New World reiterates targets despite falling Q1 output

published 16 April 2012

Coal producer New World Resources saw production fall slightly from the fourth quarter of 2011 to the first quarter of 2012 but maintained its full-year forecasts.

The company produced a combined 2,389k tonnes of coking coal and thermal coal in the first three months of the year, down from 2,606kt the quarter before. Coke volumes fell from 186kt to 175kt.

Sales volumes of coking coal and coke increased but at lower average prices, while sales of thermal coal declined but at a higher average price.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Despite the fall, the group has maintained its full-year 2012 production target of 10.8-11m tonnes of coal and 700k tonnes of coke. It expects sales of 10.25-10.5MT of coal and 600kt of coke.

Meanwhile, the group has agreed prices with its customers for the second quarter. Coking coal prices will be €130 per tonnes, down 8% compared with the first quarter but "in line with similar developments in global coking coal contract prices settled for the second quarter 2012". The average price for coke sales is down 4% at €298 per tonne due to lower prices in the European foundry coke market.

However, the agreed price for thermal coal sales in the second quarter is 11% higher than the 2011 average price at €74 per tonne reflecting strong regional demand for thermal coal as a source of power generation.

The group assured that average prices are subject to change due to fluctuations in the exchange rate, quality mix and the timing of the deliveries and flexible provisions in individual agreements.

Shares fell 1.48% to 413p in early trading on Monday.