ENP Newswire -
Release date- 29042014 -
The Corporation's unaudited interim financial statements and management's discussion and analysis ('MD&A') for the three months ended
Q1 2014 Highlights
Issued common shares for gross proceeds totalling
The Corporation initiated production and sales from its corporate-owned Cowper aggregate operation, the first operation brought into production under its agreement with a First Nations company;
Built up strategically stockpiled aggregate inventory with cost in excess of
Commencement of the winter drilling program at the
Construction of corporate-owned camp to accommodate employees at
Q1 2014 sales from corporate-owned aggregate operations were negatively impacted as a result of disruption in planned sales activities involving two customer contracts. A customer suspended a Logan pit contract when they put their project on hold. Approximately 165,000 tonnes of fully processed gravel remains to be hauled pending notification of contract resumption from the customer. The majority of the remaining contract was expected to be delivered and invoiced during Q1 2014.
Secondly, a sales agreement had been reached with a customer to purchase aggregates produced from the Cowper pit. However, the agreement was cancelled and as a result, a further amount of Q1 2014 planned sales did not occur.
Due to the seasonality of the industry, during Q1 2014 Athabasca also focused effort on equipment repair, and the setup of its corporate-owned
President and CEO
This was seen as a contributing factor in reduced aggregate sales this past quarter. Despite the light sales volume in the early months of fiscal 2014, management anticipates full year results will normalize. As well as focusing on Q2 sales opportunities, the executive team is currently undertaking a review of current operating parameters and operational execution intended to identify continued efficiency improvements. A detailed strategic analysis is being performed to ensure key performance indicators are being benchmarked, cost control measures are being achieved and maximum productivity and efficiency are being achieved.'
Aggregate demand has begun to ramp up during Q2, and management anticipates
Activity at our corporate-owned pits is ongoing.
Initial fiscal 2014 sales from the Kearl pit got underway in mid-April, when hauling of aggregates to its nearby major customer began and remains in progress;
Unsold gravel processed at the Cowper pit has been hauled to a new third party stockpile site near a major highway north of
Some recent tree clearing has been initiated at the corporate-owned Pelican Hill pit in order to prepare for future production at that location.
Mining and crushing activity at the Logan and
Aggregate operating expenses during Q1 2014 had decreased by
Management attributes the sales decline to a reduction in inventory stockpiling outside of the
Athabasca's core business relies on aggregate demand from
The Corporation determines demand for the year by discussing expected aggregate requirements with its major customers.
Improving sales demand during Q2 and expected strong demand during Q3 and Q4 is expected to offset the Q1 sales shortfall.
Existing inventory turnover during fiscal 2014, along with the efficient production of further processed aggregates from its corporate-owned pits is a management priority;
Cost savings have been targeted for near term implementation, including equipment repair and maintenance costs, work crew accommodation costs, and reduced hauling rates for aggregates delivery. These initiatives will provide improved productivities and increased efficiencies, resulting in measurable performance gains;
Athabasca plans for strategic crushing at its corporate-owned pits during Q2 and continuing through Q4 based on market demand.
The conservation, reclamation and business plan (CRBP) for the
Management is focused on opportunities to sell its existing aggregate inventory, and is actively negotiating with various customers who have expressed interest for the purchase of aggregates, which involves all of the Corporation's inventory locations.
Currently, processed and stockpiled inventory includes approximately 530,000 tonnes of gravel and 440,000 tonnes of sand located across Athabasca's corporate-owned pits and stockpile sites. This leaves the Corporation well positioned to supply aggregates to regional customers from its existing inventory of processed aggregate products.
Fiscal 2014 Kearl pit sales are now underway, with current hauling in progress to its nearby major customer. Based on additional purchasing interest expressed by other parties for its crushed aggregate products, management anticipates strong overall sales at the Kearl pit during fiscal 2014 from its inventory which includes over 250,000 tonnes of gravel and 389,000 tonnes of sand;
Logan pit inventory sales discussions are occurring with oil and gas developers in the area. The majority of aggregate sales are expected to resume in late fall 2014 when winter haul road conditions improve access to the pit. Currently 121,000 tonnes of gravel remains available for sale at the Logan pit;
68,000 tonnes of gravel at Athabasca's
50,000 tonnes of processed sand remaining onsite at Athabasca's Cowper pit. A further 46,000 tonnes of processed gravel and 20,000 tonnes of pit run is now available at a stockpile site near
The Logan pit is currently accessible only during the winter months. The Corporation is considering the construction of an all-season road during the summer of 2014, to allow for year round access and product delivery, and help enable an earlier sale of its existing inventory.
Under an agreement with a First Nations company, the Corporation is awaiting approval from the Alberta Government to open a second new pit later this year, and anticipates the pit will be available to commence production during fiscal 2014.
During fiscal 2014 Athabasca seeks to improve its corporate pit cost efficiencies, through its improved Kearl pit dewatering method, and other experience gained during its first year of operation within the pit. Improvement in the overall rate of aggregate processing is anticipated, resulting in a reduction in production cost per tonne.
Q1 2014 was subject to frozen conditions and periods of extreme cold and snow resulting in very little construction activity requiring sand and gravel. Despite the soft first quarter in 2014, the Corporation is observing increased activity at the
Increasing demand for aggregate is evident as
The Corporation has received sand and gravel orders from existing users for significant quantities to be fulfilled during fiscal 2014. Management also received substantial gravel requests from new customers who are bidding on works for a new oil sands project at the north end of the
INDUSTRIAL METALLIC MINERALS PROJECTS:
The Firebag silica sand has been tested and found to be suitable as frac sand for the oil and gas industry;
Athabasca previously submitted a technical memo documenting development and reclamation.
The Corporation is currently in discussion with a major engineering firm being considered to perform a preliminary economic assessment of the
Athabasca has also been in discussion with a major railway company for developing a future frac sand trans-loading facility, wet sand facility, drying facility and storage terminal east of
Next steps include progress towards the completion of a National Instrument 43-101 resource report for the
The Firebag project consists of a silica sand deposit located 139 km north of
Work continues on development of the
Detailed core logging and sampling has recently been completed at Athabasca's
Samples are next being sent to a major independent testing lab in
These 2014 drill holes coupled with additional drilling from the same area in 2013 will provide the information necessary to complete a National Instrument 43-101 (NI 43-101) resource estimate for the Richardson granite and dolomite in fiscal 2014. Following completion of the NI 43-101 report, the Corporation intends to apply for a mineral lease on a portion of the
The Corporation is a resource company involved in the management, exploration and development of aggregate projects. These activities include contracts works, aggregate pit management, aggregate production and sales from corporate-owned pits, new aggregate development and acquisitions of sand and gravel operations. The Corporation also has industrial mineral land holdings for the purpose of locating and developing sources of industrial minerals and aggregates essential to high growth economic development.
Tel: 403- 517-2270
This news release contains forward-looking statements that involve risks and uncertainties. Forward-looking statements or information are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by the Corporation.
The forward-looking statements or information contained in this news release are made as of the date hereof and the Corporation does not undertake any obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
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