The Company is in an important period of transition as it repositions its mine portfolio from a 40,000 to 60,000 ton per month run rate to an operating platform capable of producing 60,000 to 80,000 tons a month and beyond. As of the date of this press release, the Company has substantially completed the mine build out of all 3 pits at Old Union 2 and the Knight mine. Full scale commercial production is underway as of April, 2013. Mine development is well underway at the Posey Mill 2 mine and first production is anticipated before the end of Q2 2013. Therefore, full scale production at all of the mines is anticipated in Q2 2013.
The transition to the new mines has taken longer than anticipated. This has partially been due to adverse weather conditions but also unanticipated engineering challenges with pond and road construction, which occurred during February and March. In addition, coal deliveries into two new customers were lower than expected as these customers were burning off coal inventory acquired from previous suppliers and the Company only replaced its lost met coal order with a new customer in April. As a result, the Company had a slower start to the year and anticipates sales for Q1 to be around 150,000 tons, in line with Q3 and Q4 of 2012 but below the sales range the Company expects to achieve with its new mine complement.
The outlook for 2013 remains positive and the Company believes that it can achieve significant production and sales growth as compared to 2012. The mine build out is nearly complete and the Company's customers have been scaling up deliveries to originally planned levels in April and this is expected to continue. For 2013, the Company has sales commitments in the range of 700,000 to 800,000 tons which corresponds to between 85% and 100% of the expected production of our new mine complement. As a result, overall average 2013 pricing is expected to be relatively consistent with 2012. Capital expenditures for 2013 are expected to be significantly lower than in 2012 and will be in the range of $7 to $9 million.
The Company will provide an update to its 2013 sales guidance after all of its new mines have achieved commercial production.
Restatement of 2011 Comparative Financial Information
The comparative financial information included in the 2012 consolidated financial statements and accompanying MD&A has been restated.
Prior to July 1, 2012, the Company proportionally consolidated its 50% investment in BCC. Coincident with its July 1, 2012 acquisition of an additional 30% interest in BCC, the Company commenced full (100%) consolidation of BCC's financial results.
The Company has determined that it should have fully (100%) consolidated the financial results of BCC starting at the time of the original 50% acquisition in May 2011. At that time, the Company acquired not only a 50% interest in BCC but also the option, at the Company's sole discretion to acquire the remaining 50% interest along with control of BCC's board, before May 2016. In accordance with IAS 27, the Company's ownership position and sole discretion option constituted effective control of the Company.
The Company has restated the comparative financial information in the 2012 financial statements, as well as comparative information for Q1 and Q2 2013 to reflect consolidation accounting commencing May 2011. Additionally, the Company has restated the comparative financial information in the 2012 financial statements to correct an error in the calculation of mineral property amortization.
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