such activities during the current quarter.
Interest and financing costs decreased from $0.6 million for the quarter ended June 30, 2005 to $0.4 million for the period ended June 30, 2006. This arose as a result of the lower levels of debt carried by the Company following the repayment of term loans to Mitsui Matsushima and Marubeni Corporation in the year ended March 31, 2006.
The Company recorded a gain on foreign exchange of $0.1 million for quarter ended June 30, 2006 (loss of $0.8 million for the quarter ended June 30, 2005). As the Company's debt consists primarily of US dollar loans, the weakening of the US dollar relative to the Canadian dollar has resulted in an unrealized exchange gain to the Company. During the quarter ended June 30, 2006, the US to Canadian dollar exchange rate moved from 1.16 to 1.12, while the prior year period ended June 30, 2005 saw the exchange rate move from 1.21 to 1.23.
The Company has recognized a future income tax expense of $46,000 for the quarter ended June 30, 2006 (June 30, 2005 - recovery of $439,000). The Company has also recognized a mining tax expense of $23,000 relating to British Columbia Mineral Taxes for mining activities at the Willow Creek mine. The Company has based these amounts on estimates with regard to the marginal tax rate at which it expects to pay taxes for the 2007 fiscal year. These estimates are subject to a variety of factors that could impact the exact marginal rate at which the Company is taxable, including, but not limited to, its ability to sustain profitable operations, the availability of its income tax loss carryforwards and other tax assets.
As a result of the foregoing, the Company realized consolidated net income for the quarter ended June 30, 2006 of $83,000 (or $0.00 per share) as compared to net loss of $1.8 million (or $0.03 per share) for the quarter ended June 30, 2005.
Liquidity, Financial Condition and Capital Resources
As at June 30, 2006, the Company had cash of $5.1 million and a working capital deficiency of $10.5 million compared to cash and a working capital deficiency of $0.8 million and $11.8 million at March 31, 2006 respectively. This deficit reflects the classification on the entire $20.3 million of the Company's indebtedness as a current liability at June 30, 2006. The Company's outstanding indebtedness consists primarily of borrowings from Royal Bank Asset Based Finance, a Division of Royal Bank of Canada ("Royal Bank" or "Bank") and The Rockside Foundation ("Rockside") used to fund capital expenditures, general and administrative expenses, and working capital for the Willow Creek Coal Mine. The Company's cash balance was higher than normal at June 30, 2006 as, under its arrangements with the Bank, cash draws on the operating line are made on a Friday, being the same day as the current period end for financial reporting purposes. Accordingly, the Company drew funds on June 30, 2006 in order to pay suppliers the following week.
On June 15, 2006, the Company's loan from Rockside was amended such that the terms of repayment were extended from June 30, 2006 to September 30, 2006. In addition, the Company retained an independent financial advisor to assist it, on a best efforts basis, in securing additional debt financing. The completion of any transaction resulting from this engagement will be subject to certain conditions including the completion of due diligence processes and negotiation of documentation. Any debt offered as part of any financing will not be registered under the U.S. Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
There can be no assurance that alternate financing, or any additional debt or equity financing that the Company may require in future periods, will be available in the amount required at any particular time or for any particular period or, if available, that it can be obtained on terms satisfactory to the Company.
To date, while the Company has overall realized cash inflows from sales of its PCI product, it has continued to depend upon debt and equity financing in order to fund exploration and development programs and its working capital requirements. To the extent that the Company's cash flow from operations is lower than expected, it will have to continue its reliance upon equity issuances and debt to fund operations.
The Company realized cash inflows from operating activities of $1.3 million for the quarter ended June 30, 2006 compared to $1 million for the quarter ended June 30, 2005. Financing activities provided net cash inflows of $4.3 million for the period. Net additional loan receipts of $4.85 million were drawn on the Royal Bank operating line during the quarter ended June 30, 2006 such that the total balance outstanding on the line was $10.5 million (out of a total facility of $20 million). At June 30, 2006, the Company had additional room on the operating line under its borrowing base calculation to draw an additional $2.5 million.
For the quarter ended June 30, 2006, the Company incurred cash expenditures of $1.4 million on investing activities, of which $0.6 million related to payment of outstanding accounts payable relating to construction in the year ended March 31, 2006. Property, plant and equipment additions incurred in the quarter ended June 30, 2006 amounted to $0.8 million.
The result of these cash flows was an increase in cash for the quarter ended June 30, 2006 of $4.3 million, after incorporating the effect of the foreign exchange rate on cash.
Outlook
The Company's financial results are highly dependent upon factors including supply and demand in both the steel and metallurgical coal markets, coal prices, production and sales volumes, the U.S./Canadian dollar exchange rate and production costs (including strip ratios).
Sales and Marketing Initiatives
Sales of the Company's coal products are generally made under long-term contracts for which annual prices are negotiated and settled. Typically, these settlements are made in advance of the commencement of the coal year on April 1. While trial sales to new customers are generally made under short term agreements, successful trials often lead to longer term contract discussions. The market outlook has been and continues to be affected by the steel mills generally overbuying coal during the fiscal year ending March 31, 2006 in anticipation of supply disruptions experienced in prior years. However, there were no significant supply disruptions during that year. Furthermore, some steel mills decreased their production for a period during the year ended March 31, 2006 in response to an apparent development of steel over-supply. As a result of these factors, steel mills, late in the 2005 calendar year, were reporting higher-than-normal coal inventories such that they could no longer accept new deliveries of coal.
In light of these circumstances, reported coal settlements for the 2006 coal year have indicated that the contracted price for low-volatile PCI coal is in the mid to high US$60/tonne range while coking coal settlements have been noted in the range of US$90 - 115 depending upon the individual specifications for the coking coal. The Company's pricing settlements to date have been consistent with these ranges. In addition, there have been a small number of market settlements announced for Canadian coal during recent months and these continue to fall within the above-noted range. The price differential between coking coal and PCI is much wider than is traditionally the case and the Company expects that this will increase PCI coal demand from steel mills where the blast furnace can accept more such coal in the mix. Accordingly, the Company currently anticipates that the long-term pricing for PCI will be relatively stronger than the current year and that the price gap between our PCI and coking coal products will narrow as a result. The fundamentals of the steel business remain positive over the longer term with growing demand for the product and new steel making and coke making capacity being developed by a number of large steel companies.
The Company has evaluated these market conditions and revised its production plans accordingly such that it intends to realize sales of approximately 650,000 tonnes of PCI and 350,000 tonnes of coking coal product in the fiscal year ending March 31, 2007. At present, the Company has commitments from customers for approximately 900,000 metric tonnes of PCI and coking coal at an average sales price of approximately US$82 per tonne. This includes carryover tonnage from the fiscal year ended March 31, 2006.
The Company has continued to pursue active prospects for its coking coal product and to date has sent a total of 23 samples to steel mills that are seen as representing high potential future customers. In addition, the Company has continued to receive favourable feedback from potential customers and also positive results from testing performed at CANMET, a highly respected independent coal research and testing laboratory. One of the important measures of the quality of an individual coking coal is the Coke Strength after Reaction ("CSR"). This is an internationally recognized standardized measure of the strength of coke from a given coal after reaction with hot gas. The CSR for the main Willow Creek coking coal product, as measured by CANMET, is amongst the highest values for any coals produced in Canada based upon publicly available information. The Company continues to pursue negotiations with steel producers to enter into agreements for trial cargos and contracts for the coking coal for the upcoming fiscal year. Typically in the industry, steel mills will reserve a portion of their total estimated coking coal needs for the year to allow new products to be tested. For this reason and based on the high quality of the product, management believes that total sales, including carryover, will exceed 1 million tonnes in fiscal 2007 year. Management is also confident that coking coal trial shipments in the current fiscal year will support higher coking coal sales from Fiscal Year 2008 onwards.
In early June 2006, the Company successfully completed its first commercial coking coal shipment from the Willow Creek mine, loading approximately 50,000 tonnes of coking coal for a European customer.
