ATLANTIC COAL PLC Peter Chinneck (Non-Executive Director)
George Roskos (Executive Director) appointed 1 November 2016
Company Secretary Heytesbury Corporate LLP Registered Office 200 StrandLondon WC2R 1DJ
Company Number 05315929 Independent Auditor PKF Littlejohn LLP Statutory Auditor1 Westferry Circus Canary Wharf London E14 4HD
ATLANTIC CARBON GROUP PLC CHAIRMANS STATEMENT For the year ended 31 December 2016The acquisition of Hazleton Shaft Corporation ("HSC") was completed on 1st June, 2016 realising one of the Company's strategic objectives in that Atlantic Carbon Group plc ("ACG") is now the largest US producer of anthracite.
The excellent performance at Stockton Mine in 2015 represented the fruition of the Company's mining operations strategy with full commissioning of new plant and equipment and improved management and mining practice. Stockton, however, has limited reserves and the Company clearly needed the security of additional high quality reserves which the HSC acquisition gave us increasing reserves from 1.7 to over 9 million tons of anthracite product.
The latter half of 2016 saw us integrating the two companies and applying our successful approach at Stockton to the HSC operations. This involved major improvements to the Hazleton Shaft washing plant lifting its annual run of mine processing capacity to 1 million tons a year and the conversion of Jeansville Mine from dragline to shovel and truck operation with new Komatsu excavators and mine trucks acquired in a $20 million asset backed lease deal. This also entailed over $1.5 million one off expenditure but will stand us in very good stead for the future.
Weak anthracite prices were a significant negative feature of 2016 with average prices falling over 25% compared with 2015 due to a combination of yet another warm winter in north east USA and cheap anthracite exports from Russia and Breakaway East Ukraine (via Russia) which have depressed industrial prices.
A combination of the costs of the HSC acquisition and subsequent capital expenditure to upgrade and develop the HSC operations, depreciation on new mining plant, together with weak anthracite prices saw us make a loss of $12.7 million. However, I am happy to report that in Q1 2017, with our improvements at ACG mining and processing operations now largely completed, we moved back to the performance levels we saw in 2015 with a very positive EBITDA of $1 million.
The HSC 50% stake in the Hazleton Hiller anthracite drying plant on the Hazleton Shaft site also provides us with a secure market of 150,000 tons a year to the steel and foundry markets. This, and the possibility of a further expansion of the drying plant, gives the Company the confidence to further develop our operations.
While relatively low anthracite prices have clearly had a negative effect on our performance in 2016, the new US Government's focus on reviving American industries, particularly coal and steel, and our new export and North American marketing agreements, does give us optimism that prices will strengthen as Government policies are implemented.
All things considered we are therefore able to look forward positively for the remainder of 2017.
Finally, I would like to thank all our employees, including our new colleagues at HSC operations, and our new member of the ACG Board, George Roskos, for their cooperation and performance in 2016 which gives us great confidence going forward.
Adam R WilsonChairman
16 May 2017
Atlantic Carbon Group plc published this content on 18 May 2017 and is solely responsible for the information contained herein.
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