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Lipari Energy, Inc. Announces Fourth Quarter and Full Year 2012 Results

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TORONTO, ONTARIO -- (Marketwired) -- 04/02/13 -- Lipari Energy, Inc. (TSX: LIP) ("Lipari" or the "Company"), a thermal coal producer with current operations and additional development properties in the Central Appalachian region of the United States, is pleased to announce its operating results for the three months and twelve months ended December 31, 2012. All figures are in U.S. dollars unless otherwise stated.

Fourth quarter 2012 tons sold increased by 11.1% and production decreased by 17.2% over fourth quarter 2011 to 314,269 tons and 258,755 respectively. Fourth quarter revenues increased by 16.6%, as a result of the increase in tonnage sold and average sales price per ton. Lipari generated earnings before interest, taxes, depreciation, depletion and amortization ("EBITDA") of $1.7 million during the fourth quarter of 2012. Adjusted EBITDA, after accounting for a change in the fair value of warrants, lease expenses and other adjustments, was $2.6 million during the fourth quarter of 2012.

"Lipari's profit margins continue to be impacted by many significant issues and challenges that face producers, transporters and end users of coal. Power plant retirements, production cuts, the ever changing regulatory environment, low cost natural gas and the continuing weak economy all contribute to the uncertainty surrounding the coal industry. Irrespective of these issues we had an 11.1% increase in tons sold during the fourth quarter of 2012 compared to 2011, and with diligent costs monitoring, we are optimistic going forward," said John Liperote, CEO of Lipari Energy, Inc.

Selected Fourth Quarter 2012 Operating and Financial Highlights

Year-Over- Year Q4 2012 Q4 2011 % Change----------------------------------------------------------------------------Tons produced 258,755 312,544 (17.2%)Tons sold 314,269 282,990 11.1%Average sales price per ton $ 71.13 $ 67.75 5.0%Cash cost per ton produced(1) $ 54.05 $ 50.29 7.5%Total operating cost per ton sold(2) $ 71.47 $ 71.47 0.0%($ in 000s, except per share amounts)Revenues $ 22,352 $ 19,174 16.6%Gross margin $ (108) $ (1,051) 89.7%EBITDA $ 1,671 $ 2,735 (38.9%)Adjusted EBITDA $ 2,630 $ 3,176 (17.2%)Net income $ (6,571) $ (1,930) NMFEarnings per share - basic and diluted $ (0.14) $ (0.04) NMF----------------------------------------------------------------------------(1) Cash cost per ton produced includes all costs associated with the operation of our mines, preparation plant and rail load out facility inclusive of royalty expenses, less inventory charges.(2) Total operating cost per ton sold includes all cost of sales inclusive of depreciation, depletion and amortization.



Review of Operating Performance

During the fourth quarter of 2012, Lipari's operations sold 314,269 tons of high quality thermal coal, a 11.1% increase over the prior year's quarter of 282,990 tons. The average realized sales price per ton of coal sold was $71.13 per ton, a 5.0% increase over the prior year's average realized price of $67.75 per ton. Demand for coal continues to be reduced by lower natural gas prices and a slower economy.

Balance Sheet Highlights

($ in 000s) Dec 31, Dec 31, 2012 2011----------------------------------------------------------------------------Cash, equivalents, and restricted cash $ 13,946 $ 7,541Accounts receivable $ 6,944 $ 8,229Net working capital(1) $ 6,205 $ 11,359Total assets $ 61,210 $ 66,927Total debt $ 6,407 $ 7,147Total liabilities $ 22,043 $ 20,038Shareholders equity $ 39,167 $ 46,889Total liabilities and shareholders' equity $ 61,210 $ 66,927----------------------------------------------------------------------------(1) Current assets less current liabilities



Selected Operating and Financial Highlights for the twelve months ended December 31, 2012

Year-Over- Year($ in 000s, except per share amounts) 2012 2011 % Change----------------------------------------------------------------------------Tons produced 924,329 1,202,796 (23.2%)Tons sold 1,091,946 1,201,105 (9.1%)Average sales price per ton $ 72.00 $ 70.44 2.2%Cash cost per ton produced(1) $ 52.25 $ 45.18 15.6%Total operating cost per ton sold(2) $ 70.72 $ 64.14 10.3%($ in 000s, except per share amounts)Revenues $ 78,623 $ 84,610 (7.1%)Gross margin $ 1,396 $ 7,569 (81.6%)EBITDA $ 7,697 $ 6,964 10.5%Adjusted EBITDA $ 10,967 $ 18,672 (41.3%)Net loss $ (7,876) $ (5,426) NMFEarnings (loss) per share-basic and diluted $ (0.17) $ (0.13) NMF----------------------------------------------------------------------------(1) Cash cost per ton produced includes all costs associated with the operation of our mines, preparation plant and rail load out facility inclusive of royalty expenses, less inventory charges.(2) Total operating cost per ton sold includes all cost of sales inclusive of depreciation, depletion and amortization.



