Wrap Text
The first quarter of FY2014
FORBES & MANHATTAN COAL CORP.
(Registration number: 002116278)
(External company registration number: 2011/011661/10)
Share code on the Toronto Stock Exchange: FMC
Share code on the JSE Limited: FMC
ISIN: CA3451171050
SHAREHOLDERS ARE ADVISED THAT THIS IS A SUMMARISED VERSION OF THE RESULTS AND IS
THE RESPONSIBILITY OF THE DIRECTORS OF FORBES COAL. FULL FINANCIAL STATEMENTS AND
MANAGEMENT DISCUSSION AND ANALYSIS REPORT ARE AVAILABLE UNDER THE COMPANY PROFILE
AT WWW.SEDAR.COM OR AT WWW.FORBESCOAL.COM
FORBES COAL REPORTS REVENUE OF $20.5 MILLION AND EBITDA OF $2 MILLION
FOR THE FIRST QUARTER OF FY2014
TORONTO, ONTARIO – July 15, 2013: Forbes & Manhattan Coal Corp. (TSX/JSE: FMC)
(“Forbes Coal” or “the Company”) reports its financial results for the first
quarter of FY2014 (the 3 month period ended May 31, 2013). Revenue was $20.51
million, gross profit was $0.34 million and consolidated EBITDA was $2.01 million
as summarized in the table below.
FIRST QUARTER FY2014 FINANCIAL RESULTS
Q4 FY2013 Q1 FY2014 Q1 FY2013
(3 months ended (3 months ended May (3 months ended May
February 28, 2013) 31, 2013) 31, 2012)
Revenue $13.47 million $20.51 million $20.80 million
Gross profit $0.93 million $0.34 million $1.81 million
Consolidated $(2.58) million $2.01 million $2.45 million
EBITDA
Cash and cash $ 3.03 million
$2.40 million $8.11 million
equivalents
Stephan Theron, President and Chief Executive Officer of Forbes Coal commented,
“We have been successful at continuing to reduce our operating expenses this
quarter which has been increasingly important as export coal prices have softened
further. On the production side, we had a strong quarter and achieved record
production in April and May 2013 which had a positive impact on the financial
results of the Company this quarter.”
OPERATIONAL HIGHLIGHTS
Operational efficiencies and increased production continue to be the focus of the
Company.
- Operating expenses for the three months ended May 31, 2013 were $16.80
million ($64.36 per tonne) compared to $16.18 million ($68.86 per tonne) for
the three months ended May 31, 2012.
- Aviemore ROM production was 138,000 tonnes for Q1 FY2014, a 62% increase
over the Q4 FY2013 production of 86,000 tonnes. Record production was
achieved by Aviemore in each of April and May 2013
- Magdalena underground ROM production was 227,000 tonnes for Q1 FY2014, a 16%
increase over Q4 FY2013 production of 196,000 tonnes. Record production was
achieved by Magdalena underground in each of April and May 2013.
- Q1 FY2014 saleable production was 253,000 tonnes, an 18% increase over Q4
FY2013 saleable production of 214,000 tonnes (excluding bought in coal in
this quarter). No coal was bought in during the Q1 FY2014.
- Q1 FY2014 total ROM production of 447,000 tonnes is equal to 32% of the
total fiscal 2013 annual ROM production of 1,412,000 tonnes.
ROM Production
- Total ROM production from all operations for Q1 FY2014 was 447,000 tonnes, a
23% increase compared to 364,000 tonnes produced in Q4 FY2013. The increase
in ROM production in Q1 FY2014 was due to record production for Magdalena
underground and Aviemore underground for April and May 2013.
- Total ROM production for Q1 FY2014 was below targeted ROM production of
487,000 tonnes primarily as a result of difficult geology in sections 4 and
5 of the Magdalena underground mine.
- ROM production from Magdalena operations, underground and open pit combined,
for Q1 FY2014 was 309,000 tonnes, an 11% increase compared to 279,000 tonnes
produced in Q4 FY2013. The production for the quarter comprised 228,000
tonnes from the underground operations and 81,000 tonnes from the open pit.
- ROM production from Aviemore operations for Q1 FY2014 was 138,000 tonnes, a
62% increase compared to 86,000 tonnes produced in Q4 FY2013.
Saleable Production
- Saleable coal production for Q1 FY2014 was 243,000 tonnes (excluding
calcine), a 14% increase compared to 214,000 saleable tonnes in Q4 FY2013
(excluding bought in coal), as a result of the increased ROM production.
