Thursday, March 5, 2015

Guidance From Walter Energy Q4 Call

Looking at 2015, we'll remain focused on strong operating performance. Met coal production should total between 8 million and 8.5 million tons, led by Mine 7 at roughly 5 million tons and Mine 4 at 2.7 million tons, with the balance coming from our remaining met coal operations in Alabama and West Virginia. Mines 4 and 7 are planned to have five longwall moves in 2015. Mine 4 has two moves, one in the second quarter and one in the third quarter. Mine 7 has three moves, two in the second quarter and one in the third quarter.

Met coal sales in 2015 are forecasted to total between 8.5 million and 9 million tons. And cash cost of sales in our underground Alabama mines should average around $100 per ton for the year. Thermal production sales are expected to total roughly 0.5 million tons.
Low-vol met coal has been coal has been selling for about $110/t so far in 2015, although one index I watch has slid to $105 already. Given that other miners (Australian) talk about growing production to maintain cash flow, it seems like the price decline could get worse. If the price stays at $105/t, it sounds like met coal could generate $45 million in cash for Walter this year. That would be about two months worth of interest expense, which would buy a little more time.

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