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Message: Grande Cache Coal Corporation Announces Fourth Quarter Fiscal 2008 Financial and
Grande Cache Coal Corporation Announces Fourth Quarter Fiscal 2008 Financial and Operating Results
CALGARY, ALBERTA, May 27, 2008 (Marketwire via COMTEX News Network) --
CALGARY, ALBERTA, May 27, 2008 (Marketwire via COMTEX News Network) --
Grande Cache Coal Corporation (TSX:GCE) ("Grande Cache Coal" or the "Corporation") today announced its financial and operating results for the three and twelve months ended March 31, 2008.
- During the fourth quarter, Grande Cache Coal sold 0.42 million tonnes at an average price of $95 per tonne generating revenue of $39.9 million. In the comparable period, poor weather conditions restricted rail transportation limiting coal sales to 0.18 million tonnes and revenue to $13.8 million.
- Annual sales volumes increased 65% over last year to 1.65 million tonnes. The average annual sales price realized this year was $89 per tonne compared to $101 per tonne last year, reflecting a weaker U.S dollar relative to the Canadian dollar and lower U.S. dollar contract sales prices.
- The Corporation had a net loss of $1.2 million, or $0.02 per share, in the fourth quarter, compared to a net loss of $4.7 million in the same period last year. The net loss for the year was $15.5 million or $0.24 per share and was largely due to the weakening of the U.S. dollar.
- EBITDA for the fourth quarter was $1.5 million versus a loss of $3.1 million in the comparable quarter of last year.
- The cost of coal produced was $63 per tonne for the quarter and $58 per tonne for the year, down from $68 per tonne and $63 per tonne in the comparable periods of fiscal 2007.
- Cost of sales for the quarter were the same as last year at $86 per tonne. For the year, cost of sales decreased 8% to $86 per tonne versus $93 per tonne.
"During the quarter we were able to ship more coal than anticipated and take advantage of some higher price opportunities" said Robert Stan, President and Chief Executive Officer. "Our results were positive compared to last fiscal year in that we successfully reduced our operating costs. Unfortunately the strengthening of the Canadian dollar negated a large portion of the accomplishments we achieved and was a major contributor to our loss."
"We expect substantially better financial results in the coming fiscal year," continued Mr. Stan. "Significant coal price increases will enable us to invest in capital projects designed to improve productivities and efficiencies in existing mining operations as well as develop mining areas for the future."
Guidance for fiscal 2009:
- Grande Cache Coal has completed contract negotiations for fiscal 2009. Coal sales volumes are projected to be 1.8 to 2.0 million tonnes contingent upon adequate rail service and shipping. The average sales price for fiscal 2009 is anticipated to be in the range of U.S.$245 to U.S.$255 per tonne and includes carryover shipments from the prior coal year, contract sales negotiated on a calendar year basis and hard coking coal and PCI contract sales for the new coal year commencing on April 1, 2008. The expected average coal price is comprised of a range of prices from U.S.$81 per tonne for carry over shipments to U.S.$300 per tonne for contracts settled in the new coal year. The Corporation negotiated an average price of approximately U.S.$290 per tonne for roughly 70% of the projected sales volume for fiscal 2009.
- Several cost reduction initiatives have been realized and while it is expected that the average cost of sales will vary from quarter to quarter, the average cost of sales for fiscal 2009 is anticipated to be in the range of $85 to $88 per tonne. There has been a significant rise in industry wide mining input costs recently, most notably diesel fuel. A continued escalation of these costs would have a negative impact on the anticipated cost of sales.
- Capital expenditures are expected to total approximately $50 million.
For additional information on fiscal 2009 guidance please refer to the Outlook section of following Management's Discussion and Analysis.
Financing Activities:
- During the fourth quarter, Grande Cache Coal completed a financing agreement with Brookfield Bridge Lending Fund Inc. ("Brookfield"), the Corporation's existing senior lender, for a $17.5 million three year floating rate senior secured convertible debenture and a secured revolving credit facility for an amount up to $20.0 million, subject to a borrowing base calculation. The convertible debenture will mature three years from closing and carries a conversion price of $1.825 per common share. The proceeds from the convertible debenture were used to fully repay the Corporation's pre-existing term facility with Brookfield and associated fees. The balance of the proceeds from the convertible debenture as well as proceeds from the revolving facility will be used for general corporate purposes.
Grande Cache Coal is an Alberta based metallurgical coal mining company whose experienced team of coal professionals are managing a mine that produces metallurgical coal for the steel industry and holds coal leases covering over 22,000 hectares in the Smoky River Coalfield located in west-central Alberta. Grande Cache Coal's common shares are listed on the Toronto Stock Exchange under the trading symbol "GCE".
Management's Discussion & Analysis
This Management's Discussion and Analysis ("MD&A") should be read in conjunction with the unaudited interim consolidated financial statements for the period ended March 31, 2008, and the audited consolidated financial statements, notes and related MD&A thereto of Grande Cache Coal Corporation ("Grande Cache Coal" or the "Corporation") for the fiscal year ended March 31, 2007. The consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles. This discussion provides management's analysis of the Corporation's historical financial and operating results and provides estimates of the Corporation's future financial and operating performance based on information currently available. Actual results will vary from estimates and the variances may be significant. Readers should be aware that historical results are not necessarily indicative of future performance.
This MD&A was prepared using information that is current as of May 26, 2008.
Certain information set forth in this MD&A, including management's assessment of the Corporation's future plans and operations, contains forward-looking statements which are based on the Corporation's current internal expectations, estimates, projections, assumptions and beliefs, which may prove to be incorrect. Some of the forward-looking statements may be identified by words such as "expects", "anticipates", "believes", "projects", "plans" and similar expressions. These statements are not guarantees of future performance and undue reliance should not be placed on them. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause Grande Cache Coal's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things, changes in general economic, market and business conditions; uncertainties associated with estimating the quantity and quality of coal reserves and resources; commodity prices, currency exchange rates, the availability of credit facilities for capital expenditure requirements, debt service requirements; dependence on a single rail system; changes to legislation; liabilities inherent in coal mine development and production; competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel; geological, mining and processing technical problems; ability to obtain required mine licenses, mine permits and regulatory approvals required to proceed with mining and coal processing operations; ability to comply with current and future environmental and other laws; actions by governmental or regulatory authorities including increasing taxes and changes in other regulations; and the occurrence of unexpected events involved in coal mine development and production. Many of these risks and uncertainties are described in Grande Cache Coal's 2007 Annual Information Form, Grande Cache Coal's Management's Discussion and Analysis and other documents Grande Cache Coal files with the Canadian securities authorities.
Readers of this Management's Discussion and Analysis should refer to the section entitled "Risk Factors" in Grande Cache Coal's 2007 Management's Discussion and Analysis and 2007 Annual Information Form for factors which could potentially impact the Corporation's financial performance and its ability to meet its targets.
All references are to Canadian dollars unless otherwise indicated.