- The calcine plant was recommissioned during the quarter under review.
Saleable calcine product was 10,000 tonnes for Q1 FY2014, being the first
period of production for this product.
- No saleable coal was purchased in Q1 FY2014, compared to 11,000 tonnes
purchased during Q4 FY2013.
- The total calculated yield from plant feed was 59.7% for Q1 FY2014, compared
to 58.6% for Q4 FY2013.
- Thinner coal seams and additional roof cutting in Magdalena sections 1 and 5
continued to result in increased contamination of coal from these sections
during Q1 FY2014, resulting in lower than budgeted yields.
Sales
- Total sales of bituminous coal and anthracite products for Q1 FY2014 were
261,000 tonnes, a 55% increase compared to 169,000 tonnes sold in Q4 FY2013.
- Export sales for Q1 FY2014 were 142,000 tonnes, a 108% increase compared to
68,000 tonnes sold in Q4 FY2013, despite a significant slowdown in the
anthracite export market during this period.
- Domestic sales in Q1 FY2014 were 119,000 tonnes, a 18% increase compared to
101,000 tonnes sold in Q4 2013.
SUMMARIZED FINANCIAL RESULTS OF FORBES COAL DUNDEE
Three months ended
February 28, 2013 May 31, 2013 May 31, 2012
Run of M ine (ROM ) (t) 364,145 447,466 387,075
Run of M ine (ROM ) coal purchased (t) - - 1,569
Saleable production,excluding calcine (t) 214,044 243,219 244,605
Saleable coal purchased, including adjustment (t) 11,055 - 21,873
Plant feed, excluding calcine (t) 365,008 407,484 379,920
Yield on plant feed, excluding calcine (%) 58.6% 59.7% 64.4%
Inventory tonnes balance open (t) 102,924 162,479 41,109
Inventory tonnes balance close (t) 162,479 143,164 73,144
Sales (t) 168,913 261,035 234,997
Revenue 000,000’s (CAD) 13.5 20.5 20.8
EBITDA 000,000’s (CAD) (*) (1.6) 2.8 3.1
CAD: USD (average) 1.00 1.02 1.00
ZAR: CAD (average) 8.79 9.03 7.87
Average realized price (Revenue/Sales tonnes) (CAD)(*) 79.77 78.57 88.51
Average realized price (Revenue/Sales tonnes) (USD)(*) 80.02 76.95 88.60
Cash cost of sales (Operating expenses)
13.0 16.8 16.2
000,000's (CAD)(*)
Cash cost of sales per tonne (Operating expenses
76.78 64.36 68.86
/ Sales tonnes) (CAD)(*)
Cash cost of sales per tonne (Operating expenses
77.02 63.03 68.92
/ Sales tonnes) (USD)(*)
Capital expenditures 000,000's (CAD)(*) 1.27 0.61 1.95
Capital expenditures/Saleable production tonnes (CAD)(*) 5.92 2.52 7.98
Numbers in this chart are derived from the Forbes Coal Dundee stand alone
financial statements (See non-IFRS performance measures).
NON-IFRS PERFORMANCE MEASURES
The Company has included in this document certain non-IFRS performance measures
that are detailed below. These non-IFRS performance measures do not have any
standardized meaning prescribed by IFRS and, therefore, may not be comparable to
similar measures presented by other companies. The Company believes that, in
addition to conventional measures prepared in accordance with IFRS, certain
investors use this information to evaluate the Company’s performance.