The Company previously indicated that sales for the quarter ending June 30, 2006 were anticipated to be 180,000 tonnes, reduced from an original forecast of 300,000 tonnes. Actual sales for the period were 196,808 tonnes. The lack of coal availability (and the lower than anticipated production volumes) arose as a result of major equipment failures at the Willow Creek mine such that the Company was not able to meet budgeted production targets. The Company has been discussing this situation with its service provider and plans are being developed to compensate for the low production with additional equipment being brought to the Willow Creek mine. Additionally, there was a partial derailment of one of the trains en route to port which further restricted availability of product causing customers to defer their orders.
Production and Reserves
The Company experienced higher operating costs during the second half of the fiscal year ended March 31, 2006 due to the strip ratio of approximately 8.4:1. Based upon current information, the strip ratio for the current fiscal year ending March 31, 2007 is estimated to be 6:1 (on a raw coal basis) or 7.5:1 on a product basis, which should result in reduced mining costs for the Willow Creek Mine. The strip ratio will fluctuate from period to period within the fiscal year depending on the current status of mining activities. It is further anticipated that strip ratios will continue to decrease over the life of the mine.
The Company's current contract with its mining contractor expires on August 31, 2006 and both parties are currently in the process of negotiating a contract. In the event that the Company is unable to reach an agreement with the contractor to provide services, its operations would be disrupted, which would have a material adverse effect on its business and production plans.
The Company had previously announced plans to produce approximately 1.2 million tonnes of coal in its 2007 fiscal year in order to meet its anticipated sales targets and also to ensure that a sufficient volume of coal is on hand and available at the ports as the Company enters the new fiscal year beginning April 1, 2007. The Company is currently discussing its mine plans with its mining contractor due to the recent shortfall in waste mining rates. As a result of the mining shortfalls to date in the current fiscal year ending March 31, 2007, the Company now anticipates that production for the year will approximate its target sales total for the year. The Company believes that the current production plans, and the inventory on hand at April 1, 2006, are sufficient to meet the planned shipments to customers for the 2007 fiscal year.
A permit amendment application was filed with British Columbia provincial government regulators in March 2005 requesting an increase from the currently permitted production level of 0.9 million tonnes per calendar year to 2.2 million tonnes per calendar year. The mine permit amendment application details an accelerated production rate using the current Willow Creek Coal Mine reserves and the mine and plant infrastructure without any increase in the area of mining, known as the mine "footprint". While it is not certain that the mine permit amendment will be granted, the Company does not currently anticipate that its application will be rejected and has been working with the regulators to provide updated information as requested. The additional information requested has primarily related to geotechnical reviews, additional testing for the potential of acid rock drainage and leaching from mine waste, and drainage and water monitoring. Several items requested by the regulators necessitate the passing of a certain amount of time so that the results can be analyzed fully. The Company filed all required information with the regulators during March 2006.
As disclosed in Note 1 to the unaudited consolidated financial statements for the three months ended June 30, 2006, the Company's continuing operations are dependent on management's ability to obtain additional loan financing, the raising of additional debt or equity capital through sales of its common stock and the Company's ability to sustain profitable operations.
Risk Factors
The Company's business and results of operations are subject to numerous risks and uncertainties, many of which are beyond its ability to control or predict. Because of these risks and uncertainties, actual results may differ materially from those expressed or implied by forward-looking statements, and investors are cautioned not to place undue reliance on such statements, which speak only as of the date hereof.
Investors are urged to review the discussion of risk factors associated with the Company's business below as set out in the Company's MD&A for the quarter ended June 30, 2006, which has been filed with the Canadian Securities Regulators on SEDAR ( www.sedar.com ). The risks and as described in our MD&A and other Canadian and U.S. filings are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
This news release contains certain "forward looking statements", as defined in the United States Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties including but not limited to economic, competitive, governmental and geological factors effecting the Company's operations, markets, products and prices and other risk factors. There can be no assurances that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Factors that could cause future results to differ materially from those anticipated in these forward-looking statements include the Company's dependence on the steel industry, volatility in coal prices, accidents and other risks associated with mining operations, the Company's need for and availability of additional financing, the restrictions imposed under the Company's existing debt arrangements and its debt service requirements and the other risk factors discussed in greater detail in the Company's various filings with the Securities and Exchange Commission and Canadian securities regulators, including the Company's Form 20-F dated June 21, 2006.
PINE VALLEY MINING CORPORATION
Robert Bell, President and Chief Executive Officer
Contacts:
Pine Valley Mining Corporation
Robert (Bob) Bell
President and Chief Executive Officer
(604) 682-4678
Pine Valley Mining Corporation
Martin Rip
Vice President, Finance, CFO and Secretary
(604) 682-4678
pinevalley@pinevalleycoal.com
www.pinevalleycoal.com
SOURCE: Pine Valley Mining Corporation
mailto:pinevalley@pinevalleycoal.com
me too. We just need to be patient while sitting on those reserves.eom.
I have a bunch and I will hold until we get back to at least 5 bucks.
Hey! what happened today? 18%up? the bad thing is that it was no significant volume....but any way...it is nice, I am still holding my bag here...
best of lucks!!
vero
Your correct! I do plan to add some more when I can free funds. Thanks
Mickey, not so loud.
People will start buying on BO speculation and not give us time to build our HUGE positions in the .50 to .70 range.
That's a very good bet however.
Check out this perspective.
http://tinyurl.com/jvgw7
Click "MP3" beside the link that talks about "The Next Big Energy Company Buy Out" - go to minute :07 and listen in.
Whew! Good thing very few read this board.
Will they be buying Pine Valley??? My bet is that some one will in 2006.
WESTERN CANADIAN COAL CORP.
Transmitted by CNW Group on : June 30, 2006 09:15
Western Canadian Coal Announces Fourth Quarter 2006 Operating Results
TSX: WTN and WTN.DB and AIM: WTN
VANCOUVER, June 30 /CNW/ - Western Canadian Coal Corp. (TSX WTN and
WTN.DB; AIM: WTN) ("WCCC" or the "Company") is pleased to announce its
operating results for the three and twelve months ending March 31, 2006:
<<
Financial Summary:
- The Dillon Mine generated cash flow of $1.2 million on sales of
$11.1 million for the quarter ended March 31, 2006, before depletion,
amortization and accretion. Fiscal 2006 cash flow from the Dillon
Mine was $22.5 million on sales of $59.6 million.
- Sales for the quarter were 142,000 tonnes of pulverized coal
injection ("PCI") coal at an average price of $78.21 (US$68.25) per
tonne and for the year were 548,000 tonnes at an average price of
$108.67 (US$90.48).
- Cash costs per tonne for production were $70.01 for the fourth
quarter of fiscal 2006, compared to $70.95 and $72.11 in the third
and second quarters, respectively.
- Net loss for the quarter was $1.9 million compared to a net loss of
$3.4 million for the comparable period ending March 31, 2005. Net
income for the 2006 fiscal year of $7.5 million compared to a loss of
$11.0 million for fiscal 2005.
- Carryover PCI tonnage from fiscal 2006 into fiscal 2007 was
approximately 175,000 tonnes and sales in Q1-2007 exceeded
300,000 tonnes and averaged US$83/tonne.
- On March 23, 2006, the Company raised $125 million by way of a 7.5%
subordinated Convertible Debenture. Proceeds to the Company, net of
expenses and first year's interest in escrow, were $119.6 million.
Debt financing to complete the Wolverine project development is
expected to close in July 2006.
- Wolverine equipment and project construction costs totaled
$99.8 million and $197.9 million respectively, for the three and
twelve month periods ending March 31, 2006. The Company is on budget
and on schedule to complete the majority of the Wolverine
construction during July 2006.
- As at March 31, 2006, the Company's working capital position was
$60 million, compared to $119 million in the prior year.
- Total assets more than doubled, from $150 million to $341 million,
year over year.