Financial Overview
As at As at
March 31 March 31
(millions of dollars) 2008 2007
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Balance Sheet
Total assets 123.5 107.5
Long-term liabilities 21.5 13.9
Shareholders' equity 83.6 69.8
Three months Twelve months
(millions of dollars, except per ended March 31 ended March 31
share amounts) 2008 2007 2008 2007
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Income Statement
Revenue 39.9 13.8 146.6 101.3
Cost of sales 35.9 15.3 141.3 93.2
Loss from operations (0.7) (4.2) (13.9) (2.4)
Net loss (1.2) (4.7) (15.5) (7.0)
Basic and diluted net loss per share (0.02) (0.09) (0.24) (0.14)
Three months Twelve months
(millions of tonnes, except per ended March 31 ended March 31
tonne amounts) 2008 2007 2008 2007
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Statistics
Clean coal production (tonnes) 0.37 0.23 1.42 0.99
Coal sales (tonnes) 0.42 0.18 1.65 1.00
Average sales price (U.S.$/tonne) 94 77 86 93
Average sales price ($/tonne) 95 78 89 101
Average cost of sales ($/tonne) 86 86 86 93
Average cost of production ($/tonne) 63 68 58 63
Revenue
Fourth quarter sales volumes were 0.42 million tonnes, more than double the 0.18 million tonnes sold in the comparable quarter. During the fourth quarter of last year, the Corporation's rail provider faced severe weather conditions which restricted the amount of coal that could be moved to the port drastically reducing coal sales for the period. For the current fiscal year, sales volumes were 1.65 million compared to 1.00 million in the prior year.
The average price achieved on U.S. dollar denominated sales was U.S.$94 per tonne in the fourth quarter compared to U.S.$77 per tonne in the same period last year. The product sales mix in the current quarter included hard coking coal sales (83%) at an average price of U.S.$100 per tonne and Pulverized Coal Injection (PCI) sales (17%) at an average price of U.S.$68 per tonne. The comparable quarter included hard coking coal sales (42%) at an average price of U.S.$87 per tonne, PCI sales (35%) at an average price of U.S.$65 per tonne and thermal coal sales (23%) to a neighboring power plant facility at an average price of $34 per tonne.
For the fiscal year, the average price achieved on U.S. dollar denominated sales was U.S.$86 per tonne compared to U.S.$93 per tonne last year. The product sales mix for the year included hard coking coal sales (87%) at an average price of U.S.$89 per tonne and PCI sales (13%) at an average price of U.S.$68 per tonne. Fiscal 2007 included hard coking coal sales (75%) at an average price of U.S.$100 per tonne, PCI sales (18%) at an average price of U.S.$65 per tonne and thermal coal sales (7%) at an average price of $34 per tonne
The weaker U.S dollar in relation to the Canadian dollar continued to have a negative impact on the Corporation's financial results. During the fourth quarter, on average U.S.$1 equaled Cdn$1.01. As a result, the average Canadian price for U.S. dollar denominated sales was $95 per tonne, compared to $91 per tonne in the same period last year. For the year, the average Canadian sales price for U.S. dollar denominated sales was $89 per tonne compared $106 per tonne last year. Including thermal coal sales, the prior year's average total sales price was $101 per tonne.
Three months Twelve months
ended March 31 ended March 31
2008 2007 2008 2007
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U.S.$/tonne
Average hard coking coal sales price 100 87 89 100
Average PCI coal sales price 68 65 68 65
------------------------------------
Average sales price 94 77 86 93
Average exchange rate (1 USD = Canadian) 1.01 1.18 1.03 1.14
Canadian $/tonne
Average hard coking coal sales price 101 103 91 114
Average PCI coal sales price 68 76 70 75
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Average sales price for $U.S.
denominated sales 95 91 89 106
Average thermal coal sales price - 34 - 34
------------------------------------
Average total sales price 95 78 89 101
Revenue in the fourth quarter was $39.9 million, significantly higher than the $13.8 million achieved in the comparable period. The primary reason for the variance was the low sales volume in the comparable quarter. For the year, revenue was $146.6 million compared to $101.3 million in fiscal 2007. The annual increase is the result of higher sales volumes partially offset by lower U.S. dollar denominated contract sales prices and a lower exchange rate due to a stronger Canadian dollar.
Production Costs and Cost of Sales
The Corporation's clean coal production cost in the quarter was $63 per tonne, down from $68 per tonne in the same period last year. In the comparable period, severe weather conditions led to poor rail service causing a buildup of coal inventory at the mine site. As a result, the Corporation temporarily suspended operations in the processing plant and underground mine which led to a high unit cost due to low coal production volume.
The clean coal production cost for the year was 8% lower at $58 per tonne compared to $63 per tonne last year. In fiscal 2007, the Corporation made the decision to end its relationship with the surface mine contractor and purchase its own fleet of mining equipment. During the transition period, the contractor's efforts were focused on moving waste to maximize the coal readily available to the Corporation, which had the effect of temporarily increasing the strip ratio in the mine for the benefit of future periods. Certain stripping costs totaling $4.3 million were capitalized during the second and third quarter of fiscal 2007. These prepaid charges were amortized over the production generated by the stripping activity resulting in amortization charges of $0.1 million in the fourth quarter of fiscal 2007 and $4.2 million in the second quarter of fiscal 2008.
Cost of sales for the fourth quarter was $35.9 million, or $86 per tonne, compared to $15.3 million, or $86 per tonne in the same period last year. The cost of sales in the current quarter consisted of cost of product sold of $24.9 million ($59 per tonne) and distribution costs of $11.0 million ($27 per tonne). In the comparable quarter of fiscal 2007, the cost of product sold was $11.5 million ($65 per tonne) and the distribution costs were $3.8 million ($21 per tonne).
For the year, cost of sales were $141.3 million ($86 per tonne), versus $93.2 million ($93 per tonne) last year. The cost of sales consisted of cost of product sold of $96.2 million ($59 per tonne) and distribution costs of $45.1 million ($27 per tonne). In the prior period, the cost of product sold was $64.4 million ($64 per tonne) and the distribution costs were $28.8 million ($29 per tonne).
The reduction in the unit cost of product sold is primarily a result of lower operating costs in the surface mine and reduced process plant costs due to improved operating productivities and a higher plant yield. The Corporation has also eliminated the services of several contractors and replaced essential services with Grande Cache Coal employees and equipment.
The decrease in distribution costs for the current year is mainly due to a lower proportion of shipments to eastern North America which carry higher rail rates than shipments to port in western Canada.
Other Operating Expenses
Grande Cache Coal's general and administrative expenses were $2.5 million during the quarter up from $1.6 million in the comparable period. Included in the general and administrative expenses were head office administrative and marketing charges of $1.9 million ($1.1 million - 2007) and non-cash charges for stock-based compensation of $0.7 million ($0.4 million - 2007). The quarter also included a foreign exchange gain of $0.1 million compared to a foreign exchange loss of $0.1 million last year.