Accordingly, they are intended to provide additional information and should not
be considered in isolation or as a substitute for measures of performance
prepared with IFRS. The definition for these performance measures and
reconciliation of the non-IFRS measures to reported IFRS measures are as follows:
EBITDA - Forbes Coal consolidated
Three months ended
February 28, 2013 May 31, 2013 May 31, 2012
$000's $000's $000's
Net income (loss) for the period (3,361) (20) (1,590)
add back
Amortization and depletion 1,436 3,386 2,807
Income tax (recovery) expense (3,215) (1,654) 278
Foreign exchange loss (gain) 1 - (12)
Fair value adjustment on endowment policy (117) (217) -
Interest and dividend expense (income) 20 499 582
Business combination transaction costs 2,660 - -
Stock based compensation 3 - 18
Unrealized (gain) loss on marked-to-market securities (3) 20 368
EBITDA Forbes Coal Consolidated (2,576) 2,014 2,451
EBITDA - Forbes Coal Dundee stand alone
Three months ended
February 28, 2013 May 31, 2013 May 31, 2012
$000's $000's $000's
Net income (loss) for the period (3,361) (20) (1,590)
add back
Amortization and depletion 1,436 3,386 2,807
Income tax (recovery) expense (3,215) (1,654) 278
Foreign exchange loss (gain) 1 - (12)
Fair value adjustment on financial assets (117) (217) -
Interest and dividend expense (income) 20 499 582
Business combination transaction costs 2,660 - -
Mineral properties investigation costs (Non FC Dundee) 598 - 7
Stock based compensation 3 - 18
Unrealized (gain) loss on marked-to-market securities (3) 20 368
General and administration (Non FC Dundee) 364 830 690
EBITDA Forbes Coal Dundee (1,614) 2,844 3,148
ADVANCE NOTICE BY-LAW AMENDMENT
Forbes Coal also announces that it has adopted a new policy that requires advance
notice to the Company for nominations of directors other than by management,
through a requisition for a meeting or by way of a shareholder proposal.
Among other things, the policy fixes a deadline by which holders of record of
common shares of Forbes Coal must submit director nominations to the Company
prior to any annual or special meeting of shareholders and sets forth the
information that a shareholder must include in the notice to Forbes Coal for the
notice to be in proper written form.
In the case of an annual meeting of shareholders, notice to Forbes Coal must be
made not less than 30 nor more than 65 days prior to the date of the annual
meeting, provided that in the event that the annual meeting is to be held on a
date that is less than 50 days after the date on which the first public
announcement of the date of the annual meeting was made, notice may be made not
later than the close of business on the 10th day following such public
announcement.
In the case of a special meeting of shareholders (which is not also an annual
meeting), notice to Forbes Coal must be made not later than the close of business
on the 15th day following the day on which the first public announcement of the
date of the special meeting was made.
The new policy is intended to: (i) facilitate an orderly and efficient annual
general or special meeting process; (ii) ensure that all shareholders receive
adequate notice of the director nominations and sufficient information regarding
all director nominees; and (iii) allow shareholders to register an informed vote
after having been afforded reasonable time for appropriate deliberation.
The policy is effective immediately and will be placed before Forbes Coal’s
shareholders for approval at the Company’s annual general and special meeting of
shareholders scheduled to be held on September 11, 2013.
The full text of the policy is available under Forbes Coal’s SEDAR profile at
www.sedar.com.
ABOUT FORBES COAL
Forbes Coal is a growing coal producer in southern Africa. It holds a majority
interest in two operating mines through its 100% interest in Forbes Coal (Pty)
Ltd., a South African company ("Forbes Coal Dundee") which has a 70% interest in
Zinoju Coal (Pty) Ltd. ("Zinoju"). Zinoju holds a 100% interest in the Magdalena
bituminous mine and the Aviemore anthracite mine in South Africa (collectively,
“the Forbes Coal Dundee Properties”). The mines have a substantial resource base
and each mine has a projected life span in excess of 20 years. Forbes Coal is in
the process of increasing production at both mines using existing infrastructure
and capacity. The company has in-place transportation infrastructure allowing its
coal to reach both export corridors and the growing domestic coal market. Forbes
Coal has an experienced coal-focused management team.
Please refer to the company's NI 43-101 compliant technical report on the Forbes
Coal Dundee Properties dated March 6, 2013 entitled "Independent Qualified
Persons’ Report on Forbes Coal Dundee Operations In the KwaZulu-Natal Province,
South Africa", available on the SEDAR profile of the Company at www.sedar.com.
Additional information is available at www.forbescoal.com.
Cautionary Notes:
Johan Odendaal, B.Sc.(Geol.), B.Sc.(Hons)(Min. Econ.), M.Sc. (Min. Eng.), a
director of Minxcon and an independent Qualified Person, as defined in National
Instrument 43-101 has reviewed and approved the scientific and technical
information contained in this release [NTD: make sure he has reviewed]. The
ability of Forbes Coal to increase production amounts has not been the subject of
a feasibility study and there is no certainty that the proposed expansion will be
economically feasible.
