Fourth quarter capital expenditures on new equipment, capital repairs and mineral property development totalled $1.6 million, compared to $5.2 million in the previous quarter. The Company financed $200,000 of this investment and funded the remainder from cash flow.
For the year ended December 31, 2012 new equipment, capital repair and mineral property development expenditures totalled $17.4 million, including $14.5 million of equipment additions. As described above, the Company has made significant capital investments in anticipation of its 3 new mines opening. The Company's investments in new equipment were substantially completed in Q3 2012. New equipment purchases in Q4 totalled $200,000 and no new equipment was purchased in Q1 2013. The main portion of the Company's investment in new mine infrastructure occurs in Q4 2012, Q1 2013 and the first half of Q2 2013.
In Q4, the Company generated free cash flow from operations (EBTIDA less capital expenditures) of $1.5 million. At December 31, 2012 the Company had cash on hand of $2.4 million, compared to $3.5 million at December 31, 2011. In addition, the Company has undrawn operating lines of credit of $2.1 million, undrawn capital equipment facilities of $1 million and restricted cash of $384,000.
During Q4, the Company's working capital position declined from the end of Q3 principally as a result of capital expenditures on new mine development and expenditures on exploration project opportunities. At December 31, 2012, the Company had a working capital deficiency of $4.8 million ($3.7 million excluding the repayment of a $1.1 million, 12% convertible debenture due in August 2013) compared to a deficiency of $3.7 million at September 30, 2012 (restated to include current portion of asset retirement obligations) and $2.8 million as at December 31, 2011.
The Company believes it has sufficient cash reserves, capital and operating line credit access and other available cash sources (e.g. restricted cash, surplus equipment, which it intends to auction in Q2 2013) to finance the final development of its new mine complement. Once complete, the Company anticipates generating significant free cash flow from its new mines (from additional coal sales and reduced mine development capital spending requirements).
The Company's most recent 43-101 report (dated May 2011) identified 6 million tons of reserves covering Bear Creek, Posey Mill, Old Union, Old Union 2 and Gooden Creek. The report does not cover Knight, Powhatan and the Company's other lease holdings. The Company intends to obtain an updated 43-101 report during 2013.
Subsequent to year end, the Company achieved a number of significant milestones including:
-- Commenced mining at the Knight Mine. Production is anticipated to reach optimum levels by the middle of Q2 2013.-- Received a final permit from the Alabama Surface Mining Commission for the Posey Mill 2 mine. First production is anticipated during Q2 2013.-- Won two important new sales contracts with industrial customers for 2013. The opportunity exists to grow production at both clients and to secure long-term off take agreements.-- Mutually agreed to terminate a sales contract with an existing customer covering 4,000 tons per month of metallurgical coal sales, effective February 2013. Secured a six month purchase order to sell the coal impacted by the termination to a new customer commencing April 2013.-- Signed a three year surface coal mining lease covering approximately 1,500 acres close to the Company's existing mines.