For the year, general and administrative expenses were $9.1 million compared to $6.0 million in fiscal 2007. A major reason for the increase is related to foreign exchange losses on currency translation which accounted for $1.9 million in the current year ($0.6 million - 2007) and is a result of a stronger Canadian dollar. Head office administrative and marketing charges were $5.6 million ($4.0 million - 2007) and non-cash charges for stock-based compensation were $1.6 million ($1.4 million - 2007).
Depreciation, depletion and accretion charges were $2.2 million during the fourth quarter and $10.1 million for the year, versus $1.1 million and $4.4 million in the comparable periods of last year. The increase is reflective of higher coal production levels, the addition of productive capital assets and the change in value of depreciation and depletion included in coal inventory.
Other Income (Expenses)
Interest and other income in the fourth quarter was $0.2 million compared to $0.1 million in the same quarter last year. For the year, interest and other income was $1.1 million in contrast to $0.4 million in fiscal 2007. Interest and other income consists primarily of interest earned on restricted cash, interest earned on short term investments and access fees charged for the use of roads and bridges belonging to the Corporation.
Interest and other expenses were $0.4 million in the fourth quarter and $1.7 million for the year, compared to $0.5 million and $1.8 million in the comparable periods last year. Interest and other expenses consist primarily of interest paid on the revolving and long term debt.
Non-recurring charges in the prior year were $2.5 million and consisted of $2.2 million in demobilization costs paid to the surface mining contractor in connection with the termination of the contract and a $0.3 million fee for the cancellation of a planned equipment purchase.
Liquidity and Capital Resources
At March 31, 2008, Grande Cache Coal had cash and cash equivalents of $4.2 million and availability of $15.0 million on the revolving debt facility. During the fourth quarter the Corporation's cash position decreased $0.6 million compared to a cash increase of $0.9 million in the same period last year. For the year, the Corporation's cash position decreased $0.4 million in contrast to a cash increase of $3.6 million during fiscal 2007.
Operating activities generated cash of $1.0 million in the fourth quarter compared to $1.6 million in the prior period. Cash provided by operating activities since March 31, 2007 was $10.6 million versus a cash use of $16.8 million in the previous fiscal year. Cash generated in the current year was weakened by the Corporation's $15.5 million net loss, which was largely a result of reduced revenue due to lower contract sales prices and a weaker U.S. dollar.
During the fourth quarter, Grande Cache Coal completed its previously announced financing with Brookfield Bridge Lending Fund Inc. ("Brookfield"), the Corporation's existing senior lender. At closing, a $17.5 million floating rate senior secured convertible debenture (the "Convertible Debenture") was issued to Brookfield and a secured revolving credit facility was entered into with Brookfield for an amount up to $20.0 million (the "Revolving Facility"), subject to a borrowing base calculation. The proceeds from the Convertible Debenture were used to fully repay the Corporation's pre-existing term facility with Brookfield ($10 million) and associated fees. The balance of the proceeds from the Convertible Debenture as well as proceeds from the Revolving Facility will be used for general corporate purposes.
The Convertible Debenture matures on April 1, 2011 (the "Maturity Date"). Interest accrues on the Convertible Debenture at a variable annual rate equal to a Canadian chartered bank's prime lending rate plus 1.75 percent per annum, calculated daily. The Convertible Debenture is convertible at Brookfield's option into common shares of the Corporation ("Common Shares") at the earlier of any time prior to the Maturity Date and the business day immediately preceding the date fixed by Grande Cache Coal for redemption at a conversion price of $1.825 per Common Share (the "Conversion Price"). The Convertible Debenture is non-transferable except to affiliates of Brookfield and funds managed by Brookfield or its affiliates.
Grande Cache Coal may redeem the Convertible Debenture at any time in multiples of $250,000 on 30 days notice at a redemption price equal to 107% of the principal amount being redeemed plus accrued and unpaid interest. Grande Cache Coal is required to redeem all amounts of outstanding indebtedness under the Convertible Debenture at a 107% premium in the event of a change of control of Grande Cache Coal. In addition, at any time after August 12, 2008, Grande Cache Coal may require Brookfield to convert up to 50% of the Convertible Debenture at the Conversion Price, provided that the 15 day volume weighted average trading price ("VWAP") (on volumes of at least 300,000 Common Shares for 15 consecutive trading days) of the Common Shares on the Corporation's principal stock exchange exceeds $2.50 per share. Grande Cache Coal may require Brookfield to convert the balance of the Convertible Debenture in the event the 15 day VWAP of the Common Shares exceeds $4.00 per share.
During the fourth quarter, warrants were exercised for cash proceeds of $1.4 million and common share options were exercised for cash proceeds of $0.2 million.
Financing activities since March 31, 2007 have provided cash of $25.0 million. During the current year, the Corporation issued share capital for gross proceeds of $28.0 million. Costs for issuing the share capital were $2.0 million resulting in net proceeds of $26.0 million. The Corporation also made net repayments of $10.0 million during the year on the Revolving Facility bringing the balance to $5.0 million at March 31, 2008.
Financing activities in the prior year generated cash of $28.8 million, during which time the Corporation closed a bought deal equity financing for net proceeds of $25.3 million, consisting of gross proceeds of $27.0 million and share issuance costs of $1.7 million. The Corporation also received net proceeds from the revolving debt facility of $3.5 million during the previous fiscal year.
Investing activities resulted in a cash decrease of $10.6 million in the fourth quarter and $34.6 million for the year, compared to a decrease of $0.6 million and $8.3 million in the respective periods of last fiscal year. Capital additions accounted for $10.2 million of the expenditures in the current quarter ($0.6 million - 2007) and $38.8 million during the year ($3.6 million - 2007). During fiscal 2008, expenditures of $30.4 million were made towards the purchase of surface mine equipment. Also included in investing activities was the capitalization and amortization of certain prestrip costs. In fiscal 2007, prestrip costs totaling $4.3 million were capitalized and subsequently amortized over the production generated by the stripping activity resulting in amortization charges of $4.2 million in the current fiscal year.
The Corporation believes that the Revolving Facility will be sufficient to fund ongoing working capital requirements. Grande Cache Coal expects that coal production will be sufficient to meet customer requirements and increase inventory levels during 2009. At March 31, 2008, the Corporation had $5.5 million in coal inventory, compared to $7.3 million at the end of the previous quarter.
The Corporation did not have any off-balance sheet financing structures in place at March 31, 2008. The only long term liabilities of the Corporation are long term debt of $17.4 million, asset retirement obligations with a present value of $4.0 million, and capital lease obligations of $0.1 million. Grande Cache Coal's asset retirement obligations are covered by a cash deposit of $0.1 million and letters of credit totaling $5.5 million provided to the Alberta Government, which are presently secured by restricted cash.
Recent and Upcoming Changes in Accounting Policies
The CICA Handbook sections 1530 - Comprehensive Income, 3855 - Financial Instruments - Recognition and Measurement and 3865 - Hedges, became applicable to the Corporation on April 1, 2007.