This press release contains “forward-looking information” within the meaning of
applicable Canadian securities legislation. Forward-looking information includes,
but is not limited to, statements with respect to the anticipated production
results with respect to the Forbes Coal Dundee Properties, future financial or
operating performance of Forbes Coal and its projects, statements regarding the
advance notice by-law amendment, anticipated improvements in logistical support
and anticipated improvements in sales, statements made with respect to prospects
for the business of Forbes Coal, requirements for additional capital, government
regulation of the mineral exploration industry, environmental risks, acquisition
of mining licences, title disputes or claims, limitations of insurance coverage
and the timing and possible outcome of pending litigation and regulatory matters.
Generally, forward-looking information can be identified by the use of forward-
looking terminology such as “plans”, “expects” or “does not expect”, “is
expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”,
“anticipates” or “does not anticipate”, or “believes”, or variations of such
words and phrases or state that certain actions, events or results “may”,
“could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. Forward-
looking information is subject to known and unknown risks, uncertainties and
other factors that may cause the actual results, level of activity, performance
or achievements of Forbes Coal to be materially different from those expressed or
implied by such forward-looking information, including but not limited to:
general business, economic, competitive, foreign operations, political and social
uncertainties; a history of operating losses; delay or failure to receive board
or regulatory approvals; timing and availability of external financing on
acceptable terms; not realizing on the potential benefits of the proposed
transaction; conclusions of economic evaluations; changes in project parameters
as plans continue to be refined; future prices of mineral products; failure of
plant, equipment or processes to operate as anticipated; accidents, labour
disputes and other risks of the mining industry; and, delays in obtaining
governmental approvals or required financing or in the completion of activities.
Although Forbes Coal has attempted to identify important factors that could cause
actual results to differ materially from those contained in forward-looking
information, there may be other factors that cause results not to be as
anticipated, estimated or intended. There can be no assurance that such
information will prove to be accurate, as actual results and future events could
differ materially from those anticipated in such statements. Accordingly, readers
should not place undue reliance on forward looking information. The Company does
not undertake to update any forward-looking information, except in accordance
with applicable securities laws.
FORBES & MANHATTAN COAL CORP.
BY-LAW AMENDMENT
BE IT ENACTED AND IT IS HEREBY ENACTED as a by-law of FORBES & MANHATTAN COAL
CORP. (hereinafter called the “Corporation”) as follows:
ADVANCE NOTICE OF NOMINATIONS OF DIRECTORS
1. General By-law No. 3 of the by-laws of the Corporation is hereby amended by
adding the following thereto as Section 3A:
Nomination of Directors. – Subject only to the Business Corporations Act
(Ontario) (the “Act”) and the articles of the Corporation (the “Articles”), only
persons who are nominated in accordance with the following procedures shall be
eligible for election as directors of the Corporation. Nominations of persons for
election to the Board may be made at any annual meeting of shareholders, or at
any special meeting of shareholders if one of the purposes for which the special
meeting was called was the election of directors, (a) by or at the direction of
the Board or an authorized officer of the Corporation, including pursuant to a
notice of meeting, (b) by or at the direction or request of one or more
shareholders pursuant to a proposal made in accordance with the provisions of the
Act or a requisition of the shareholders made in accordance with the provisions
of the Act or (c) by any person (a “Nominating Shareholder”) (i) who, at the
close of business on the date of the giving of the notice provided for below in
this Section 3A and on the record date for notice of such meeting, is entered in
the securities register as a holder of one or more shares carrying the right to
vote at such meeting or who beneficially owns shares that are entitled to be
voted at such meeting and (ii) who complies with the notice procedures set forth
below in this Section 3A:
(i) In addition to any other applicable requirements, for a nomination to
be made by a Nominating Shareholder, the Nominating Shareholder must
have given timely notice thereof in proper written form to the
secretary of the Corporation at the principal executive offices of the
Corporation in accordance with this Section 3A.
(ii) To be timely, a Nominating Shareholder’s notice to the secretary of
the Corporation must be made (a) in the case of an annual meeting of
shareholders, not less than 30 nor more than 65 days prior to the date
of the annual meeting of shareholders; provided, however, that in the
event that the annual meeting of shareholders is called for a date
that is less than 50 days after the date (the “Notice Date”) on which
the first public announcement of the date of the annual meeting was
made, notice by the Nominating Shareholder may be made not later than
the close of business on the tenth (10th) day following the Notice
Date; and (b) in the case of a special meeting (which is not also an
annual meeting) of shareholders called for the purpose of electing
directors (whether or not called for other purposes), not later than
the close of business on the fifteenth (15th) day following the day on
which the first public announcement of the date of the special meeting
of shareholders was made. In no event shall any adjournment or
postponement of a Meeting of Shareholders or the announcement thereof
commence a new time period for the giving of a Nominating
Shareholder’s notice as described above.
