Grande Cache coal production ebbs

Grande Cache Coal (GCE-T, GACHF-O) failed to meet its own production targets for the last quarter and as a result had to watch its shares take a hit.

While net income for the quarter was up to $3.4 million, or 4 per share, compared with a $2-million loss for the same period last year, that failed to make up for the lost production.

The Calgary-based company’s shares were off 12% or 75 to $5.45 on roughly 4.7 million shares traded. Over the last year, its shares have fluctuated widely between a high of $10.78 and a low of just 71. It has roughly 83 million shares outstanding.

Financial results are from the three months ending June 30 — which Grande Cache reports as its first quarter for the fiscal year 2009.

Grande Cache blames lost production on the slow development of the underground mine, issues with the deployment of equipment and people at the surface mine and a lower plant yield.

The company has both surface and underground operations around Grande Cache, Alta., where it produces metallurgical coking coal for the global steel industry.

The low production brought sales for the quarter down to just 250,000 tonnes, but it expects sales to now pick up and still be within its guidance for the year of between 1.8 and 2 million tonnes.

Problems on the production side, combined with industry-wide higher input costs, brought clean coal production cost ups to US$100 per tonne.

Despite those higher costs for the quarter, the company still managed an 8% increase in revenue to $41 million thanks to higher coal prices.

The average selling price for the quarter came in at US$166 per tonne, a tidy sum compared with the US$89 per tonne it received for the same period last year.

“Although we had a slow start to the year, we foresee substantially better results over the remainder of the fiscal year,” Robert Stan, Grande Cache’s president and chief executive said in a statement.

Stan said that development of the underground operation has already managed to increase raw coal production. Better availability of surface mine equipment was also noted as a factor allowing the company to move more material.

Given the current market conditions, Grande Cache is motivated to maximize the amount of coal it can pull from the ground.

“There has certainly been a high demand for our product, so we are doing everything we can to increase production in order to meet our customer’s needs,” Stan said.