Production and Sales Contract Portfolio

Lipari has sales commitments in place for 100% of its planned 2013 production and approximately 47% of its planned 2014 production at prices averaging approximately $77 per ton in 2013 and $79 per ton in 2014. The Company currently plans to keep production at levels to meet contracted tonnages during 2013.

Annual Consolidated Financial Statements and Management's Discussion and Analysis for the years ending December 31, 2012 and 2011 have been posted on SEDAR and are available at www.liparienergy.com.

Use of Non-IFRS Financial Measures

Our financial results are prepared in accordance with International Financial Reporting Standards (IFRS). This document refers to EBITDA and Adjusted EBITDA, which are not measures recognized under IFRS. EBITDA is earnings attributable to shareholders before interest and financing expenses, income taxes, depreciation, depletion and amortization. Adjusted EBITDA equals EBITDA exclusive of loss on debt extinguishment, IPO costs, warrant expense, stock compensation expense, equipment lease expense, and change in fair value of warrants. We disclose these measures, which have been derived from our financial statements and applied on a consistent basis, because we believe it is of assistance in understanding the results of our operations and financial position and are meant to provide further information about our financial results to investors. Management believes that Adjusted EBITDA is a valuable indicator of the Company's ability to generate liquidity by producing operating cash flow to fund working capital needs, service debt obligations and fund capital expenditures.

The table below presents EBITDA and Adjusted EBITDA and reconciles these non-IFRS measures from net income (loss):

Quarter Ended Twelve Months Ended(unaudited, $ in 000s) Dec 31 Dec 31 2012 2011 2012 2011 -------------------- --------------------Net income (loss) $ (6,571) $ (1,930) $ (7,876) $ (5,426)Depreciation, depletion and amortization 3,031 4,267 11,310 13,622Interest expense 75 100 320 1,264Income tax provision (benefit) 5,136 298 3,943 (2,496) -------------------- --------------------EBITDA $ 1,671 $ 2,735 $ 7,697 $ 6,964 -------------------- --------------------Loss on debt extinguishment - - - 8,869IPO costs - - - 4,151Warrant expense - - - 719Stock compensation expense 24 - 154 1,064Equipment lease expense 936 826 3,811 3,060Change in fair value of warrants (1) (385) (695) (6,404)Non-compliance charge - - - 250 -------------------- --------------------Adjusted EBITDA $ 2,630 $ 3,176 $ 10,968 $ 18,672 -------------------- --------------------



About Lipari Energy:

Lipari is a thermal coal producer with current operations and additional development properties in the Central Appalachian region of the United States. Lipari has been in production since 2008 and has diversified surface and highwall mining operations. Lipari coal sales are predominantly to utilities through a mix of forward contracts and short-term sales. Lipari's growth strategy includes continued growth of its organic reserves through its enhanced drilling program, as well as from its focused and disciplined approach to strategic acquisitions. Lipari's corporate office is located in London, Kentucky.

This news release and the information contained herein does not constitute an offer of securities for sale in the United States and securities may not be offered or sold in the United States absent registration or exemption from registration.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This news release contains "forward-looking information" that includes information relating to future events and future financial and operating performance, including management's assessment of Lipari's future outlook. Forward-looking information should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by which, that performance or those results will be achieved. Forward-looking information is based on information available at the time it is made and/or management's good faith belief as of that time with respect to future events, and such information is subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking information. Important factors that could cause these differences include but are not limited to: changes in contracted sales, the business of the Company may suffer as a result of uncertainty surrounding the coal market; the Company may be adversely affected by other economic, business, and/or competitive factors; the worldwide demand for coal; the price of coal; the price of alternative fuel sources; the supply of coal and other competitive factors; the costs to mine and transport coal; the ability to obtain new mining permits; the costs of reclamation of previously mined properties; the risks of expanding coal production; the ability to bring new mines on line on schedule; industry competition; the Company's ability to continue to execute its growth strategies; and general economic conditions. These and other risks are more fully described in the Company's filings with the Canadian Securities Administrators, including its Annual Information Form for the year ended December 31, 2012, available on SEDAR at www.sedar.com. You should not put undue reliance on any forward-looking information. We assume no obligation to update forward-looking information to reflect actual results, changes in assumptions or changes in other factors affecting forward looking information, except to the extent required by applicable securities laws. If we do update one or more forward-looking information, no inference should be drawn that we will make additional updates with respect to those or other forward-looking information.



Contacts:
Lipari Energy, Inc.
Richard Liperote
President
606.877.1800
www.liparienergy.com



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