As discussed, the Company faced a number of challenges in the first quarter including longer than expected development and transition to the new mines as well as lower than expected coal deliveries into two new customers as these customers were burning off coal inventory acquired from previous suppliers. Also, the Company only replaced its lost metallurgical coal order with a new customer in April. We believe we have now moved past these transitional issues and the Company is focusing on maximizing new mine production and sales to the greatest extent possible.
Notwithstanding these Q1 challenges, the Company believes that it can achieve significant production and sales growth as compared to 2012. 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. As disclosed in our 2012 MD&A, total 2013 capital expenditures are expected to 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 2012 Comparative Financial Information
The comparative financial information included in the unaudited condensed interim financial statements for the three month period ended March 31, 2013 and the MD&A has been restated.
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 2013 first quarter unaudited condensed interim financial statements to reflect consolidation accounting. Additionally, the Company has restated the comparative financial information to correct an error in the calculation of mineral property amortization.
About CanAm Coal Corp.
CanAm is a coal producer and development company focused on growth through the acquisition, exploration and development of coal resources. CanAm's main activities and assets include its four operating coal mines in Alabama and the Buick Coal Project which holds significant coal resources, 188 million indicated and 103 million inferred resources, in Colorado, USA (see the technical report entitled "Limon Lignite Project, Elbert County, Colorado, USA," dated October 26, 2007 and filed on SEDAR on November 2, 2007). Other coal and related opportunities continue to be evaluated on an ongoing basis.
EBITDA and Free Cash Flow
Statements throughout this press release make reference to EBITDA and Free Cash Flow which are non-IFRS financial measures commonly used by financial analysts in evaluating financial performance of companies, including companies in the mining industry. Accordingly, management believes EBITDA and Free Cash Flow may be a useful metric for evaluating the Company's performance as it is a measure management uses internally to assess performance, in addition to IFRS measures. As there is no generally accepted method of calculating EBITDA and Free Cash Flow, the terms used herein are not necessarily comparable to similarly titled measures of other companies. The items excluded from EBITDA and Free Cash Flow are significant in assessing the Company's operating results and liquidity. EBITDA and Free Cash Flow have limitations as an analytical tool and should not be considered in isolation from, or as alternative to, net income or other data prepared in accordance with IFRS. EBITDA is calculated as income from mining operations plus depreciation, depletion, accretion and amortization less general and administrative costs. Free Cash Flow is calculated as EBITDA less financed and non-financed capital expenditures. Other financial data has been prepared in accordance with IFRS.
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