13th Nov 2014 12:42
LONDON (Alliance News) - New World Resources PLC saw its shares rise on Thursday after it said it narrowed its pretax loss during the first nine months of the year following a restructuring of its balance sheet, despite lower coal prices hitting its revenue and being accompanied by lower production levels.
New World shares were up 11% to 1.45 pence per share on Thursday afternoon.
For the first nine months of the year, New World reported a pretax loss of EUR133.2 million, narrower than the EUR540.3 million reported for the first three quarters of 2013. The narrowed loss is attributable to significantly lower cost of sales and due to an impairment loss of EUR310 million taken in 2013.
Revenue for the period fell 21% to EUR504.0 million, compared to EUR634.3 million a year earlier. Cost of sales decreased by 30% to EUR463.5 million from EUR664.1 million. The reduction in costs is due to cash mining costs reducing by 16% to EUR68 per tonne compared to EUR81 per tonne in the previous year, New World said.
Sales and administrative expenses fell 26% to EUR100 million from EUR136 million.
Production of coal for the first nine months dropped 2% to 6.3 million tonnes, from 6.4 million tonnes in the same period in 2013. Coal sales fell 15% to 6.1 million tonnes from 7.2 million tonnes. In 2015, the company is aiming to produce between 7.5 million and 8.0 million tonnes of coal.
Coking coal prices averaged EUR86 per tonne, down 12% from EUR98 per tonne, with thermal coal prices remaining flat at EUR56 per tonne from 2013. New World said it does not expect the prices of either thermal of coking coal to change in 2015.
"The low pricing environment is clearly reflected in our revenues, which were down 21%. On the operating level we have managed to drive the unit cash costs down by 16% and Administrative and Selling expenses by 26%," it said.
"Besides the continuous attack on our cost base, another priority is keeping the optionality in terms of future growth when there is coal price recovery. Therefore, we have started a strategic review of our Polish development project Debiensko, which comprises a huge coal resource of 556 million tonnes of predominantly hard coking coal, for which we suspended development in early 2013 given the aforementioned market conditions," said New World.
By Joshua Warner; [email protected]; @JoshAlliance
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