Corsa Coal Corp. shipped high metallurgical coal volumes during Q3 2023, its highest since the Q2 2020, and a 13% increase over Q3 2022. “Operationally, our surface mines performed well in the quarter delivering improved production volumes and decreased costs, but the impact was muted in our overall results due to the numerous challenges we faced at our underground mines,” said Kevin Harrigan, president and CEO of Corsa.
Corsa’s underground mines suffered from adverse geological conditions that began in early August. A number of breakdowns also reduced equipment availability, resulting in lower-than-expected coal production and increased mining costs during the quarter. “Our average sales price reflected increased exposure to index prices and the impact of the lower price environment experienced in the first half of the third quarter,” Harrigan said. “As a result of a 12% increase in cash production cost per ton sold, and lower realized prices, cash margins in the period were lower than anticipated.”
A $23.3 million settlement with the Pennsylvania Department of Transportation (PennDOT) for damages resulting from certain historical takings of leased land by PennDOT in 2010 and 2011 improved the company’s liquidity during the quarter. “The settlement proceeds, which were received in October 2023, were partially utilized to prepay the amounts due in 2023 and 2024 under the company’s Main Street credit facility,” Harrigan said. “With this prepayment, the company has one further principal payment due in December 2025 under this facility.”
Corsa is expecting to see more favorable mining conditions at each of its underground mines. “We continue to focus on improving coal production and lowering costs in the fourth quarter and into 2024,” Harrigan said.
Price levels opened Q3 2023 at $233 per metric ton (mt) delivered (FOB) for spot deliveries and closed the quarter at $333/mt FOB. The average price for Q3 2023 was $263.07/mt FOB compared to $242.92/mt FOB in Q2 2023.
The price for spot deliveries of Australian premium low-volatile metallurgical coal opened Q4 2023 at $333/mt FOB and was trading at $343.50/mt FOB in the second half of October, with a high price of $367/mt FOB. Forward curve pricing for the balance of 2023 is trading at an average of $328.67/mt FOB.
Despite the improving mining conditions, the company said its Q4 2023 sales volumes are expected to be lower than the Q3 2023 due to decreased production from its deep mines in the previous quarter and decreased availability of purchased coals. For 2024, Corsa has committed sales of nearly 700,000 tons at an FOB mine price of nearly $145/ton. The price per ton is the equivalent of $257/mt FOB for Australian premium low-volatile metallurgical coal.