Section 1530 requires the presentation of a statement of comprehensive income and its components that are not included in net income (loss). Other comprehensive income is the change in net assets during a period that result from transactions, events and circumstances from non-owner sources such as unrealized gains or losses on available-for-sale investments. The Corporation did not have other comprehensive income or losses during the period therefore comprehensive loss was equal to the net loss.
Section 3855 establishes the recognition and measurement criteria of financial assets, financial liabilities and derivatives. All financial instruments are required to be measured at fair value on initial recognition of the instrument, except for certain related party transactions. Measurement in subsequent periods depends on whether the financial instrument has been classified as held-for-trading, available-for-sale, held-to-maturity, loans and receivables, or other financial liabilities as defined by the standard. Financial assets and financial liabilities held-for-trading are measured at fair value with changes in those fair values recognized in net income (loss). Financial assets available-for-sale are measured at fair value, with changes in those fair values recognized in other comprehensive income (loss). Financial assets held-to-maturity, loans and receivables and other financial liabilities are measured at amortized cost using the effective interest method of amortization. The methods used by the Corporation in determining the fair value of financial instruments are unchanged as a result of implementing the new standard.
Section 3865 provides new standards for entities applying hedge accounting. The Corporation had no transactions which have been designated as hedges for accounting purposes therefore the new standard did not impact the financial statements.
The CICA Handbook sections 1535 - Capital Disclosures, 3031 - Inventories, 3862 - Financial Instruments - Disclosures and 3863 - Financial Instruments - Presentations, will become applicable to the Corporation on April 1, 2008.
Section 1535 requires the disclosure of information regarding objectives, policies and processes for managing capital. Adoption of this accounting standard may result in additional disclosure in the Corporation's notes to the financial statements.
Section 3031 prescribes new accounting treatment for inventories. The impact of adopting this accounting standard is currently being assessed.
Section 3862 requires enhanced financial statement disclosure of financial instruments including the significance of financial instruments, the nature and extent of risks arising from financial instruments and how those risks will be managed. Section 3863 establishes enhanced financial statement presentation of financial instruments and their implications on the Corporation's financial position, performance and cash flows. The impact of adopting these accounting standards is currently being assessed.
The Canadian Accounting Standards Board has decided that International Financial Reporting Standards ("IFRS") will be adopted as Canadian generally accepted accounting principles ("GAAP") for publicly accountable enterprises. As such, the Corporation will be required to adopt IFRS for the fiscal year beginning April 1, 2011, including comparative data from the prior year. The Corporation is in the process of assessing the differences between IFRS and Canadian GAAP and the impact the transition will have on the financial statements.
Summary of Quarterly Results
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2008 2007
------------------------------------------------------
(millions, except per
unit amounts) Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
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Clean coal production 0.37 0.35 0.37 0.33 0.23 0.27 0.22 0.27
Coal sales 0.42 0.44 0.36 0.43 0.18 0.30 0.29 0.23
Average sales price
($/tonne) 95 85 85 89 78 95 103 125
Average cost of sales
($/tonne) 86 85 91 81 86 88 97 101
Average cost of
production ($/tonne) 63 50 62 55 68 63 63 60
Revenue 39.9 37.7 30.8 38.2 13.8 28.7 29.8 29.0
(Loss) income from
operations (0.7) (3.0) (8.5) (1.7) (4.2) 0.6 (0.9) 2.1
Net (loss) income (1.2) (3.4) (8.8) (2.0) (4.7) (2.2) (1.8) 1.7
Basic and diluted net
(loss) income per
share (0.02) (0.05) (0.14) (0.04) (0.09) (0.04) (0.03) 0.03
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Outlook
Metallurgical Coal Markets
Grande Cache Coal has completed contract negotiations for fiscal 2009. Coal sales volumes are projected to be 1.8 to 2.0 million tonnes contingent upon adequate rail service and shipping. The average sales price for fiscal 2009 is anticipated to be in the range of U.S.$245 to U.S.$255 per tonne and includes carryover shipments from the prior coal year, contract sales negotiated on a calendar year basis and hard coking coal and PCI contract sales for the new coal year commencing on April 1, 2008. The expected average coal price is comprised of a range of prices from U.S.$81 per tonne for carry over shipments to U.S.$300 per tonne for contracts settled in the new coal year. The Corporation negotiated an average price of approximately U.S.$290 per tonne for roughly 70% of the projected sales volume for fiscal 2009.
The Corporation is maintaining a focus on expanding and diversifying its customer base geographically as well as within traditional markets to mitigate delays in vessel nominations. The demand for metallurgical coking coal is expected to remain strong over the medium term as worldwide markets have tightened as production and infrastructure issues in parts of the world continue to constrain supply.
Operations
The Corporation is continuing to focus on productivity improvements and cost control measures in the surface mine, underground mine and process plant. Several cost reduction initiatives have been realized and while it is expected that the average cost of sales will vary from quarter to quarter, the average cost of sales for fiscal 2009 is anticipated to be in the range of $85 to $88 per tonne. There has been a significant rise in industry wide mining input costs recently, most notably diesel fuel. A continued escalation of these costs would have a negative impact on the anticipated cost of sales.
Coal production in the first quarter of fiscal 2009 thus far has been below plan due to the underground mine being in a development stage, which temporarily reduces coal production, and issues with the deployment of equipment and people in the surface mine. Depillaring activities in the underground mine are expected to resume early in the second quarter of fiscal 2009 and result in increased coal production. The Corporation is adding equipment and skilled personnel in the surface mine to increase production volume over the remainder of the fiscal year. As a result of the reduced production volume, the Corporation expects that the cost of sales in the first quarter of fiscal 2009 will be higher than the average cost of sales projected for the fiscal year.
Capital Expenditures
The Corporation anticipates capital expenditures will total approximately $50 million in fiscal 2009. Expenditures related to surface mining are expected to total $30 million in the year, including $11 million on equipment to increase mine productivity and $19 million of mine development projects. The development expenditures are to include an extension of the current surface mining area as well as development on future surface mining areas. Capital expenditures related to underground mining and the coal processing plant are projected to total approximately $5 million each, including both sustaining capital expenditures and projects designed to increase efficiency. Safety, environmental, engineering and other projects are expected to total $8 million. Ongoing drilling and exploration programs are anticipated to total approximately $2 million.
Income Tax
Since the Corporation has been operating it has not had to pay income tax. The Corporation expects to be taxable in fiscal 2009 due to a significant increase in the average coal sales price and improved operating results.
Other Information
The Corporation has not entered into any off-balance sheet arrangements at this time. Looking forward, export trade credit insurance may be used to support accounts receivable.