>>
Gary K. Livingstone, President & Chief Executive Officer of the Company
will host a conference call and webcast to discuss the fourth quarter results
on Thursday, July 6, 2006 at 8:00am Pacific/11:00am Eastern. The conference
call can be accessed by calling 416-644-3420 or toll-free on 1-800-814-4853
prior to the scheduled start time. An archived recording of the call will be
available for two weeks after the completion of the call by dialing
416-640-1917 or 1-877-289-8525, both using passcode 21194997 followed by the
number sign.
A live and archived audio webcast of the conference call will also be
available on the Company's website at www.westerncoal.com.
News Release
This news release is prepared as at June 29, 2006 and should be read in
conjunction with the Company's March 31, 2006 audited financial statements and
notes contained therein, as well as the interim unaudited financial statements
and MD&A's for the three, six and nine months ended June 30, September 30, and
December 31, 2005. This news release does not constitute Management's
Discussion and Analysis as contemplated by relevant securities rules. Western
Canadian Coal Corp.'s March 31, 2006 audited financial statements and MD&A and
the interim financial statements and MD&A's for the periods referred to above
are available on SEDAR at www.sedar.com under the Company's profile.
<<
Financial Summary:
(In thousands of Canadian
dollars, except tonnes and
per share data)
March 31, March 31,
2006 2005
-------------------------------------------------------------------------
Cash & cash equivalents $ 71,274 $ 115,186
Inventory 23,631 8,831
Other current 19,153 7,041
Total Assets 341,280 149,802
Current liabilities 53,621 11,682
Long-term liabilities 125,920 966
Shareholders' equity $ 161,739 $ 137,154
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three months ending For the year ending
March 31, March 31,
2006 2005 2006 2005
-------------------------------------------------------------------------
Tonnes shipped 142,000 152,000 548,000 152,000
Revenue $ 11,094 $ 11,347 $ 59,594 $ 11,347
Cost of goods sold 11,057 10,309 40,296 10,772
Operating profit 37 1,038 19,298 575
Other expenses 3,562 4,388 18,364 11,547
Income tax recovery 1,585 - 6,520 -
Net income (loss) $ (1,940) $ (3,350) $ 7,454 $ (10,972)
Earnings (loss) per share,
basic $ (0.03) $ (0.05) $ 0.09 $ (0.22)
Earnings (loss) per share,
diluted $ (0.03) $ (0.05) $ 0.09 $ (0.22)
-------------------------------------------------------------------------
>>
Included in the above balances and results are the Company's
proportionate share of its interest in and results from the Belcourt Saxon
joint venture, as disclosed in note 3 to the financial statements for the year
ended March 31, 2006.
Revenues
During the fourth quarter of the 2006 fiscal year, the Company mined
213,000 tonnes of PCI coal from the Dillon mine located within the Burnt River
property and realized FOB sales of 142,000 tonnes for total revenues of $11.1
million. The average selling price realized during the period was $78.21 or
US$68.25. Lower shipments during the quarter were due to higher customer
inventories during 2005 and seasonal reductions in crude steel production.
Included in inventory at March 31, 2006 were 305,000 tonnes of PCI coal, all
of which has been sold during the quarter ending June 30, 2006 at an average
rate of US$83 per tonne.
For fiscal 2006, the Company mined 721,000 tonnes and realized FOB sales
of 548,000 tonnes for total revenues of $59.6 million. The average selling
price per tonne realized for the year was $108.67 or US$90.48.
Cost of goods sold
Cost of goods sold for the three months ended March 31, 2006 totaled
$11.1 million or $77.87 per tonne, and cost of goods sold for the year ended
March 31, 2006 of $40.3 million or $73.47 per tonne. Cost of goods sold for
the three months ended March 31, 2005 were $10.3 million or $67.83 per tonne.
Cost of goods sold includes cost of production, transportation, and depletion,
amortization and accretion charges as presented in the table below:
<<
(In thousands of Canadian For the three months ending March 31,
dollars)
2006 $/tonne 2005 $/tonne
-------------------------------------------------------------------------
Cost of production $ 4,619 $ 32.53 $ 3,258 $ 21.44
Transportation and other 5,322 37.48 6,140 40.40
Depletion, amortization and
accretion 1,116 7.86 911 5.99
Total cost of goods sold $ 11,057 $ 77.87 $ 10,309 $ 67.83
(In thousands of Canadian For the years ending March 31,
dollars)
2006 $/tonne 2005 $/tonne
-------------------------------------------------------------------------
Cost of production $ 17,003 $ 31.00 $ 3,258 $ 21.44
Transportation and other 20,113 36.67 6,140 40.40
Depletion, amortization and
accretion 3,180 5.80 1,374 9.04
Total cost of goods sold $ 40,296 $ 73.47 $ 10,772 $ 70.88
>>
Mining costs were adversely affected, commencing with the quarter ended
September 2005, by a previously undefined fault in the southern end of the
Dillon syncline resulting in a decrease in coal reserves of approximately
188,000 tonnes. This decrease in reserves, coupled with the concurrent
increase in waste, resulted in an overall increase in cash mining costs of
approximately $9.56/ tonne for the year ending March 31, 2006, as compared to
the prior year.
Transportation and other costs include the coal haul from the Dillon Mine
to the rail load-out, rail costs including surcharges, fuel allocations, port
charges and various surveying and agent fees incurred in loading vessels. For
the quarter ended March 31, 2006, total transportation related costs were $5.3
million or $37.48/tonne which is $2.92/ tonne less than the prior year
quarter.
Operating profit
The operating profit for the fourth quarter of 2006 was $37,000 as
compared to $1.0 million in the same quarter last year. Operating profit for
the current quarter included the posting of an additional non-cash adjustment
of $466,000 to catch up on the Dillon Mine depletion since commencement of
operations. For fiscal 2006 operating profit is $19.3 million (2005 - $0.6
million) or 32.3% (2005 - 5.1%) of revenues for the year.
Other expenses
Other expenses, for the quarter ending March 31, 2005, were
$3.562 million and include the following:
<<
For the Three Months For the Years
(In thousands of Canadian Ending Mar 31, Ending Mar 31,
dollars) 2006 2005 2006 2005
-------------------------------------------------------------------------
General, administration and
selling $ 3,021 $ 2,421 $ 12,538 $ 6,703
Coal exploration 1,454 2,148 10,343 5,242
Write-off equipment deposit - - - 250
Interest expense 13 - 32 6
Other income (926) (181) (4,549) (654)
-------------------------------------------------------------------------
Total other expenses $ 3,562 $ 4,388 $ 18,364 $ 11,547
-------------------------------------------------------------------------
>>
Included in general, administration and selling costs are non-cash
stock-based compensation charges of $0.5 million and $0.6 million respectively
in each of the quarters ended March 31, 2006 and 2005, and $3.1 million and
$1.9 million respectively in each of the years ended March 31, 2006 and 2005.
Also included in general, administration and selling costs are salaries,
benefits, and other remuneration, which increased from $0.6 million to $1.3
million, and professional and other consulting costs that decreased from $0.7
million to $0.4 million.
Coal exploration expenditures for the three months ended March 31, 2006
decreased to $1.5 million from $2.1 million in 2004. Exploration expenditures
for the quarter include the Company's proportionate share of expenses recorded
by the Belcourt-Saxon joint venture of $0.9 million (2004 - $2.1 million), and
relate to properties on which the capitalization criteria have not been met.
Net (loss) income
Net loss for the quarter ended March 31, 2006 was $1.9 million compared
to $3.4 million for the same period in the prior year. Net loss for the
fourth quarter of 2006 reflects a future income tax recovery of $1.6 million.
Net income for the year ended March 31, 2006 was $7.5 million compared to
a net loss of $11.0 million for the prior year. Net income for the 2006
fiscal year reflects: an operating profit of $19.3 million; other expenses
totaling $18.4 million including general, administrative and selling expenses,
coal exploration expenses, including the Company's proportionate share of coal
exploration expenses recorded by the Joint Venture of $7.4 million, offset by
other income; and the recording of a future income tax recovery of $6.5
million. The income tax recovery represents the unrecognized future income
tax asset to be realized as a result of it being more likely than not that
sufficient future taxable income will be available to utilize such tax assets,
in accordance with CICA Handbook Section 3465 "Income Taxes".
