February 22, 2019 - Corsa Coal Corp. (TSXV: CSO) ("Corsa" or the "Company"), a premium quality metallurgical coal producer, has reported financial results for the three months and full year ended December 31, 2018. 

Unless otherwise noted, all dollar amounts in this news release are expressed in United States dollars and all ton amounts are short tons (2,000 pounds per ton).  Pricing and cost per ton information is expressed on a free-on-board, or FOB, mine site basis, unless otherwise noted.

Fourth Quarter and Full Year 2018 Highlights

Corsa reported net and comprehensive income from continuing operations of $10.3 million, or $0.09 per share attributable to shareholders, for the fourth quarter 2018, compared to $83.5 million, or $0.74 per share attributable to shareholders, for the fourth quarter 2017.  For the year ended December 31, 2018, Corsa reported net and comprehensive income from continuing operations of $5.9 million, or $0.03 per share attributable to shareholders compared to $108.6 million, or $0.93 per share attributable to shareholders for the year ended December 31, 2017.   The fourth quarter and full year ended December 31, 2017 included an asset impairment reversal of $86.2 million.

Corsa's adjusted EBITDA was $11.3 million and $35.0 million for the fourth quarter and year ended December 31, 2018, respectively.  Corsa's EBITDA was $14.5 million and $32.8 million for the fourth quarter and year ended December 31, 2018, respectively.

Operating cash flows provided by continuing operations for the fourth quarter and year ended December 31, 2018 were $5.6 million and $15.3 million, respectively, compared to $5.3 million and $29.5 million, for the fourth quarter and year ended December 31, 2017, respectively.

Total revenue from continuing operations was $66.5 million and $265.9 million for the fourth quarter and year ended December 31, 2018, respectively, compared to $47.8 million and $217.5 million for the fourth quarter and year ended December 31, 2017, respectively.  Total revenue from continuing operations increased 22% for the year ended December 31, 2018 compared to the year ended December 31, 2017.

Corsa sold a total of 466,525 and 1,872,105 tons of metallurgical coal in the fourth quarter and full year 2018 compared to 321,890 and 1,474,898 tons of metallurgical coal in the fourth quarter and full year 2017.  For the year ended December 31, 2018, low volatile metallurgical coal sales volumes are up 23% versus 2017 comparable period levels, and total metallurgical coal sales volumes are up 27% as compared to year ended December 31, 2017.

Corsa achieved an average realized price per ton of metallurgical coal sold(1) at its NAPP Division of $116.27 for all metallurgical qualities in the fourth quarter 2018.  This average realized price is the approximate equivalent of $170 to $175 on an FOB vessel basis(2).  For low volatile metallurgical coal sold, Corsa achieved the approximate equivalent of $174 to $179 on an FOB vessel basis(2).  For the year ended December 31, 2018, Corsa's sales mix included 27% of sales to domestic customers and 73% of sales to international customers.

Cash production cost per ton sold was $76.77 for the fourth quarter 2018, a decrease of $12.46 per ton, or 14%, as compared to the fourth quarter 2017.

Additional 2018 Milestones and Achievements

A successful transition was made at the Casselman mine during the first half of 2018 to cross under a stream and access the northeast reserve base.  This development created an access point to open up over 5 years of future mining in the Northeastern reserve area at Casselman.

The Acosta mine achieved its full forecasted production run-rate level starting in June 2018, as goals related to staffing levels, mining equipment deliveries and regulatory approvals were met.

Significant progress was made in restarting and developing the Horning mine, which has seen better coal qualities than expected.

Corsa divested its thermal and industrial coal division in March 2018, becoming a pure-play metallurgical coal producer.

In December 2018, Corsa entered into an amending agreement to extend the maturity date of its term credit facility from August 19, 2019 to August 19, 2020 and to amend certain other terms of the credit agreement governing its term credit facility made available by Sprott Resource Lending Corp.

In December 2018, Corsa received the mining permit for the Schrock Run Extension mine as well as a permit to enable highwall mining at that operation.

Corsa completed over $4 million of land reclamation work in 2018.

Corsa finished the funding of the Global Water Treatment Trust Fund, which enables future withdrawals of earnings in excess of fully funded amounts in order to defray ongoing water treatment costs.