As at May 26, 2008, there were 75,600,501 common shares issued and outstanding, and the following share options were also outstanding:
Number Number Exercise
Share Options Outstanding Granted Vested Price Expiry Date
----------------------------------------------------------------------------
941,667 941,667 $ 1.00 March 21, 2009
150,000 150,000 $ 3.70 July 21, 2009
37,500 37,500 $ 3.70 August 8, 2009
115,000 115,000 $ 11.56 March 15, 2010
10,000 10,000 $ 9.08 June 9, 2010
75,000 75,000 $ 4.50 October 18, 2010
610,000 610,000 $ 2.44 April 11, 2011
525,000 525,000 $ 1.05 October 11, 2011
175,000 175,000 $ 1.05 November 16, 2011
125,000 83,333 $ 0.79 December 14, 2011
503,667 335,778 $ 0.88 May 23, 2012
1,866,734 566,734 $ 1.04 January 8, 2013
-----------------------
Total 5,134,568 3,625,012
-----------------------
-----------------------
As at May 26, 2008, there were 7.6 million purchase warrants outstanding, exercisable at a price of $1.60 per share until August 11, 2008.
Additional Information
Additional information regarding the Corporation and its business operations, including the Corporation's annual information form for the fiscal year ended March 31, 2007, is available on the Corporation's SEDAR company profile at www.sedar.com.
Grande Cache Coal Corporation
Consolidated Balance Sheets
(thousands of Canadian dollars)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
As at As at
March 31 March 31
(unaudited) 2008 2007
----------------------------------------------------------------------------
Assets
Current assets
Cash and cash equivalents $ 4,238 $ 4,614
Restricted cash (note 3) 6,528 6,528
Accounts receivable 20,171 5,129
Inventory (note 4) 10,477 34,677
Prepaid expenses 1,084 1,769
Prepaid prestrip charges (note 5) - 4,193
----------- -----------
42,498 56,910
Deposit for future reclamation expenditures 82 82
Capital assets (note 6) 80,937 50,473
----------- -----------
$ 123,517 $ 107,465
----------- -----------
----------- -----------
Liabilities
Current liabilities
Accounts payable and accrued liabilities $ 13,484 $ 8,788
Revolving debt (note 7) 5,000 15,000
----------- -----------
18,484 23,788
Long term debt (note 7) 17,382 10,000
Asset retirement obligations (note 8) 4,020 3,783
Capital lease obligations 52 104
----------- -----------
39,938 37,675
----------- -----------
Shareholders' Equity
Share capital (note 9) 154,676 126,979
Convertible debenture (note 7) 118 -
Contributed surplus 4,468 3,036
Deficit (75,683) (60,225)
----------- -----------
83,579 69,790
----------- -----------
$ 123,517 $ 107,465
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Commitments (note 13)
See accompanying notes to the consolidated financial statements.
Grande Cache Coal Corporation
Consolidated Statements of Net Loss, Comprehensive Loss and Deficit
(thousands of Canadian dollars, except per share amounts)
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Three months ended Twelve months ended
March 31 March 31
----------------------- ---------------------
(unaudited) 2008 2007 2008 2007
----------------------------------------------------------------------------
Revenue $ 39,944 $ 13,788 $146,579 $ 101,251
Expenses
Cost of product sold 24,861 11,552 96,246 64,398
Distribution 11,059 3,780 45,081 28,841
General and administrative 2,475 1,571 9,089 6,000
Depreciation, depletion and
accretion 2,241 1,113 10,057 4,409
----------------------- ---------------------
40,636 18,016 160,473 103,648
----------------------- ---------------------
Loss from operations (692) (4,228) (13,894) (2,397)
Other income (expenses)
Interest and other income 193 89 1,123 399
Interest and other expenses (400) (508) (1,672) (1,751)
Non-recurring charges
(note 10) - - - (2,541)
----------------------- ---------------------
Loss before taxes (899) (4,647) (14,443) (6,290)
Taxes (289) (100) (1,015) (724)
----------------------- ---------------------
Net loss and comprehensive loss (1,188) (4,747) (15,458) (7,014)
Deficit, beginning of period (74,495) (55,478) (60,225) (53,211)
----------------------- ---------------------
Deficit, end of period $ (75,683) $ (60,225) $(75,683) $ (60,225)
----------------------- ---------------------
----------------------- ---------------------
Net loss per share (note 11)
Basic and diluted $ (0.02) $ (0.09) $ (0.24) $ (0.14)
----------------------- ---------------------
----------------------- ---------------------
See accompanying notes to the consolidated financial statements.
Grande Cache Coal Corporation
Consolidated Statements of Cash Flows
(thousands of Canadian dollars)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months ended Twelve months ended
March 31 March 31
---------------------------------------
(unaudited) 2008 2007 2008 2007
----------------------------------------------------------------------------
Cash provided by (used for)
Operating activities
Net loss and comprehensive loss $ (1,188) $ (4,747) $(15,458) $ (7,014)
Items not affecting cash
Stock-based compensation (note 12) 667 392 1,575 1,415
Settlement of asset retirement
obligation (note 8) - - (19) -
Unrealized foreign exchange loss 131 108 1,433 25
Depreciation, depletion and
accretion 2,241 1,113 10,057 4,409
---------------------------------------
1,851 (3,134) (2,412) (1,165)
Net change in non-cash working
capital relating to operating
activities (811) 4,714 13,042 (15,650)
---------------------------------------
1,040 1,580 10,630 (16,815)
---------------------------------------
Financing activities
Proceeds on long term debt (note 7) 7,500 - 7,500 -
(Repayment) proceeds on revolving
debt (note 7) - - (10,000) 3,500
Proceeds on exercise of warrants
(note 9) 1,377 - 1,377 -
Proceeds on exercise of options
(note 9) 200 - 200 -
Proceeds on issuance of share
capital (note 9) - - 27,956 27,000
Share issuance costs (note 9) - - (1,979) (1,736)
Payment on capital lease
obligations (17) (39) (62) (39)
Net change in non-cash working
capital relating to financing
activities - - 2 -
---------------------------------------
9,060 (39) 24,994 28,725
---------------------------------------
Investing activities
Additions to mineral properties
and development (203) (44) (1,380) (2,219)
Additions to buildings and
equipment (9,982) (549) (37,369) (1,376)
Restricted cash (note 3) - - - (390)
Net change in non-cash working
capital relating to investing
activities (368) 6 4,198 (4,333)
---------------------------------------
(10,553) (587) (34,551) (8,318)
---------------------------------------
Effect of foreign exchange on
cash and cash equivalents (131) (34) (1,449) 49
---------------------------------------
(Decrease) increase in cash and
cash equivalents (584) 920 (376) 3,641
Cash and cash equivalents,
beginning of period 4,822 3,694 4,614 973
---------------------------------------
Cash and cash equivalents, end of
period $ 4,238 $ 4,614 $ 4,238 $ 4,614
---------------------------------------
---------------------------------------
See accompanying notes to the consolidated financial statements.
