After making promising upward moves of US$3.50 and US$2.40 per tonne in each of 1989 and 1990 respectively, the price received for metallurgical coal by Canada’s largest producer has dropped somewhat. Westar Mining (TSE) recently accepted a price decrease of US$1 per tonne effective April 1, 1991. This brings the FOB price of the company’s metallurgical coal bound for Asian markets to US$51.80 per tonne.
A US$1-per-tonne move is by no means insignificant. For the third quarter of 1990, Westar produced 1.6 million tonnes from its Balmer mine and 700,000 tonnes from its Greenhills operation, both in southeastern British Columbia.
Westar reported net earnings for the nine months ended Sept. 30, of $38.6 million, compared to a loss of $3.9 million for the corresponding year-earlier period.
The nine month results include $79.8 million in extraordinary items primarily associated with the restructuring of the company’s debt in July, 1990.
Although the mining operations realized an operating profit before depreciation and depletion of $19.5 million for the 9-month period, this was easily overwhelmed by financing charges of $41.8 million.
Before income taxes and other items, Westar reported a loss of $35.2 million for the nine months ended Sept. 30.
The company’s balance sheet remains on shaky ground even after the restructuring. Westar has a working capital deficit of $27.2 million and long-term debt totalling $324.6 million as at Sept. 30.
Westar expects the mining operations to continue to operate at a loss and is unable to predict when a redemption of the series 1 preferred shares will be possible. The preferred shares had a retraction date of April 15, 1989, which the company was unable to meet.006 Westar Mining (TSE) 3 months ended Sept. 30 1990 1989 Revenue $121,400 $129,000 Net earnings 51,500 6,500
per share 2.76 0.29 9 months ended Sept. 30 Revenue $350,700 $369,300 Net earnings (loss) 38,600 (3,900 )
per share 1.93 (0.40 )004
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