Amsterdam, 14 April 2010 - New World Resources N.V. (“NWR” or the “Company”), Central Europe’s leading hard coal and coke producer, today announced that it has reached agreements with its customers for coking coal sales for the next 12 months as well as coke sales for the next 3 months. In line with the Company’s strategy of more closely aligning its pricing cycle with international global coal markets, coking coal contracts for 2010 now largely follow the Japanese Fiscal Year (“JFY”) with some coking coal subject to quarterly pricing.
NWR has entered into agreements to sell 5.5Mt of its coking coal to external customers between April 2010 and March 2011. Prices for approximately 80% of these sales are agreed for the JFY 2010 period. The average price of the JFY 2010 settlements is approximately EUR 163 per tonne, representing a 58% increase over the Q1 2010 prices of EUR 103 per tonne and 87% higher than average 2009 prices. The price for the remaining 20% of the sales volumes will be renegotiated on a quarterly basis. The average price for the Q2 2010 settlements is approximately EUR 135 per tonne, which are mostly for semi-soft coking coal. The actual average realised price and volume for Q2 2010 will be a blend of JFY 2010 and Q2 2010 settlements.
The Company has also agreed terms for the sale of 338kt of coke during the second calendar quarter of 2010 for an average price of EUR 255 per tonne, which is 31% higher than the EUR 195 average price for Q1 2010 and 71% higher than 2009 average prices. NWR expects to continue pricing coke on a quarterly basis for the rest of the calendar year 2010 in line with previous practice.
Thermal coal price agreements have not significantly changed and the majority of the settlements continue to follow the calendar year. NWR expects to sell approximately 5.0Mt of its thermal coal to external customers in 2010. Thermal coal sales are priced at an average of EUR 65 per tonne for the calendar year 2010.1
“The coking coal and coke price increases of 87% and 71% over 2009 prices we have announced today are very pleasing and provide strong evidence of a sustainable improvement in demand for New World Resources’ products,” commented Mike Salamon, Executive Chairman of NWR’s Board. “Our shift to pricing arrangements more closely aligned with the broader international trade in our products is also a significant positive, as it allows NWR to also benefit from the positive pricing trends attributable to the global supply and demand imbalance for coking coal, driven by demand in the emerging world. We are committed to working with our customers to continue this new arrangement in future,” added Salamon.
NWR, along with its coal mining subsidiary OKD, a.s. (“OKD”), has decided to increase coal production for 2010 to 11.5Mt from the 11.0Mt as previously announced, reflecting stronger customer demand. The Company’s coke production target of 1Mt for 2010 remains unchanged.
NWR announced earlier in the year that it expected total personnel expenses for the Company in 2010 to remain stable, on a constant currency basis, when compared to 2009. However, as market conditions have improved, the Company’s production target has been raised and, conditional on NWR and its subsidiaries achieving their financial and operational performance targets, the Company will consider paying performance-related bonuses to its employees, which would consequently increase its total personnel costs for the year.
NWR has updated its internal reserve base calculations and its total reserves as at 1 January 2010 were 407Mt.
||Reserves as at 1 January 2010 (kt)
NWR will publish its first quarter 2010 results on 19 May 2010, at which further details of the Company’s performance will be announced.
Mike Salamon, Executive Chairman of the Board and Marek Jelinek, Executive Director and Chief Financial Officer, will host a conference call today, Wednesday, 14 April 2010, at 10:00 CET (09:00 BST). A live webcast of the conference call will also be made available on NWR’s website at www.newworldresources.eu.
The Netherlands +31 (0) 20 708 5073
Czech Republic (Toll free) 800 900 226
Poland (Toll free) 00 800 121 2695
UK & rest of Europe +44 (0) 203 003 2666
USA +1 646 843 4608
- Ends -
For further information please contact:
New World Resources N.V.
Tel: +31 20 570 2270
E-mail: firstname.lastname@example.org Corporate Communications
Tel: +420 225 282 163
Disclaimer and Cautionary Note on Forward Looking Statements and Notes on Certain Other Matters
Certain statements in this document are not historical facts and are or are deemed to be “forward-looking”. The Company’s prospects, plans, financial position and business strategy, and statements pertaining to the capital resources, future expenditure for development projects and results of operations, may constitute forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology including, but not limited to; “may”, “expect”, “intend”, “estimate”, “anticipate”, “plan”, “foresee”, “will”, “could”, “may”, “might”, “believe” or “continue” or the negatives of these terms or variations of them or similar terminology. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. These forward-looking statements involve a number of risks, uncertainties and other facts that may cause actual results to be materially different from those expressed or implied in these forward-looking statements because they relate to events and depend on circumstances that may or may not occur in the future and may be beyond NWR’s ability to control or predict. Forward-looking statements are not guarantees of future performances.
Factors, risk and uncertainties that could cause actual outcomes and results to be materially different from those projected include, but are not limited to, the following: risks relating to changes in political, economic and social conditions in the Czech Republic, Poland and the CEE region; future prices and demand for the Company's products, and demand for the Company's customers' products; coal mine reserves; remaining life of the Company's mines; coal production; trends in the coal industry and domestic and international coal market conditions; risks in coal mining operations; future expansion plans and capital expenditures; the Company's relationship with, and conditions affecting, the Company's customers; competition; railroad and other transportation performance and costs; availability of specialist and qualified workers; and weather conditions or catastrophic damage; risks relating to Czech or Polish law, regulations and taxation, including laws, regulations, decrees and decisions governing the coal mining industry, the environment and currency and exchange controls relating to Czech and Polish entities and their official interpretation by governmental and other regulatory bodies and by the courts; and risks relating to global economic conditions and the global economic environment. Additional risk factors are as described in the Company’s annual report.
Forward-looking statements are made only as of the date of this document. The Company expressly disclaims any obligation or undertaking to release, publicly or otherwise, any updates or revisions to any forward-looking statement contained in this report to reflect any change in its expectations or any change in events, conditions, assumptions or circumstances on which any such statement is based unless so required by applicable law.
1All of the prices stated in Euros are based on an exchange rate for CZK/EUR of 24.5. Prices are expressed as blended averages between the different qualities both for coal and coke.
NWR further notes that the average contract prices are indicative prices, as these can be influenced by a range of factors including, but not limited to, exchange rate fluctuations, quality mix, timing of the deliveries and flexible provisions in the individual agreements. Thus the actual realised price for the period may differ from the average contract prices announced.
14 Apr 2010 Update on 2010 Prices (326KB PDF)