Grande Cache Coal Corporation
Notes to Consolidated Financial Statements
March 31, 2008
(Unaudited)
(thousands of Canadian dollars, except per share amounts)
1. Basis of Presentation
The interim consolidated financial statements of the Corporation have been prepared in accordance with Canadian generally accepted accounting principles. The interim consolidated financial statements have been prepared using the same accounting policies as the consolidated financial statements for the fiscal year ended March 31, 2007, except as described in note 2.
The interim consolidated financial statements should be read in conjunction with the Corporation's audited consolidated financial statements and notes thereto for the year ended March 31, 2007.
Certain prior year's figures have been reclassified to conform to the presentation adopted in the current year.
2. Recent and Upcoming Changes in Accounting Policies
The CICA Handbook sections 1530 - Comprehensive Income, 3855 - Financial Instruments - Recognition and Measurement and 3865 - Hedges, became applicable to the Corporation on April 1, 2007.
Section 1530 requires the presentation of a statement of comprehensive income and its components that are not included in net income (loss). Other comprehensive income is the change in net assets during a period that result from transactions, events and circumstances from non-owner sources such as unrealized gains or losses on available-for-sale investments. The Corporation did not have other comprehensive income or losses during the period therefore comprehensive loss was equal to the net loss.
Section 3855 establishes the recognition and measurement criteria of financial assets, financial liabilities and derivatives. All financial instruments are required to be measured at fair value on initial recognition of the instrument, except for certain related party transactions. Measurement in subsequent periods depends on whether the financial instrument has been classified as held-for-trading, available-for-sale, held-to-maturity, loans and receivables, or other financial liabilities as defined by the standard. Financial assets and financial liabilities held-for-trading are measured at fair value with changes in those fair values recognized in net income (loss). Financial assets available-for-sale are measured at fair value, with changes in those fair values recognized in other comprehensive income (loss). Financial assets held-to-maturity, loans and receivables and other financial liabilities are measured at amortized cost using the effective interest method of amortization. The methods used by the Corporation in determining the fair value of financial instruments are unchanged as a result of implementing the new standard.
Section 3865 provides new standards for entities applying hedge accounting. The Corporation had no transactions which have been designated as hedges for accounting purposes therefore the new standard did not impact the financial statements.
The CICA Handbook sections 1535 - Capital Disclosures, 3031 - Inventories, 3862 - Financial Instruments - Disclosures and 3863 - Financial Instruments - Presentations, will become applicable to the Corporation on April 1, 2008.
Section 1535 requires the disclosure of information regarding objectives, policies and processes form managing capital. Adoption of this accounting standard may result in additional disclosure in the Corporation's notes to the financial statements.
Section 3031 prescribes new accounting treatment for inventories. The impact of adopting this accounting standard is currently being assessed.
Section 3862 requires enhanced financial statement disclosure of financial instruments including their significance, the nature and extent of risks arising from financial instruments and how those risks will be managed. Section 3863 established enhanced financial statement presentation of financial instruments and their implications on the Corporation's financial position, performance and cash flows. The impact of adopting these accounting standards is currently being assessed.
The Canadian Accounting Standards Board has made the decision that International Financial Reporting Standards ("IFRS") will be adopted as Canadian generally accepted accounting principles ("GAAP") for publicly accountable enterprises. As such, the Corporation will be required to adopt IFRS for the fiscal year beginning April 1, 2011, including comparative data from the prior year. The Corporation is in the process of assessing the differences between IFRS and Canadian GAAP and the impact the transition will have on the financial statements.
3. Restricted Cash
Cash secured letters of credit in the amount of $5,528 have been provided to the Alberta Minister of Finance for security to cover anticipated costs of reclamation for the Corporation's mining areas, processing facilities and surrounding infrastructure, including $90 in the second quarter of fiscal 2007. In addition, cash secured letters of credit of $1,000 have been made available to service providers, including $300 in the first quarter of fiscal 2007.
4. Inventory
March 31 March 31
2008 2007
----------------------------------------------------------------------------
Coal inventory $ 5,500 $ 30,251
Materials inventory 4,977 4,426
---------- ----------
$ 10,477 $ 34,677
---------- ----------
---------- ----------
5. Prepaid Prestrip Charges
In accordance with EIC-160: Stripping Costs Incurred in the Production Phase of a Mining Operation, the Corporation capitalized certain stripping costs in fiscal 2007, including $3.3 million during the second quarter and $1.0 million during the third quarter, due to mining conditions during the period in which the surface mine contractor was winding down its activities for the Corporation. During the transition period, the contractor's efforts were focused on removing waste to maximize the coal readily available to the Corporation, which had the affect of temporarily increasing the strip ratio in the mine for the benefit of future periods.
Prepaid prestrip charges were amortized over the production generated by the stripping activity resulting in amortization charges of $132 in the fourth quarter of fiscal 2007 and $4,193 in the second quarter of fiscal 2008.
6. Capital Assets
March 31 March 31
2008 2007
----------------------------------------------------------------------------
Mineral properties and development $ 16,080 $ 19,788
Buildings and equipment 64,639 30,456
Capital leases 218 229
---------- ----------
$ 80,937 $ 50,473
---------- ----------
---------- ----------
7. Revolving and Term Debt
At December 31, 2007, the Corporation had a $25 million secured credit facility consisting of a $10 million term facility and a $15 million revolving facility with Brookfield Bridge Lending Fund Inc. ("Brookfield"). The credit facilities were secured by a general security agreement with interest payable monthly at a rate of prime plus 2% per annum and had a maturity date of April 8, 2008. At March 31, 2007 the $10 million term facility was classified as long term debt. The credit facilities were being used to finance the Corporation's working capital.
During the fourth quarter, Grande Cache Coal completed a financing agreement with Brookfield for a $17.5 million three year floating rate senior secured convertible debenture and a secured revolving credit facility for an amount up to $20 million, subject to a borrowing base calculation. The proceeds from the convertible debenture were used to fully repay the Corporation's pre-existing term facility with Brookfield ($10 million) and associated fees. The balance of the proceeds from the convertible debenture as well as proceeds from the revolving facility will be used for general corporate purposes.
The convertible debenture matures on April 1, 2011. Interest accrues on the convertible debenture at a variable annual rate equal to a Canadian chartered bank's prime lending rate plus 1.75 percent per annum, calculated daily. The convertible debenture is convertible at Brookfield's option into common shares of the Corporation at the earlier of any time prior to the maturity date and the business day immediately preceding the date fixed by Grande Cache Coal for redemption at a conversion price of $1.825 per common share.
Grande Cache Coal may redeem the convertible debenture at any time in multiples of $250 on 30 days notice at a redemption price equal to 107% of the principal amount being redeemed plus accrued and unpaid interest. Grande Cache Coal is required to redeem all amounts of outstanding indebtedness under the convertible debenture at a 107% premium in the event of a change of control of Grande Cache Coal. In addition, at any time after August 12, 2008, Grande Cache Coal may require Brookfield to convert up to 50% of the convertible debenture at the conversion price, provided that the 15 day volume weighted average trading price ("VWAP") (on volumes of at least 300,000 common shares for 15 consecutive trading days) of the common shares on the Corporation's principal stock exchange exceeds $2.50 per share. Grande Cache Coal may require Brookfield to convert the balance of the convertible debenture in the event the 15 day VWAP of the common shares exceeds $4.00 per share. Upon full conversion of the convertible debenture, 9,589,042 common shares will be issued and outstanding.