Outlook
The main focus of the Company is completing the construction of the
Wolverine project which is designed to handle 3.0 million tonnes of hard
coking coal per annum. Initial throughput is expected to commence in July 2006
and will quickly ramp up to a rate of 2.4 million tonnes per annum. The
Company applied to the BC government for an increase in the allowable
production at Wolverine from 1.6 million tonnes to 2.4 million tonnes per
annum and the final mine permit is expected in July 2006. Total capital costs,
initially estimated to be $242 million, remain on budget despite recent
increases in steel and other construction costs, and the construction
completion date remains on schedule for July 2006. Additionally, of the total
$83 million in initial mining equipment necessary to conduct the mining and
stripping operations at Wolverine, approximately $75 million in mining
equipment is currently on site with the balance expected in the first half of
2007. The Company plans to lease and ultimately own the majority of this
equipment.
Cash on hand and cash flow from the Company's Burnt River operations are
not anticipated to be sufficient to fund the entire construction,
commissioning and operating costs associated with the Wolverine project. As a
result, the Company is required to obtain additional financing. Along with the
proceeds from the offering of Convertible Debentures completed in March 2006,
the Company is in the process of arranging a debt facility to finance the
balance of the construction, commissioning and operation of the Perry Creek
project in what is expected to be a $90 million senior debt facility secured
by the assets of the Wolverine Project. The Company expects the debt financing
to be completed in July 2006, however, in the event this debt financing is not
completed as and when required, the Company will need to seek alternative
funding sources.
Based on the Wolverine Project Technical Report, the Company expects a
life-of-mine average cash cost of US$56 per tonne in 2005 dollar terms using
an exchange rate of CDN$1.11 per US$1.00. Pricing for the quality of coal
expected to be produced from the Perry Creek pit exceeds US$100 per tonne for
the 2006/2007 coal year.
On completion of the Wolverine Project, with the construction estimates
based on the accelerated schedule, the Company expects to produce
approximately 1.35 million tonnes of hard coking coal during the fiscal year
ended March 31, 2007. It is the Company's intent to increase production from
2.4 million tonnes to 3.0 million tonnes per year from the Wolverine group of
properties within 24 months after the completion of the Wolverine Project. The
extra capacity would facilitate production from future mining activities at
the nearby Hermann or EB deposits.
The Company's low-volatile-PCI coals have been sold to major steel mills
in, China, Japan, Korea, Taiwan, and Europe, and the Company continues to
secure coal supply agreements for its Wolverine hard coking coal in Asia,
Europe, the Americas and most recently in India. Recently two hard coking coal
contracts were secured from the Japanese Steel Mills (JSM) and the Company's
efforts in India were successful with the award of a 300,000 tonne tender to
Steel Authority of India.
The Company also concluded agreements with two European steel industry
customers and a South American steel mill for the sale of Wolverine hard
coking coal. Further negotiations are continuing for additional Wolverine hard
coking coal contracts to other steel mills in the region, as well as in the
North American market. To date, the Company has secured sales commitments for
approximately 880,000 tonnes, representing approximately 70% of its projected
hard coking coal sales of 1.25 million tonnes for the coal year ended March
31, 2007. The Company is actively pursuing commitments for the remainder of
the fiscal year's production and the Company's goal is to have all planned
sales committed to contract by the end of August 2006. Should the balance of
Wolverine's remaining hard coking coal be placed at prices similar to the
commitments received to date, the average price to be realized for the current
fiscal year on such sales would be approximately US$100 per tonne.
Including production from the remaining Dillon Mine reserve,
approximately 671,600 tonnes of ultra low volatile PCI ("ULV-PCI") coal from
the Dillon Mine are available to be sold in the fiscal year ended March 31,
2007, including 175,000 tonnes of coal originally scheduled for delivery in
the fiscal year ending March 31, 2006. Of the 671,600 tonnes of anticipated
Dillon Mine ULV-PCI coal sales, in excess of 300,000 tonnes has been shipped
in the quarter ending June 30, 2006 at an average price of US$83 per tonne.
Sales of the remaining Dillon Mine ULV-PCI coal are expected to be at prices
in the mid to high US$60s per tonne.
If the Company is satisfied that PCI coal prices and transportation costs
will support the development of the Brule mine project and the necessary
permits can be are obtained, the Company will make a determination as to
whether to proceed with plans to initially develop and operate the Brule mine
project in a manner similar to the operation at the Dillon Mine. On this
basis, the Company estimates production at the Brule mine project could be at
a rate of up to 1.0 million tonnes per year. Work is being completed on
identifying areas of high quality coal that can be accessed by a low stripping
ratio that could be mined and processed using the existing Dillon Mine plant
facilities. This would enable the Brule mine project to provide a continuity
of production from the Burnt River properties following the depletion of the
Dillon Mine reserves in late 2006.
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.
"Gary K. Livingstone"
President and Chief Executive Officer
-30-
/For further information: Gary K. Livingstone, President & CEO or Fausto
Taddei, CFO & Corporate Secretary, Western Canadian Coal Corp., 900 - 580
Hornby Street, Vancouver, B.C., V6C 3B6, CANADA, Phone (604) 608-2692, Fax
(604) 629-0075, Email info@westerncoal.com, www.westerncoal.com/
Picked this up on Pine Valley in a Find Profit News letter
I think I may buy just a little more at these prices and then just wait.
As an early-stage and undercapitalized play on the metallurgical coal cycle, these market changes have hit PVMCF especially hard. Just as the rewards would have been greatest for this small-cap stock if it would have hit the cycle in stride, PVMCF is now under a lot of pressure as prices turn, customers delay orders and/or slow down the process of entering into new contracts, and the capital markets freeze up.
Fundamentally, PVMCF does continue to make progress in its operations, with the bulk of its capital expenditures now complete and the volume and strip ratios of its mining operations set to improve. The company is making real shipments of product, and it has a number of contracts in hand for this year. PVMCF even reported positive net income last year. However, significant working capital issues and an aggressive CapEx budget over the last year have created material balance sheet risk.
Looking ahead, the primary risks to PVMCF are threefold: 1) balance sheet risk, which requires the company to secure additional capital, potentially in the form of another dilutive equity raise, 2) limited visibility into the timing and size of potential coking coal contracts, and 3) metallurgical coal pricing for the contract year starting April 2007 (we won't likely get a sense of this until late 2006).
PVMCF's market cap is now around $70 million, which isn't expensive if you believe that contract prices will remain stable next year and the company is able to hit its cost and volume targets. Indeed, if you believe the company's targets, PVMCF could drive over $15 million in pre-tax income in its current fiscal year.
And I keep buying. I bought another 2 K yesterday at .74 and 2 K today at .82. Lets keep the faith.
Hi Mickey,
Thanks for your post re TS and your personal take on PVMCF. I decided to go ahead and get my cost basis waaay down! Besides your helpful thoughts, I also considered that today (Tues) around 80, it was definitely time!!!! (Maybe MI said something today?? Do not know. BUT my reasoning: This is a commodity and not a service nor a product which might go out of style soon. After all, some fine day some one (even another company with deep pockets) is going to want the hard asset of coal-- to say nothing of meth coal.
Takks8888
Friday Con Call on VCAST
http://www.investorcalendar.com/IC/index.asp?calDate=20060623
Like waht I am hearing. It's time to get your cost-basis down....but that's my opinion on Pine Valley after listening to the replay of their Friday conference call (available on vcall).
They had a huge strip ratio (8 but going down to 6 by end of year), fuel surcharges, production problems, the general commodity slump, labour problems, etc. and still turned a positive cash flow. Now with little capex needed this year (only C$2mm), they should do nicely. I see little down-side from here (currently .75) and hugh upside.
Takk Skall Deg Ha, TS still has it. Here is his latest that was posted before the earnings on 6/20. Hopfully he will have an opinion next Tuesday. I did buy some Friday to average down and feel that if they don't make it, they have enough assets that even a takeover is possible and we should get a good price.
