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CALGARY, ALBERTA -- (Marketwire) -- 03/06/13 -- CanAm Coal Corp. (TSX VENTURE: COE)(OTCQX: COECF) ("CanAm" or the "Company") is pleased to provide an update on sales volumes, contracting and pricing for the fiscal year ending December 31, 2012.
2013 Sales Forecast---------------------------------------------------------------------------- Tons % increase2010 48,0002011 263,000 448%2012 455,000 73%----------------------------------------------------------------------------2013 700,000 to 900,000 54% - 98%----------------------------------------------------------------------------Note: CanAm consolidates its 80% ownership in Birmingham Coal & Coke (BCC),following the acquisition of an additional 30% interest effective July 1,2012. Accordingly, the table presents sales information on a consolidatedbasis and includes 100% of BCC volumes sold (or forecast to be sold) sinceJuly 1, 2012.
The Company is estimating 2013 coal sales of between 700,000 to 900,000 tons, an increase of approximately 250,000 to 450,000 tons over 2012. The significant increase is attributable to the following factors:
-- A full year impact of the Company's increased ownership position in BCC, which was effective July 1, 2012.-- Increased production from the Company's three new mines: Old Union 2, Knight and Posey Mill 2.
Realized sales for 2013 are a function of the timing associated with the completion of mine development and build out of our new mines. Old Union 2 and Knight are currently producing but not at full production yet and Posey Mill 2 is targeted to start production in April. That said, we expect to have reached full production at all mines before the end of the second quarter.
Sale contracts and customers
The Company has 2013 sales commitments for at least 750,000 tons. Accordingly, the Company's 2013 production is substantially hedged and, depending on actual production levels as discussed above, 2013 tonnage is sold at between 85 to 100%. Sales are to five key customers with 40% of sales into the power market and 60% to industrial users. All sales are into the local Alabama market with the majority of our customers' facilities within a short haul of our current mines.
In late 2012, the Company was awarded two new thermal sales contracts and shipments to these industrial customers started in January 2013. The Company is excited about these newly established relationships as they further diversify our customer base. Both of these customers operate in the local Alabama market and the Company believes it has an opportunity to grow volumes with each customer, over time.
In February 2013, the Company and its primary metallurgical coal customer mutually agreed to terminate their sales contract due to coal specification issues. The termination impacts about 4,000 tons per month of production. The Company anticipates that it will be able to market this high quality coal to other customers. A number of off take contracting opportunities are being investigated.