At closing, Grande Cache Coal entered into an investor rights agreement with Brookfield pursuant to which it granted Brookfield the right to appoint one individual to the Board of Directors of Grande Cache Coal upon Brookfield converting the convertible debenture and holding at least 10% of the outstanding common shares. In addition, Grande Cache Coal also granted Brookfield the right of first offer to purchase its pro rata equity interest in future security issuances of the Corporation provided that Brookfield and its affiliates owns and/or has rights to acquire pursuant to the terms of convertible debenture not less than 3% of the outstanding common shares. At closing, Grande Cache Coal also entered into a standstill agreement with Brookfield pursuant to which Brookfield agreed with the Corporation that until the date which is one year from the date that the convertible debenture has been fully repaid (either through conversion or redemption or repayment on the maturity date), neither it nor any of its affiliates or funds managed by it will, directly or indirectly, acquire any securities of the Corporation unless specifically approved in writing by the Board of Directors of Grande Cache Coal.
The Corporation determined that $17,382 of the convertible debenture should be classified as long term debt based on the market interest rate of a similar liability that does not have an associated equity component. The residual value of $118 has been allocated to equity.
Net repayments on the revolving facility in the current fiscal year were $3.0 million during the first quarter and $7.0 million during the second quarter.
March 31 March 31
2008 2007
----------------------------------------------------------------------------
Revolving debt $ 5,000 $ 15,000
Convertible debenture 17,500 10,000
Less: Equity portion of convertible debenture (118) -
---------- ----------
Long term debt 17,382 10,000
$ 22,382 $ 25,000
---------- ----------
---------- ----------
8. Asset Retirement Obligations
Future asset retirement obligations were calculated based on the Corporation's estimated costs to fulfill its legal asset retirement obligations. The Corporation has estimated the net present value of its asset retirement obligations to be $4,020 as at March 31, 2008, based on a total future liability of $7,225. The Corporation's credit adjusted risk free rates range from 5.5% to 7.6% depending on the period when the provision originated and the term of estimated years to reclamation.
The following table reconciles the Corporation's asset retirement obligations:
Balance - March 31, 2006 $ 3,470
Increase in liability 72
Settlement of liability -
Accretion expense 241
-----------
Balance - March 31, 2007 $ 3,783
Increase in liability -
Settlement of liability (19)
Accretion expense 256
-----------
Balance - March 31, 2008 $ 4,020
-----------
-----------
9. Share Capital
Authorized
Unlimited common shares
Unlimited preferred shares, issuable in series
Issued
(thousands) Number Stated Value
----------------------------------------------------------------------------
Common shares
Balance - March 31, 2006 40,769 $ 101,715
Shares issued on bought deal equity financing 10,000 27,000
Share issuance costs - (1,736)
-------- --------------
Balance - March 31, 2007 50,769 126,979
-------- --------------
Shares issued on private placement 289 277
Shares issued on bought deal equity financing 20,500 26,650
Shares issued on over-allotment option 791 1,029
Shares issued on exercise of warrants 861 1,377
Shares issued on exercise of options 151 343
Share issuance costs - (1,979)
-------- --------------
Balance - March 31, 2008 73,361 $ 154,676
-------- --------------
-------- --------------
On April 5, 2006, the Corporation closed a bought deal equity financing. At closing, a total of 10 million units (the "Units") of the Corporation were issued at a price of $2.70 per Unit for gross proceeds of $27 million. Each Unit consisted of one common share and one-half of one common share purchase warrant of the Corporation. Each whole warrant entitled the holder thereof to acquire one common share at a price of $3.40 per share until April 5, 2007. Share issuance costs related to the bought deal equity financing were $1,736. Warrants to purchase an aggregate of 500 thousand common shares at an exercise price of $3.40 per share until April 5, 2007, were also issued to the agents.
On July 9, 2007, Grande Cache Coal completed a private placement of 289 thousand common shares at a price of $0.96 per share, which was the five day volume weighted average trading price of the common shares of the Corporation calculated as at June 14, 2007. The shares were issued to certain directors and officers of the Corporation.
On August 9, 2007, the Corporation closed a bought deal equity financing. At closing, a total of 20.5 million units (the "Units") of the Corporation were issued at a price of $1.30 per Unit for gross proceeds of $26.65 million. In addition, the Corporation granted to the underwriters an over-allotment option to purchase up to an additional 3.1 million Units at the issue price for a period of 30 days following the closing date. Each Unit consisted of one common share and one-half of one common share purchase warrant of the Corporation, each whole warrant entitling the holder thereof to acquire one common share at a price of $1.60 per share until August 11, 2008.
On September 7, 2007, the underwriters of the Corporation's bought deal equity financing that closed on August 9, 2007 exercised their over-allotment option, resulting in the issuance of 791 thousand units (the "Units") of the Corporation at a price of $1.30 per Unit for gross proceeds of $1,029. Each Unit consisted of one common share and one-half of one common share purchase warrant of the Corporation, each whole warrant entitling the holder thereof to acquire one common share at a price of $1.60 per share until August 11, 2008.
Share issuance costs related to the private placement, bought-deal equity financing and over-allotment option were $1,979.
During the fourth quarter, 861 thousand warrants were exercised for cash proceeds of $1,377. At March 31, 2008, there were 9.8 million purchase warrants outstanding. No value was attributed to the warrants issued during the second quarter.
During the fourth quarter, 151 thousand common share options were exercised for cash proceeds of $200. On exercise of these common share options, $143 was credited to share capital from contributed surplus.
10. Non-recurring Charges
In the second quarter of fiscal 2007, Grande Cache Coal incurred a charge of $335 for cancelling a commitment to purchase mining equipment from a major equipment manufacturer. During the third quarter of fiscal 2007, $2.2 million in demobilization costs were paid to the surface mining contractor in connection with the termination of the contract. These expenses are not expected to occur again in the future and have been classified as non-recurring costs. These non-recurring costs have been classified as Other Expenses as they are not part of the continuing day to day operations of the mine.
11. Net Loss per Share
The following table reconciles the denominators for basic and diluted net loss per share calculations. The treasury stock method is used to determine the dilutive effect of the share options. There was no dilutive effect for the Corporation's outstanding share options, warrants and convertible debentures as the effect of all exercises and conversions would be anti-dilutive to the loss per share.