Pine Valley Mining (OTC BB: PVMCF) (Stealth) extended the due date for repaying the debt financing provided by The Rockside Foundation, from June 30, 2006, to Sept. 30, 2006. Pine Valley currently has principal of $8.85 million due under this facility. Interest will continue to be paid at a rate of 12% per annum. The company also retained an independent financial adviser to assist it, on a best efforts basis, in securing additional debt financing.
Bottom Line: When Pine Valley reports its 2006 fiscal year-end results after the close on Thursday, we will be tuned into management's conference call, carefully listening for any hints of operational catalysts on the horizon. We've been patient with PVMCF, but we want to be sure we're not going to be stuck riding this into the ground, so to speak.
Hi Mickey10305 and ALL,
I am new poster to Board. Given all data which PVMCF has released to public and Mickey has kindly posted here, I am considering buying more to average down. I do belong to TS CW newsletter but not to the MI one. I know that TS did recommend PVMCF to MI subscribers some time back. Does anyone know TS present position or recommendation re PVMCF?? It always helps to know who might be "bailing" since there was almost double normal volume on Friday the 23rd.
Takks8888
Pine Valley Announces Fiscal 2006 Results
6/22/2006
VANCOUVER, BRITISH COLUMBIA, Jun 22, 2006 (CCNMatthews via COMTEX News Network) --
Pine Valley Mining Corporation (TSX:PVM)(OTCBB:PVMCF) (the "Company" or "Pine Valley") announces its results for the year ended March 31, 2006. The Company's audited consolidated financial statements, its management's discussion and analysis ("MD&A") and its Form 20-F are available under the company profile on SEDAR at www.sedar.com or may be accessed through the Company web site at www.pinevalleycoal.com.
Graham Mackenzie, President & Chief Executive Officer of Pine Valley, will host a conference call and webcast to discuss the annual results on Friday, June 23, 2006 at 8:00 a.m. PDT / 11:00am EDT.
The call can be accessed by calling the operator at 416-695-5261 or toll free on 1-877-888-4210 prior to the scheduled start time. A playback version of the call will be available for two weeks up to July 7, 2006 at 416-695-5275 or North America toll free 1-888-509-0081, using passcode 626050.
A live webcast of the call will be available via a link at the Company's web site - www.pinevalleycoal.com.
Highlights of Annual Results
- Revenues from coal sales for the year ended March 31, 2006 were $59.458 million, representing 601,175 tonnes of pulverized coal injection ("PCI") metallurgical coal product at an average price of $98.90 (US$82.94) per tonne.
- The Company produced 674,622 tonnes of PCI product. Cash cost of production for product coal to the port was $70.09 per tonne.
- Operating profit for the year was $8.382 million and positive cash flows of $8.142 million were realized from mining activities.
- Net income for the year was $0.608 million or $0.01 per share.
Highlights of Fourth Quarter Fiscal 2006 Results
- Revenues from coal sales for the three months ended March 31, 2006 were $18.216 million, representing 154,997 tonnes of PCI metallurgical coal product at an average price of $117.52 (US$101.40) per tonne.
- The Company produced 131,029 tonnes of PCI and coking coal product. Cash cost of production for product coal to the port was $86.62 per tonne.
- Operating profit for the fourth quarter was $1.692 million and positive cash flows of $2.826 million were realized from mining activities.
- Net loss for the quarter was $0.674 million or $0.01 per share.
Other
As announced in a separate news release earlier today, the Board of Directors has accepted the resignation of Mr. Graham Mackenzie from the position of President and CEO for personal reasons. Mr. Mackenzie will remain as a Director of the Company. Upon the effective date of Mr. Mackenzie's resignation, Mr. Robert Bell, the Company's current Executive Vice President and Chief Operating Officer, will be appointed as President and CEO.
Mr. Bell joined the Company on February 27, 2006 from Luscar Ltd., where he served as Vice President Marketing. Mr. Bell has held a variety of engineering, operations, finance and marketing positions over his 25 years of involvement in the mining industry. He graduated from McGill University with a mining engineering degree and earned a Masters of Business Administration from Queen's University. He entered the coal industry in 1988 and served two years as Chairman of the Coal Association of Canada in addition to his corporate responsibilities.
SUMMARY - Presented in accordance with Canadian GAAP
(Thousands of dollars, Year ended March 31,
except per unit amounts) 2006 2005 2004
---------------------------------------
Statement of operations
Revenues $ 59,458 $ 19,675 $ -
Income before
undernoted items 8,382 1,564 -
Income (loss) before
other income (expenses)
and income taxes 1,757 (1,518) (1,056)
Foreign exchange and
derivatives gain 1,360 2,006 30
Interest and financing (2,018) (889) (84)
Mining taxes expense (207) (45) -
Future income taxes expense (299) (32) -
Net income (loss) $ 608 $ (453) $ (1,113)
Basic and diluted income
(loss) per share $ 0.01 $ (0.01) $ (0.03)
Coal production (tonnes) 674,622 377,099 -
Coal sales (tonnes) 601,175 289,681 -
Average US$ coal price
(per tonne) $ 82.94 $ 55.35 -
Average CDN$ coal price
(per tonne) $ 98.90 $ 67.92 -
Balance Sheet
Total assets $ 82,129 $ 59,856 $ 16,931
Total $ 34,122 $ 31,579 $ 4,880
liabilities
Shareholders' equity $ 48,007 $ 28,277 $ 12,051
Results of Operations
Revenues from coal sales for the year ended March 31, 2006 were $59.458 million based upon 601,175 tonnes of PCI product shipped to customers and representing an increase from the prior year of $39.783 million or approximately 202%. The realized average sales price for the year was $98.90 per tonne (US$82.94) compared to $67.92 (US$55.35) for fiscal 2005.
The Company utilizes a non-GAAP financial measure to determine the production cost per tonne of coal sold, which includes all direct mining, processing and transportation costs to bring the coal to the port. This financial measure enables the Company to determine its average cost of production and hence efficiency with regard to mining and transportation operations, without the effect of selling costs, compliance and new product sampling costs, general and administrative overhead and non-cash charges such as depletion and depreciation, such items being outside the direct control of the mine operations. Utilizing this measure, the cash cost per tonne for product sold in the year relating to direct costs for mining, processing, transport and port receiving charges (the "production cost") was $70.09 (compared to $53.21 for the preceding year). To facilitate a better understanding of this measure a reconciliation of this factor to the audited consolidated financial statements "mining and transportation costs" for the period ended March 31, 2006 is provided in the table below.
Non-GAAP production statistics (unaudited)
(Thousands of dollars, Year ended March 31,
except per unit amounts) 2006 2005
--------------------
Coal sales (tonnes) 601,175 289,681
Product coal produced (tonnes) 674,622 377,099
Mining and transportation Costs $ 44,213 $ 16,239
Less: Selling and
non-production costs included
in mining and transportation $ (2,080) $ (826)
--------------------
Mining, transportation and
port receiving costs $ 42,133 $ 15,413
--------------------
--------------------
Mining, transportation and
port receiving cash costs
(per tonne) $ 70.09 $ 53.21
--------------------
Total cost of operations for the year ended March 31, 2006, was $51.076 million compared to $18.111 million for the year ended March 31, 2005. The increase in production cost is attributable to the following significant factors with regards to the mining and facility operating costs:
- Average strip ratios relating to product sold during the year ended March 31, 2005 were 5.63:1 compared to 7.85:1 for the year ended March 31, 2006. The impact of these higher strip ratios amounted to an increased cost per tonne of approximately $11.30 for the March 31, 2006 year. Strip ratios have been running at higher than anticipated levels over recent periods due to an anticline roll in a PCI coal seam that required additional overburden removal.
- As part of the ongoing negotiations with the Company's mining contractor (Tercon Construction Ltd.) revised coal and waste mining rates became effective in September 2005. These revised rates contributed to an increase of approximately $1.60 per tonne for coal sold in the year ended March 31, 2006 compared to the immediately preceding year. The increased rates charged by Tercon are directly affected by the mining strip ratios.