(iii) To be in proper written form, a Nominating Shareholder’s notice to
the secretary of the Corporation must set forth (a) as to each person
whom the Nominating Shareholder proposes to nominate for election as a
director (i) the name, age, business address and residence address of
the person, (ii) the principal occupation or employment of the person,
(iii) the class or series and number of shares in the capital of the
Corporation which are controlled or which are owned beneficially or of
record by the person as of the record date for the Meeting of
Shareholders (if such date shall then have been made publicly
available and shall have occurred) and as of the date of such notice,
and (iv) any other information relating to the person that would be
required to be disclosed in a dissident’s proxy circular in connection
with solicitations of proxies for election of directors pursuant to
the Act and Applicable Securities Laws; and (b) as to the Nominating
Shareholder giving the notice, any proxy, contract, arrangement,
understanding or relationship pursuant to which such Nominating
Shareholder has a right to vote any shares of the Corporation and any
other information relating to such Nominating Shareholder that would
be required to be made in a dissident’s proxy circular in connection
with solicitations of proxies for election of directors pursuant to
the Act and Applicable Securities Laws. The Corporation may require
any proposed nominee to furnish such other information as may
reasonably be required by the Corporation to determine the eligibility
of such proposed nominee to serve as an independent director of the
Corporation or that could be material to a reasonable shareholder’s
understanding of the independence, or lack thereof, of such proposed
nominee.
(iv) No person shall be eligible for election as a director of the
Corporation unless nominated in accordance with the provisions of this
Section 3A; provided, however, that nothing in this Section 3A shall
be deemed to preclude discussion by a shareholder (as distinct from
nominating directors) at a Meeting of Shareholders of any matter in
respect of which it would have been entitled to submit a proposal
pursuant to the provisions of the Act. The chairman of the meeting
shall have the power and duty to determine whether a nomination was
made in accordance with the procedures set forth in the foregoing
provisions and, if any proposed nomination is not in compliance with
such foregoing provisions, to declare that such defective nomination
shall be disregarded.
(v) For purposes of this Section 3A, (i) “public announcement” shall mean
disclosure in a press release reported by a national news service in
Canada, or in a document publicly filed by the Corporation under its
profile on the System of Electronic Document Analysis and Retrieval at
www.sedar.com; and (ii) “Applicable Securities Laws” means the
applicable Securities Act of each relevant province and territory of
Canada, as amended from time to time, the rules, regulations and forms
made or promulgated under any such statute and the published national
instruments, multilateral instruments, policies, bulletins and notices
of the securities commission and similar regulatory authority of each
province and territory of Canada.
(vi) Notwithstanding any other provision of General By-law No. 1, notice
given to the secretary of the Corporation pursuant to this Section 3A
may only be given by personal delivery, facsimile transmission or by
email (at such email address as stipulated from time to time by the
secretary of the Corporation for purposes of this notice), and shall
be deemed to have been given and made only at the time it is served by
personal delivery, email (at the address as aforesaid) or sent by
facsimile transmission (provided that receipt of confirmation of such
transmission has been received) to the secretary at the address of the
principal executive offices of the Corporation; provided that if such
delivery or electronic communication is made on a day which is a not a
business day or later than 5:00 p.m. (Toronto time) on a day which is
a business day, then such delivery or electronic communication shall
be deemed to have been made on the subsequent day that is a business
day.
(vii) Notwithstanding the foregoing, the Board may, in its sole discretion,
waive any requirement in this Section 3A.
General By-law No. 1, as amended from time to time, of the by-laws of the
Corporation and this by-law shall be read together and shall have effect, so far
as practicable, as though all the provisions thereof were contained in one by-law
of the Corporation. All terms contained in this by-law which are defined in
General By-law No. 1, as amended from time to time, of the by-laws of the
Corporation shall, for all purposes hereof, have the meanings given to such terms
in the said General By-law No. 1 unless expressly stated otherwise or the context
otherwise requires.
FOR FURTHER INFORMATION PLEASE CONTACT:
Stephan Theron
President and Chief Executive Officer
+1 (416) 861-5912
Email: stheron@forbescoal.com
Samantha Thomson
Investor Relations Manager
+1 (416) 309-2957
Email: sthomson@forbescoal.com
15 July 2013
Johannesburg
Sponsor
Sasfin Capital (a division of Sasfin Bank Limited)
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