Issues Financial Results for First Quarter of Fiscal 2009
posted on May 15, 2009 08:39AM
Edit this title from the Fast Facts Section
|May 15, 2009|
|Hillsborough Resources Issues Financial Results for First Quarter of Fiscal 2009|
|VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 15, 2009) - Hillsborough Resources Limited (TSX:HLB) is pleased to announce its interim financial results for the quarter ended March 31, 2009.
For the three months ended March 31, 2009, Hillsborough Resources Limited ("Corporation") recorded net earnings of $2,565,558 ($0.03 per share) compared to a net loss of $1,632,084 ($0.02 per share) for the same period in 2008. Included in the net earnings for the three months ended March 31, 2009 is tax expense of $1,552,865 and equity earnings of $1,114,628 resulting from the Corporation's 13.36% interest in the PRC. The future income tax expense for the three months ended March 31, 2009 was $1,330,865 compared to a future income tax recovery of $229,611 for the same period in 2008.
Demand for the quality thermal coal produced by Quinsam remained very strong during the quarter. Due to the terms of domestic cement supply contracts, which rely on the Producer Price Index as an escalator, the Corporation was unable to obtain increased prices from one of its two remaining cement customers. These low prices, however, were offset by significantly higher prices realized on the international thermal coal shipment delivered in March 2009. One major cement contract came to an end in November 2008, and this coal is now being directed into the international market.
Quinsam's average revenue per tonne of coal sold during the three months ended March 31, 2009 was $118.82 (March 31, 2008 - $51.99). The average revenue per tonne was lower than the expected average of $125 per tonne due to a quality penalty received on the international shipment. The contribution margin on coal sales during the three months ended March 31, 2009 was $6.38 million, 38.5% (March 31, 2008 - loss of $0.17 million (3.8%)), reflecting the impact of the international shipment completed in March 2009.
At the Quinsam mine, clean coal production for the three months ended March 31, 2009 was 118,789 tonnes (March 31, 2008 - 108,679 tonnes), from raw coal production of 205,090 tonnes for the three months ended March 31, 2009 (March 31, 2008 - 189,936). The cost per tonne of production in the first quarter of 2009 was $73.09 (Q1 2008 - $53.95). The annual cost per tonne for 2008 was $64.43 with a cost per tonne of $86.28 in the fourth quarter of 2008. Positively affecting the production cost of coal during the first quarter of 2009, compared to the last quarter of 2008, was the effect of the depillar tonnes mined versus the development tonnes mined. The cost per tonne of production continues to be greater than historical costs due to thinner seams found in the current mining production area.
Peace River Coal Activities
During the first quarter of 2009, PRC finalized the $104 million capitalization program to acquire and operate its own mining equipment fleet. By carrying out its own mining operations, PRC expects to increase production and significantly reduce its operating costs per tonne. The Corporation recorded equity income for the first quarter of 2009 of $1.1 million related to its PRC investment.
As previously released, on January 5, 2009, the Corporation received a PRC cash call notice in the amount of $3,576,661. In an effort to conserve cash, the Corporation did not fulfill its obligation in respect of the January 2009 PRC cash call and accordingly accepted dilution in its investment in PRC by 0.78%. The Corporation's interest in PRC is now held at 13.36%.
During the first quarter of 2009, a net $0.4 million was contributed by the Corporation to PRC in respect of cash calls made to cover both operating costs as well as certain capital expenditures. As a result, the Corporation's 13.36% interest has remained intact.