- Approximately $2.40 per tonne relates to increased costs as a result of the Company operating both a raw coal crushing and handling facility and a washplant during the year ended March 31, 2006. The crushing and handling facility was completed in February 2005 and the washplant in December 2005.
- The Company continued to incur the cost of fuel surcharges which reflect the continued high commodity cost of oil in world markets. These surcharges relate to both rail and services provided by the Company's mining contractor. The total fuel surcharge costs in the year ended March 31, 2006 amounted to $3.47 per tonne of product coal sold compared to $0.95 per tonne for the year ended March 31, 2005. These fuel surcharge costs are included in the Company's production cost per tonne.
Selling costs for the year totalled $4.03 per tonne ($3.83 for the year ended March 31, 2005). These costs include selling commissions, port charges relating to vessel loading and costs associated with coal sampling. Selling costs were higher on a per tonne basis compared to the prior year primarily as a result of comparatively higher commission costs based on the higher average sales price realized compared to the year ended March 31, 2005. Administrative/amortization costs totalled a combined $8.54 per tonne ($3.36 for the year ended March 31, 2005). The increase in administrative/amortization per tonne costs relates to the increased charges for depreciation of plant and equipment given the full year of operations in fiscal 2006.
General and administrative expenses not directly related to mining operations at the Willow Creek mine totalled $6.625 million for the year ended March 31, 2006. This represents an increase of $3.543 million from the equivalent period in the prior year. The increase can be attributed to the significantly higher activity level within the Company as it has developed and added to its infrastructure as well as performing more activities in all areas of the business as operational activities developed.
Salaries and stock-based compensation for the year ended March 31, 2006 increased by $2.628 million compared to the prior year. Stock-based compensation expense increased by $2.3 million for the year ended March 31, 2006 compared to the year ended March 31, 2005. The overall increased salary and stock-based compensation costs arose as a result of the Company's decision to enhance its management capabilities through the addition of new personnel during and subsequent to the fourth quarter of the fiscal year ended March 31, 2005 and as part of the Company issuing further stock options to key team members in March 2006 so as to retain key personnel in light of escalating wages and in context of a tight labour market for experienced mining personnel.
Office and general expenses increased from $171,000 for the year ended March 31, 2005 to $770,000 in the current year. The increased expenditures are reflective of the increased volume of activity at the Company and specific additional areas are insurance coverage (primarily Directors and Officers liability and property insurance for the mine infrastructure) and travel costs required as part of the Company's ongoing activities to maintain ongoing dialogue with customers and the investment community.
Filing and transfer agent fees increased during the year ended March 31, 2006 to $252,000 from $88,000 in the prior year. These additional costs reflect the Company's successful application to graduate to the TSX during the year.
Interest and financing costs increased by $1.129 million for the year ended March 31, 2006 compared to the prior year as the Company carried higher levels of debt to fund completion of the Willow Creek mine's infrastructure. During the period from October 1, 2004 to March 31, 2006, the Company's overall term debt and operating line utilization increased from $9.808 million to $16.012 million which increased interest costs. The Company also incurred increased financing costs pursuant to its negotiations with several potential lenders during the current fiscal year and the note from The Rockside Foundation for which bonus shares have been included as financing fees.
The Company recorded a gain on foreign exchange of $1.36 million for year ended March 31, 2006 ($2.006 million for the year ended March 31, 2005). As the Company's debt consists primarily of US dollar loans, the weakening of the US dollar relative to the Canadian dollar has resulted in an unrealized exchange gain to the Company. During the year, the US to Canadian dollar exchange rate moved from 1.21 to 1.16, while the prior year ended March 31, 2005 saw the exchange rate move from 1.31 to 1.21. The gain in the current year was less than that experienced in 2005 due to the relatively smaller exchange rate movement.
The Company has recognized a future income tax expense of $0.299 million for the year ended March 31, 2006 (2005 - $32,000). The Company has also recognized a mining tax expense of $0.207 million relating to British Columbia Mineral Taxes for mining activities at the Willow Creek mine. The amounts recognized by the Company are estimates subject to a variety of factors that could impact the exact rate at which the Company is taxable, including, but not limited to, its ability to continue to achieve profitable operations, the availability and use of its income tax loss carryforwards and other tax assets.
As a result of the foregoing, the Company realized consolidated net income for the year ended March 31, 2006 of $0.608 million (or $0.01 per share) as compared to net loss of $0.453 million for the year ended March 31, 2005.
Fourth Quarter
Fourth quarter revenues were $18.216 million (on 154,997 tonnes of product sold) compared to the fourth quarter of the prior fiscal year with revenues of $7.223 million (on 97,402 tonnes). The average sales price increased from US$60.32 (CAD$74.15) to US$101.40 (CAD$117.52) for the quarter ended March 31, 2006 compared to the prior year equivalent period representing the higher coal sales prices negotiated for the 2006 fiscal year. This increase in sales price was mitigated, to some extent, as a result of the stronger Canadian dollar.
Sales for the quarter ended March 31, 2006 were lower than anticipated as a result of a shipment being pushed back into April due to a vessel delay. It is not unusual for variation in the timing of shipments to occur as a result of customer scheduling, vessel delays and port congestion. The average sales price realized in the quarter ended March 31, 2006 was US$101.40 per tonne, being reflective of the sales contracts entered into during the 2006 fiscal year without any impact of carryover tonnage from prior years.
The Company previously indicated that production for the quarter ended March 31, 2006 would approximate 240,000 tonnes. Actual production for the quarter amounted to 131,029 tonnes. The shortfall in production arose following the decision to reduce production from late February to better match production rates to changes in the shipping schedule, to minimize working capital requirements and in order to more fully focus efforts on developing the coking coal pit so as to be in a better position to bring the Willow Creek coking coal to market.
Production costs can vary on a quarterly basis as a result of varied mining conditions such as the timing of overburden removal and waste mining. As the Company accounts for these changes in mining strip ratios on a current basis the value of its inventory can change dramatically between reporting periods. As previously disclosed, the Company continued to experience an elevated strip ratio, and accordingly, higher cost of production per tonne during the quarter ended March 31, 2006 (strip ratio of 8.54:1 compared to 8.43:1 for the quarter ended December 31, 2005).
The reported production costs per tonne for the quarter ended March 31, 2006 increased from prior periods as a result of the Company incurring a write-down to the carrying value of inventory of $0.372 million following the conclusion of the PCI price negotiations for the fiscal year commencing April 1, 2006. The amounts written down related to coal mined in earlier periods in the year with strip ratios and costs incurred as a result of conditions at that point in time. In addition, the Company incurred additional costs totaling approximately $0.39 million relating to mining coking coal areas of the Willow Creek Mine where the costs were expensed in the period, including the removal of oxidized coal which was exposed near the surface prior to mining, such coal not being suitable for sale as coking coal.
Construction of coal preparation plant
Commissioning of the coal preparation plant commenced on October 10, 2005 and was completed in December 2005. The total cost of the plant and related capital additions is as follows:
Component Cost ('000s)
-------------
Building $ 4,122
Equipment 4,296
Engineering 2,273
Tailings pond 875
Water 273
Capitalized interest 693
-------------
TOTAL $ 12,532
-------------
-------------
The major elements for construction of the plant had been awarded to the Sedgman Group of Companies ("Sedgman") for a contracted cost of US$8.456 million ($9.809 million at an exchange rate of 1.16 Canadian to the $1.00 US), inclusive of the maximum achievable bonus for early completion. The actual Sedgman amount included in the costs above was US$8.219 million. The total budgeted cost for the coal preparation plant was $11.7 million (excluding capitalized interest charges).
With the completion of the coal preparation plant the Company has the necessary infrastructure in place to be able to meet its planned production of approximately 1.2 million tonnes for the year commencing April 1, 2006. Achieving these production rates is dependent upon receipt of approval for the amendment to the Company's current mine permit which is discussed in the "Outlook" section below.