Three months ended Twelve months ended
March 31 March 31
-------------------- -------------------
2008 2007 2008 2007
----------------------------------------------------------------------------
Weighted average shares
outstanding - basic and diluted 72,668 50,769 64,666 50,632
---------- --------- --------- ---------
Net loss $ (1,188) $(4,747) $(15,458) $ (7,014)
---------- --------- --------- ---------
Net loss per share:
Basic and diluted $ (0.02) $ (0.09) $ (0.24) $ (0.14)
---------- --------- --------- ---------
---------- --------- --------- ---------
12. Stock-Based Compensation
The Corporation has a share option plan, pursuant to which the Board of Directors or a committee thereof may from time to time grant options to purchase common shares. Total stock-based compensation expense included in general and administrative expenses for the fourth quarter was $667, compared to $392 in the same quarter last year and was a result of options granted pursuant to the Corporation's share option plan. The year to date stock-based compensation was $1,575 compared to $1,415 in the prior year.
On May 24, 2007, pursuant to the Corporation's share option plan, options to purchase 520 thousand common shares were granted to employees, consultants, officers and directors of the Corporation at an exercise price of $0.88 per share. The options have a five year term and are subject to an 18 month vesting period.
On June 30, 2007, options to purchase 32 thousand common shares were cancelled. On August 31, 2007, options to purchase 17 thousand common shares were cancelled.
On January 9, 2008, options to purchase 1,950 thousand common shares were granted to employees, consultants, officers and directors of the Corporation pursuant to the Corporation's share option plan at an exercise price of $1.04 per share. The options have a five year term and will vest on a one third basis on each of March 31, 2008, March 31, 2009 and March 31, 2010.
During the fourth quarter, options to purchase 151 thousand common shares were exercised at a weighted average price of $1.32 per share.
The fair value of each share option granted is estimated on the date of the grant using the Black-Scholes option pricing model, using an estimated volatility at the time of each grant between 42% and 95%, risk-free interest rates of 3% to 4.5% and an expected term of five years.
Details of the share options outstanding are as follows:
Common Shares
Weighted
Average
Exercise
(thousands of shares) Number Price
----------------------------------------------------------------------------
Outstanding - March 31, 2007 2,948 $ 2.07
Granted 520 0.88
Cancelled (32) 5.73
Exercised - -
-------------------------
Outstanding - June 30, 2007 3,436 1.86
Granted - -
Cancelled (17) 1.00
Exercised - -
-------------------------
Outstanding - September 30, 2007 3,419 1.86
Granted - -
Cancelled - -
Exercised - -
-------------------------
Outstanding - December 31, 2007 3,419 1.86
Granted 1,950 1.04
Cancelled - -
Exercised (151) 1.32
-------------------------
Outstanding - March 31, 2008 5,218 $ 1.57
-------------------------
-------------------------
Of the share options outstanding at March 31, 2008, 1,129 thousand options
expire in 2009, 200 thousand options expire in 2010, 1,435 thousand options
expire in 2011, 504 thousand options expire in 2012, and 1,950 expire in
2013.
Details of the share options exercisable at March 31, 2008 are as
follows:
Common Shares
Weighted
Average
Exercise
(thousands of shares) Number Price
----------------------------------------------------------------------------
942 $ 1.00
187 3.70
115 11.56
10 9.08
75 4.50
610 2.44
467 1.05
83 0.79
168 0.88
650 1.04
-------------------------
3,307 $ 1.89
-------------------------
-------------------------
13. Commitments
Grande Cache Coal has a commitment to purchase six haul trucks that will primarily be used to supplement the transportation of coal from the surface mine to the process plant. The haul trucks have an estimated cost of U.S.$4.1 million. At March 31, 2008, U.S.$1.9 million had been paid towards the purchase of the haul trucks.
14. Subsequent Events
Subsequent to March 31, 2008, the following events occurred.
The Corporation made payments of U.S.$1.0 million towards the purchase commitment on the haul trucks.
2,156 thousand warrants were exercised into common shares at an exercise price of $1.60 per share for gross proceeds of $3.4 million.
83 thousand common shares were issued on the exercise of options at an average price of $1.04 per share for gross proceeds of $87. The Corporation received $0.8 million in cash due to the return of restricted cash that had been used as security for a letter of credit that had been made available to a service provider.
READER ADVISORY
Non-GAAP Financial Measure
This news release contains the term "EBITDA" which is not a recognized measure under Canadian generally accepted accounting principles ("GAAP"). It is therefore unlikely to be comparable to similar measures presented by other companies. Management defines EBITDA as income from operations before depreciation, depletion and accretion expense. EBITDA is presented on a consistent basis from period to period. Management uses EBITDA to assess the operating performance of Grande Cache Coal's ongoing business without the effects of depreciation, depletion and accretion expenses, interest, tax and non-recurring items. Management excludes depreciation, depletion and accretion expense because it largely depends on the accounting methods and assumptions used, as well as non-operating factors such as the historical cost of capital assets. Management excludes non-recurring items because they are transitional in nature. Management believes that in addition to income from operations, EBITDA is a useful supplemental measure as it allows management to compare Grande Cache Coal's operating performance on a consistent basis. Management believes that certain investors and analysts use EBITDA to measure a company's ability to service debt and to meet other payment obligations, or as a common valuation measurement in the mining industry. The most comparable GAAP financial measure is income from operations.
Forward-looking Statement Advisory
This news release contains certain forward-looking statements, which are based on Grande Cache Coal's current internal expectations, estimates, projections, assumptions and beliefs, which may prove to be incorrect. Some of the forward-looking statements may be identified by words such as "expects", "anticipates", "believes", "projects", "plans" and similar expressions. These statements are not guarantees of future performance and undue reliance should not be placed on them. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause Grande Cache Coal's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things, changes in general economic, market and business conditions; uncertainties associated with estimating the quantity and quality of coal reserves and resources; commodity prices, currency exchange rates, capital expenditures and debt service requirements; dependence on a single rail system; changes to legislation; liabilities inherent in coal mine development and production; competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel; geological, mining and processing technical problems; ability to obtain required mine licenses, mine permits and regulatory approvals required to proceed with mining and coal processing operations; ability to comply with current and future environmental and other laws; actions by governmental or regulatory authorities including increasing taxes and changes in other regulations; and the occurrence of unexpected events involved in coal mine development and production. Many of these risks and uncertainties are described in Grande Cache Coal's 2007 Annual Information Form, Grande Cache Coal's Management's Discussion and Analysis and other documents Grande Cache Coal files with the Canadian securities authorities. Copies of these documents are available without charge from Grande Cache Coal or may be accessed on Grande Cache Coal's website (www.gccoal.com) or on the website maintained by the Canadian securities regulatory authorities (www.sedar.com).
SOURCE: GRANDE CACHE COAL CORPORATION
Grande Cache Coal Corporation Anita L. Roncin Vice President, Finance and Chief Financial Officer (403) 543-7070 (403) 543-7092 (FAX) Grande Cache Coal Corporation Suite 1610, 800 - 5th Avenue S.W. Calgary, Alberta T2P 3T6 Canada Website: www.gccoal.com
Copyright (C) 2008 Marketwire. All rights reserved.
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