New World Resources (NWR) has revealed that first quarter revenue dropped by almost a third, in what has been an 'extremely difficult' period for the mining company.
During the first quarter, revenues fell 31% from 347m euro to 240m euro, pushing the group into a loss of 80m euro for the period (Q1 2012: profit 6.0m euro).
The group has revised its 2013 operational targets to 9-10m tonnes or coal and 800,000 tonnes of coke.
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It expects to sell around 700,000 tonnes of coke and has an external sales target of 8.5-9.5m tonnes of coal, equally split between coking and thermal coal.
Global coking coal markets have suffered a deterioration since mid-2011, with the Australian HCC average spot price falling by more than 50% to less than $160 per tonne.
As the group explained, "such price developments affect the whole industry and for many of our competitors these pricing levels have become unsustainable".
Chairman detailed the company's reaction to this: "We believe that a number of European economies will need to go through further major fiscal adjustments, and this will weigh on economic growth going forward.
"Given the negative effect of these external developments on NWR's financial and operational performance, the management has decided to take aggressive but necessary steps to ensure the stability of current operations, and position NWR for delivery of its strategic plans.
"The immediate steps include 100m euro-worth of short-term measures to fortify NWR's financial position including among others an immediate 10% group-wide cut in salaries, additional capital expenditure savings and deferrals, the sale of thermal coal inventories, and active working capital management. Waivers recently negotiated for financial covenants in our bank facilities give us sufficient comfort, and we can fully focus on execution of these measures."
Looking ahead to the second quarter, the average coking coal price has been agreed at 104 euro per tonne, and 246 euro per tonne for coke.
Capital expenditure is expected to total 100m euro, of which 10m has been budgeted for the Debiensko project.
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