Development of coking coal product
The Company commenced the initial overburden removal on its coking coal seams in October 2005 in order to extract a small amount of coking coal to wash in production mode following completion of the coal preparation plant late in 2005. This enabled the Company to perform sample analysis and provide drum samples to current and interested prospective customers. The Company sent samples to a highly respected independent laboratory to conduct coking tests on the product. Both the test results and feedback from customers have been favourable, indicating that the coking coal produced at the Willow Creek mine compares with the best quality coals produced in Canada.
In early June 2006, subsequent to the fiscal year end, the Company successfully completed its first commercial coking coal shipment from the Willow Creek mine, loading approximately 50,000 tonnes of coking coal for a European customer.
Exploration of Pine Pass Property
As previously announced, in May 2005, the Company initiated a drill program to further define Pine Pass reserves for mining and reporting purposes to National Instrument 43-101 standards, provide geological data to develop a mine plan and initiate environmental testing necessary to obtain mine permits. This is viewed as a key medium-term objective in order to continue to develop the Company and add shareholder value. The budget assigned to the initial phase of the drill program was $2.75 million and as of March 31, 2006, $2.722 million had been incurred. An additional $0.872 million has been expended on the property to obtain background information that will be required for future permit applications, to comply with necessary environmental obligations and for consultants to manage the project and perform analysis on the samples drilled.
Final drilling was completed in early November 2005 and the Company has engaged an independent consultant to complete more detailed reserves definition for Pine Pass and a mine plan. The Company will also be required to perform extensive environmental analysis and apply for a mine permit prior to production commencing. These events are not certain to occur and could delay any plans to bring the Pine Pass property into production.
Willow Creek Reserves
The Company issued an updated Technical Report that determined increased coal reserves at its Willow Creek mine. The revised reserve represents an increase of more than 35% in saleable product coal to 14.798 million tonnes ("Mt") compared to 10.859 Mt reported in the Company's previous Technical Report filed on SEDAR in July 2005 (as reconciled for subsequent mining activity). Of the increase in reported saleable product, 3.679 Mt relate to coking coal and 0.26 Mt to PCI taking the total for each type of saleable product coal to 7.722 Mt and 7.076 Mt respectively.
The updated Technical Report is based upon revised detailed pit design and economic analyses. The table below summarizes and reconciles the revised coal reserves at the Willow Creek Mine:
Recoverable Saleable
Category ('000's tonnes) ('000's tonnes)
--------------------------------
Current Reserves(1) 19,083 14,798
Previous Reserves(2) 13,531 10,859
--------------------------------
Increased Reserves 5,552 3,939
--------------------------------
(1) Total measured and indicated reserves at January 1, 2006 per
updated Technical Report of March 2006.
(2) Total measured and indicated reserves at March 31, 2005 per
Technical Report of July 2005 less coal mined for the period
from April 1, 2005 to December 31, 2005.
The saleable coal volumes as split between coking and PCI coal have been revised as follows:
Coking PCI
Category ('000's tonnes) ('000's tonnes)
--------------------------------
Current Saleable 7,722 7,076
Previous Saleable 4,043 6,816
--------------------------------
Increased Saleable 3,679 260
--------------------------------
The additional coking coal reserves arise as a result of expanding the boundaries of the mining area from the previous plan using economic analysis based upon prevailing market prices and anticipated future mining costs. The increase to the PCI reserves results from the reclassification of Seam 3 from coking coal to PCI. The average stripping ratio for the reported reserves is 5.0 bcm of waste per tonne of recoverable reserve.
The Technical Report has been developed, in compliance with National Instrument 43-101, by the Independent Qualified Persons Mr. Robert J. Morris, M.Sc., P.Geo. and Mr. James H. Gray, P.Eng., who have reviewed and approved this statement.
The updated reserves at the Willow Creek mine support the Company's intention to increase coking coal as a percentage of total sales as it seeks to develop new markets and increase contracted tonnage commitments.
Graduation to the TSX
On December 22, 2005 the Company commenced trading on the Toronto Stock Exchange ("TSX") under the symbol PVM. The Company de-listed from the TSX Venture Exchange on December 21, 2005. A total of 85,643,145 common shares of the Company were listed on the TSX, of which 75,702,878 were available for trading with 9,940,267 common shares reserved for future issue.
Financing
The Company has engaged in a variety of significant financing activities during and subsequent to the year ended March 31, 2006. In summary, financing activities included the following items:
- Repayment of the final $1 million due to Mitsui Matsushima Canada Ltd.;
- Repayment of the Company's facility with Marubeni Corporation;
- Entering into a working capital credit facility of up to $20 million with Royal Bank Asset Based Finance, a Division of Royal Bank of Canada; and
- Completing two private placements for total gross proceeds of $15.138 million.
In addition, the Company has obtained an extension on its loan from The Rockside Foundation from June 30, 2006 to September 30, 2006 and is currently seeking to obtain additional debt financing, having entered into an engagement letter with an independent financial advisor.
As at March 31, 2006, the Company had cash of $0.817 million and a working capital deficiency of $11.839 million compared to cash and a working capital deficiency of $2.2 million and $9.742 million at March 31, 2005 respectively. This deficit reflects the classification on the entire $16.012 million of the Company's indebtedness as a current liability of March 31, 2006. The Company's outstanding indebtedness consists primarily of borrowings from Royal Bank Asset Based Finance, a Division of Royal Bank of Canada ("Royal Bank" or "Bank") and The Rockside Foundation ("Rockside") used to fund capital expenditures, general and administrative expenses, and working capital for the development of the Willow Creek Coal Mine.
The Company realized cash inflows from operating activities of $8.142 million for the year ended March 31, 2006 compared to negative cash flows of $3.63 million for the year ended March 31, 2005.
The Company increased the quantity of inventory on hand as at March 31, 2006 compared to prior periods as a result of anticipated shipments to customers in early April 2006. This resulted in increased working capital requirements which were offset by increased accounts payable and accrued liabilities at March 31, 2006.
Financing activities provided net cash inflows of $10.228 million for the year. Net loan receipts of $5.675 million were drawn on the Royal Bank operating line (out of a total facility of $20 million). For the year ended March 31, 2006, the Company incurred cash expenditures of $0.466 million related to fees incurred negotiating with financial institutions for an operating line of credit. The Company continued to make substantial payments on investing activities related to the construction of its coal preparation plant and the exploration program on Pine Pass. This resulted in cash outflows of $19.762 million for the year.
The result of these cash flows was a decrease in cash for the year ended March 31, 2006 of $1.383 million, after incorporating the effect of the foreign exchange rate on cash. The Company continues to monitor its cash flows closely so as to ensure that amounts drawn on its Royal Bank operating line are sufficient for current operational purposes.
On June 15, 2006, the Company's loan from Rockside was amended such that the terms of repayment were extended from June 30, 2006 to September 30, 2006. In addition, the Company has retained an independent financial advisor to assist it, on a best efforts basis, in securing additional debt financing. The completion of any transaction resulting from this engagement will be subject to certain conditions including the completion of due diligence processes and negotiation of documentation. Any debt offered as part of any financing will not be registered under the U.S. Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
There can be no assurance that alternate financing, or any additional debt or equity financing that the Company may require in future periods, will be available in the amount required at any particular time or for any particular period or, if available, that it can be obtained on terms satisfactory to the Company.
To date, while the Company has overall realized cash inflows from sales of its PCI product, it has continued to depend upon debt and equity financing in order to fund exploration and development programs and its working capital requirements. To the extent that the Company's cash flow from operations is lower than expected, it will have to continue its reliance upon equity issuances and debt to fund operations.
Outlook
The Company's financial results are highly dependent upon factors including supply and demand in both the steel and metallurgical coal markets, coal prices, production and sales volumes, the U.S./Canadian dollar exchange rate and production costs (including strip ratios).
