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Press Releases / 2014 / Q4 2013 Trading Update and Q1 2014 Prices & Initiation of review of NWR’s Capital Structure 

Q4 2013 Trading Update and Q1 2014 Prices & Initiation of review of NWR’s Capital Structure

22/1/2014

New World Resources Plc and New World Resources N.V. (together, the ‘Company’ or ‘NWR’), and their subsidiaries (together the ’Group’) announce today that we have reached agreements with our customers for coking coal for the first quarter of 2014, and thermal coal for the calendar year 2014. Further, the Company announces production and sales volumes as well as realised prices for the fourth quarter of 2013.

The Company also announces today the initiation of a review of the Group’s capital structure.

Q4 2013 operating update

Below is a brief overview of the Company’s key production and sales indicators for Q4 2013 as well as FY 2013. NWR will publish its results for the full year 2013 on Thursday 13 February 2014, when further information will be provided.

 

 

Q4 2013 production volume (kt)

Q4 2013 sales volume (kt)

Q4 2013 avg. realised price (EUR/tonne)

Coking Coal

2,348

1,207

98

Thermal Coal

1,317

55

 

 

FY 2013 production volume (kt)

FY 2013 sales volume (kt)

FY 2013 avg. realised price (EUR/tonne)

Coking Coal

8,800

4,630

98

Thermal Coal

5,079

56

The average EUR/CZK FX rate in Q4 2013 was 26.7.

2014 Production and sales targets

The Company targets FY 2014 coal production and sales of 9 – 9.5 Mt, with 55 - 60 per cent of coking coal and 45 - 40 per cent of thermal coal in the sales mix. More detailed guidance will be provided on Thursday 13 February 2014 together with NWR’s full year results.

Q1 2014 coking coal pricing

The average agreed price for coking coal deliveries in the first quarter of 2014 is EUR 91 per tonne, a 7 per cent decrease compared to the fourth quarter of 2013 realised price.

 

This average coking coal price is based on the expectation that coking coal sales for the first quarter 2014 will be split approximately 52 per cent hard coking coal (mid-volatility), 40 per cent semi-soft coking coal and 8 per cent PCI coking coal.

2014 thermal coal pricing

An average price of EUR 54 per tonne has been agreed for 80% of expected thermal coal production in 2014, a 4 per cent decrease compared to FY 2013 realised price. This average thermal coal price is based on the expectation that thermal coal sales for the full year 2014 will be split approximately 76 per cent thermal coal and 24 per cent middlings. The remaining 20% of expected thermal coal production will be sold and priced later in the year.

 

Notice

All prices are expressed as blended averages between the different qualities both for coking and thermal coal and are ex-works.

 

All of the announced prices are indicative prices, and are based on an exchange rate of EUR/CZK of 27.0. 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, may influence final realised prices. The actual realised price for the period may therefore differ from the average prices announced.

 


 

Review of the capital structure

The Company also announces today the initiation of a review of the Group’s capital structure.

 

Considerable progress has been made in implementing the Company’s plans to restructure the operations of OKD, NWR’s mining subsidiary. This includes: lower overheads and cash mining unit costs; a new collective agreement with the trade unions of OKD; the disposal of its coke subsidiary OKK Koksovny, a.s.; and finally the conclusion of a memorandum of understanding with the Czech government on the closure of the Paskov mine. 

However, several recent developments have triggered the Company’s decision to review the appropriateness of its current capital structure. These developments are:

 

  • Continuous challenging market circumstances with persistent global pressure on both coking and thermal coal pricing, as reflected in the above-announced pricing.
  • NWR’s EUR 100 million Revolving Credit Facility (currently fully undrawn) expires on 7 February 2014, and the Company has not secured an extension of this credit line.
  • NWR is currently conducting a review of its mineral reserves. Principally due to the change in the long-term coal price outlook, we expect a significant decrease of economically mineable coal reserves of the Group.

 

The review will be focused on the Group’s balance sheet and will consider all available options. It is expected not to impact the Group’s customers, employees, partners, suppliers or trade creditors. The Company will continue to conduct its business as usual and remains focused on implementing its previously announced efficiency and cost optimisation measures.

Financial and legal advisors

To assist in the review process and to provide general debt advisory services, the Company has mandated The Blackstone Group International Partners LLP as its financial advisor and White & Case LLP as its legal advisor.

Support of BXR Mining B.V. (‘BXR’)

The Company’s majority shareholder, BXR has confirmed its continued support for the Company and its business strategy. BXR has indicated that it and its shareholders are prepared to invest new equity capital into a revised and satisfactory capital structure.

Further announcements

There is no set timeframe for the review. Further announcements will be provided strictly via regulatory channels. Next scheduled announcement and conference call with Company’s management will be the 2013 full year results on Thursday 13 February 2014. The call dial-in information is available on NWR’ website (www.newworldresources.eu).

 

– Ends –


 

Contacts:

Investor Relations                                                      Media relations

Tel: +31 20 570 2244                                                Tel: +31 20 570 2229

Email: ir@nwrgroup.eu                                             Email: pr@nwrgroup.eu

Website: www.newworldresources.eu

 

Financial advisor

Blackstone Group International Partners LLP

Martin Gudgeon

Tel: +44 20 7451 4000

 

 

About NWR:

New World Resources Plc is one of Central Europe’s leading hard coal producers. NWR produces quality coking and thermal coal for the steel and energy sectors in Central Europe through its subsidiary OKD, the largest hard coal mining company in the Czech Republic. NWR currently has several development projects in Poland and the Czech Republic, which form part of NWR's regional growth strategy.

NWR is listed in London, Prague and Warsaw. It is a constituent of FTSE Small Cap index.

New World Resources N.V. has two publicly traded bonds listed at the Global Exchange Market of the Irish Stock Exchange.


Disclaimer and cautionary note on forward looking statements and notes on certain other matters

Certain statements in this announcement 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, risks 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 announcement.  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 announcement 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.

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