George Dethlefsen, Chief Executive Officer of Corsa, commented, "Fourth quarter profitability was driven by a strong performance from our operations as well as an increase in realized coal pricing.  The fourth quarter marked our best performance for the year for adjusted EBITDA, metallurgical coal production volumes and cash production cost per ton sold.  The benefits of the mine development work and mining equipment investments made in the first half paid dividends in the second half of the year, as cash mining costs declined by 16%, and production at our Casselman and Acosta mines collectively increased by 50% over first half levels.  All our mines are well positioned heading into 2019.  Casselman, Acosta and Horning all have newly rebuilt equipment, development work at both Casselman and Horning has been completed, and the Acosta mine is fully ramped up and producing at capacity.

Our Company's growth story continues to produce results and has a positive outlook.  2018 marked the second consecutive year of over 20% metallurgical coal production growth for Corsa.  We are forecasting 33% growth in metallurgical coal production levels in 2019, as the Horning and Schrock Run mines add to our volumes and as we get a full year of run-rate production levels from the Casselman and Acosta mines.  We expect to receive the Keyser and North mine permits during the first half of 2019.  In 2018, Value Added Services purchased coal volumes grew by 27%, Sales and Trading volumes grew by 41%, and overall metallurgical coal sales were up by 27% for the year.  Growth remains a high priority for the Company as we seek to increase utilization rates at existing infrastructure and benefit from economies of scale.

Customer demand remains very healthy owing to strong global steel production levels and profitable steel prices.  Metallurgical coal supply concerns in Australia related to production interruptions, flooding, port congestion and labor stoppages have kept the market tight.  The calendar 2019 forward curve for premium low vol pricing is above $195/mt FOB Vessel, suggesting that supply and demand fundamentals will remain very tight over the course of the year.  As a result of limited global production growth and continued strength in steel pricing, as of yesterday, the forward curve is now showing pricing above $170/mt FOB Vessel through 2022.  The US export terminal congestion issues have improved, and with the reduction in export thermal pricing, we see less competition from thermal coal for space at the export terminals in the months ahead.  Looking forward, we expect reduced demurrage expenses as compared to what we experienced in 2018.

We continue to expect a robust 2019, as our mines are well positioned from a geologic and equipment standpoint, and as prices remain above historical averages.  We are forecasting strong free cash flow over the course of the year, which we will use to pay down our term loan and continue to pursue growth."

Corsa's total metallurgical coal sales and low volatile metallurgical coal sales increased 27% and 23%, respectively, for the full year ending December 31, 2018 compared to the same period in 2017.  Overall, metallurgical coal sales volumes have increased 180% since 2016 and annual low vol sales have more than doubled.

Coal Pricing Trends and Outlook

The fourth quarter of 2018 continued the theme of global supply-side challenges that were present throughout the earlier part of the year. Metallurgical coal mines in Australia encountered geological issues that resulted in mines being shut down, port and railroad worker strikes and weather impacting the availability of their coal ports. The United States had similar challenges with a large metallurgical coal producer filing bankruptcy; a hurricane hitting the U.S. East Coast ("USEC"), which slowed port and rail operations; and other operational issues, which limited deliveries. These events kept the market focused on supply-side issues and kept spot pricing strong to end the year.  Spot prices for Australian premium low volatile metallurgical coal finished at $220/metric ton ("mt") from beginning the quarter at $213/mt while USEC low volatile coal remained steady in $197-198/mt.  The futures market for 2019 has remained constructive with prices north of $195/mt. The strength of the metallurgical coal forward curve for 2019 withstood pressure from the late December downturn in the global equity markets and other commodity markets, suggesting that fundamentals remain tight.

Global steel production finished up 4.5% on the year and, excluding China, the rest of the world grew at 2.3%, according to the World Steel Association. Chinese steel production grew 6.6%, while India was up 4.9% and the U.S. was up 6.2%. The strong global steel markets continue to drive a healthy U.S. export coal market. Total annual U.S. metallurgical coal exports were 49.5 million mt which was up 10% on the year. The U.S. also experienced strong steam coal export volumes which finished up 34% at nearly 45 million mt.  Both the U.S. steam and metallurgical coal markets competed for export capacity which was already tight to begin 2018. Recently, steam coal prices have softened $17/mt in the prompt quarter which could help alleviate congestion, storage space and rail service for metallurgical coal. We have witnessed improved rail performance as we finished 2018.

Over the fourth quarter, freight rates decreased globally for dry bulk markets making Asia cheaper to access from the U.S. To end the year, China instituted a metallurgical coal import ban in December.  As 2019 begins, the Chinese government recently announced several safety issues which has caused a review of their safety procedures and temporary mine closures. This review could potentially increase the Chinese import requirement for metallurgical coal.  Domestic metallurgical coal prices in China remain above the prevailing price for seaborne-traded metallurgical coal, suggesting that increases in Chinese imports are likely.