Sales and Marketing Initiatives
Sales of the Company's coal products are generally made under long-term contracts for which annual prices are negotiated and settled. Typically, these settlements are made in advance of the commencement of the coal year on April 1. While trial sales to new customers are generally made under short term agreements, successful trials often lead to longer term contract discussions. The market outlook has been and continues to be affected by the steel mills generally overbuying coal during the fiscal year ending March 31, 2006 in anticipation of supply disruptions experienced in prior years. However, there were no significant supply disruptions during the year. Furthermore, some steel mills decreased their production for a period during the year ended March 31, 2006 in response to an apparent development of steel over-supply. As a result of these factors, steel mills, late in the 2005 calendar year, were reporting higher-than-normal coal inventories such that they could no longer accept new deliveries of coal.
Following the requests by customers to delay shipments in October and November as a result of their over-committing to coal suppliers for the current fiscal year, the Company recommenced shipments in December 2005. These steel mills were unable to take the full contracted tonnage for the fiscal year ended March 31, 2006; however, the majority of remaining tonnages have been carried over to the next fiscal year at the current year prices.
In light of these circumstances, coal settlements for the 2006 coal year have taken place for the majority of PCI and coking coal production. Reported settlements indicate that the contracted price for low-volatile PCI coal is in the mid to high US$60/tonne range while coking coal settlements have been noted in the range of US$90 - 115 depending upon the individual specifications for the coking coal and the Company's pricing settlements to date have been consistent with these ranges. The price differential between coking coal and PCI is much wider than is traditionally the case and the Company expects that this will increase PCI coal demand from steel mills where the blast furnace can accept more such coal in the mix. Accordingly, the Company currently anticipates that the long-term pricing for PCI will be relatively stronger than the current year and that the price gap between our PCI and coking coal products will narrow as a result. The fundamentals of the steel business remain positive over the longer term with growing demand for the product and new steel making and coke making capacity being developed by a number of large steel companies.
The Company has evaluated these market conditions and revised its production plans accordingly such that it intends to market approximately 650,000 tonnes of PCI and 350,000 tonnes of coking coal product in the fiscal year ending March 31, 2007. At present, the Company has commitments from customers for approximately 900,000 metric tonnes of PCI and coking coal at an average sales price of approximately US$82 per tonne. This includes carryover tonnage from the fiscal year ended March 31, 2006.
The Company continues to place increased focus on its coking coal product. A number of steel mills have received the coking coal samples and are performing their own internal analysis and quality evaluation. The Company also sent samples to a highly respected independent laboratory to conduct coking tests on the same product. The coking test results from this laboratory and from the steel mills that have reported their results to the Company indicate the Willow Creek coking coal is a high quality product that compares favourably with the best quality coals coming from Canada. The Company continues to pursue negotiations with steel producers to enter into agreements for trial cargos and contracts for the coking coal for the upcoming fiscal year. Typically in the industry, steel mills will reserve a portion of their total estimated coking coal needs for the year to allow new products to be tested. For this reason and based on the high quality of the product, management believes that total sales, including carryover, will exceed 1 million tonnes in fiscal 2007 year. Management is also confident that coking coal trial shipments in the current fiscal year will support higher coking coal sales from Fiscal Year 2008 onwards.
In early June 2006, the Company successfully completed its first commercial coking coal shipment from the Willow Creek mine, loading approximately 50,000 tonnes of coking coal for a European customer.
The Company previously indicated that sales for the quarter ending June 30, 2006 were anticipated to be 300,000 tonnes. This sales target has been revised to approximately 180,000 tonnes, partly as a result of delayed customer shipping schedules and partly due to a lack of coal availability. The lack of availability arose as a result of major equipment failures at the Willow Creek mine such that the Company was not able to meet budgeted production targets. The Company has been discussing this situation with its service provider and plans are being developed to compensate for the low production with additional equipment being brought to the Willow Creek mine. Additionally, there was a partial derailment of one of the trains en route to port which further restricted availability of product causing customers to defer their orders.
Production and Reserves
The Company has experienced higher operating costs during the second half of the fiscal year ended March 31, 2006 due to strip ratios of approximately 8.4:1. In October 2005, the Company performed additional drilling at the Willow Creek Mine site to provide additional data and assist in amending the five-year mine plan to enhance mining efficiencies. The work performed on updating the Company's five-year mine plan was overseen by Mr. Roy Fougere, P. Eng, the Assistant Mine Manager at Falls Mountain Coal Inc., the Company's wholly owned subsidiary. Mr. Fougere has 18 years of mining experience, including experience with western Canadian coal mines of similar geological complexity. The analysis was recently completed and provided the following updated indications with regard to the Willow Creek Mine:
- Strip ratios for the fiscal year commencing April 1, 2006 are estimated to be 6:1. These ratios were discussed in the Company's current updated Technical Report and are reflective of the expansion to the Company's 4c pit. As discussed earlier in this MD&A, this should result in reduced mining costs for the Willow Creek Mine. It is further anticipated that strip ratios will continue to decrease over the life of the mine.
In order to secure sufficient storage capacity and reduce rail haulage times the Company has begun shipping through Ridley Terminals in Prince Rupert in addition to Neptune Terminals in North Vancouver. The first customer shipment through Ridley Terminals was made early in January 2006. This additional port alternative will add to the Company's flexibility in its supply chain so as to service customer needs.
The Company plans to produce approximately 1.2 million tonnes of coal in its 2007 fiscal year in order to meet its anticipated sales targets and also to ensure that a sufficient volume of coal is on hand and available at the ports as the Company enters the new fiscal year beginning April 1, 2007.
In order to achieve the planned level of production for the 2006 calendar year, the Company will require an amendment to its mining permit. A permit amendment application was filed with British Columbia provincial government regulators in March 2005 requesting an increase from the currently permitted production level of 0.9 million tonnes per calendar year to 2.2 million tonnes per calendar year. The mine permit amendment application details an accelerated production rate using the current Willow Creek Coal Mine reserves and the mine and plant infrastructure without any increase in the area of mining, known as the mine "footprint". While it is not certain that the mine permit amendment will be granted, the Company does not currently anticipate that its application will be rejected and has been working with the regulators to provide updated information as requested. The additional information requested has primarily related to geotechnical reviews, additional testing for the potential of acid rock drainage and leaching from mine waste and drainage and water monitoring. Several items requested by the regulators necessitate the passing of a certain amount of time so that the results can be analyzed fully. The Company filed all required information with the regulators during March 2006.
The Company's current contract with its mining contractor expires on August 31, 2006 and both parties are currently in the process on negotiating a long-term contract. In the event that the Company in unable to reach an acceptable agreement with the contractor to provide services, its operations could be disrupted, which could have a material adverse effect on its business and production plans for the fiscal year beginning April 1, 2007.
As disclosed in Note 1 to the audited consolidated financial statements for the year ended March 31, 2006, the Company's continuing operations are dependent on management's ability to obtain additional loan financing, the raising of additional debt or equity capital and the Company's ability to sustain profitable operations.
This news release contains certain "forward-looking statements", as defined in the United States Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties including but not limited to economic, competitive, governmental and geological factors effecting the Company's operations, markets, products and prices and other risk factors. There can be no assurances that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Factors that could cause future results to differ materially from those anticipated in these forward-looking statements include the Company's dependence on the steel industry, volatility in coal prices, accidents and other risks associated with mining operations, the Company's need for and availability of additional financing, the restrictions imposed under the Company's existing debt arrangements and its debt service requirements and the other risk factors discussed in greater detail in the Company's various filings with the Securities and Exchange Commission and Canadian securities regulators, including the Company's Form 20-F dated June 21, 2006.
PINE VALLEY MINING CORPORATION
Graham Mackenzie, President and Chief Executive Officer
SOURCE: Pine Valley Mining Corporation
Pine Valley Mining Corporation Sam Yik Vice President Corporate Development & Commercial Operations (604) 682-4678 Pine Valley Mining Corporation Martin Rip Vice President, Finance, CFO and Secretary (604) 682-4678 pinevalley@pinevalleycoal.com www.pinevalleycoal.com
Copyright (C) 2006 CCNMatthews. All rights reserv
Hi Vero, the price of PVMCF is now .96, with volume of 7800 as I write this. You would think people would be buying. It seems like such a bargain. Maybe they need better publicity or something.
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