Western Canadian Coal Signals Financial Trouble
By The Canadian Press
15 Nov 2007 at 07:21 AM GMT-05:00
resourceinvestor.com
VANCOUVER (CP) -- Western Canadian Coal Corp. [TSX:WTN] experienced a rocky second-quarter, recording a loss that ballooned to C$43.9 million after writedowns.
The Vancouver company said it does not currently have enough funds to meet near-term financial obligations given current coal prices and the high Canadian dollar, but expects majority owner Cambrian Mining PLC to help it get back on track.
''The company will require additional capital from its major shareholder and external sources,'' Western Canadian said in an earnings release. ''In the past, the Company has been successful in raising additional capital, and management believes that these funds will be again available in the future.''
The quarterly loss amounted to 38 cents per share and included C$22.6 million or 20 cents per share in one-time charges: writedowns of future income tax assets and inventory, a terminated contract, impairment on its exposure to asset-backed commercial paper and abandoned transaction expenses.
In the prior-year period, Western Canadian's loss was C$4.7 million or five cents per share.
Revenue rose to C$67.9 million, from C$10.7 million a year earlier, but was outpaced by cost of goods sold at C$81.4 million.
''It was a disappointing quarter for the company,'' said president and CEO John Hogg.
''Aside from the accounting adjustments recorded and the impact of the strengthening Canadian dollar has had on our results, the disappointment was in our mine performance. Equipment shortages and maintenance issues all hampered production and therefore increased costs.''
Demand for Western Canadian's coal continues to increase and the company is finalizing long-term contracts, Hogg added.
''With spot market prices for hard coking coal and PCI much higher than current contract prices, we are quite optimistic for possibly record coal prices in the upcoming coal year.''
Cambrian CEO Mark Burridge has been asked to advise Western Canadian's board ''to assist the Company in its corporate development activities.''
Western Canadian shares tumbled 45 cents or 27% to C$1.23 in early trading on the Toronto Stock Exchange. |
