Labour disruptions and a weaker coal export market have notably impacted the financial results of JSE-and TSX-listed Forbes Coal.The company revealed that it managed to achieve revenues of US$68.5 million and gross profit of US$900 000, compared to revenues of US$104.5 million, and gross profit of US$17.4 million achieved in the 2012 financial year. Forbes Coal explained that the decline in coal revenues during the twelve months ended February 28, 2013 to US$68.5 million were attributable to a decline in the coal price index in Q1 and Q2 2013 and to labour disruptions in Q3 2013. Further, a tough trading climate was worsened, with the average selling price per coal ton decreasing in the twelve month fiscal period from US$96.59/t in the 2012 financial year, compared to US$81.87/t for the 2013 financial year due to a softening export coal price. “A softening export coal market combined with lower production due to the labour disruption in Q3, 2013 were the main factors impacting our profitability for fiscal 2013. We were able to reduce our operating expenses which provided some relief and cost containment will remain a priority for the company. “We are pleased to report that production losses as a result of the labour disruption were offset by a record production month in February 2013 with a total of 151 000 t of coal produced, a significant achievement over the 117 000 t monthly average of the last 12 months. Run of mine production at Magdalena grew 29% year-on-year in the fourth quarter. We remain focused on our plans to expand production at both properties and to keep operational costs down,” said Forbes Coal’s president and CEO Stephan Theron. Total run of mine (ROM) production from all operations for fiscal 2013 was 1,411,773 t, a 9% increase compared to 1,290,799 t produced in 2012.
ROM production from Magdalena in 2013 was 1,009,180 t, on par when compared to fiscal 2012, while ROM production at Aviemore in 2013 was 402 583 t, a 43% increase compared to 281 244 t produced in 2012.Forbes Coal advised that total ROM production for the fourth quarter increased by 20% over the fourth quarter of fiscal 2012 to 364 100 t but was below targeted ROM production of 467 501 t as originally budgeted prior to the labour disruptions and was also impacted by difficult geology, interruptions in the power supply and high target tonnages for a stone section in Magdalena. Operating expenses for the twelve months ended February 28, 2013 were US$58.58 million (US$70.02/t) compared to US$71.06 million (US$65.69/t). Meanwhile, the company noted that its strategic goals in fiscal 2014 are to advance and expand production at its Dundee properties by further developing Magdalena and Aviemore, by increasing wash plant recovery rates and by improving operational efficiencies. “In order to achieve these goals, Forbes Coal will work to increase productivity and production capacity at Magdalena through operational efficiency initiatives. The company is targeting to achieve saleable production of 845 000 t at Magdalena and 300 000 t of saleable production at Aviemore for fiscal 2014 and has outlined a number of initiatives to accomplish this goal in its Management Discussion and Analysis released on May 29, 2013,” the company said. The overall fiscal 2014 saleable production target is 1,145,000 t of coal, an increase of 20% over the saleable production reported for fiscal 2013.