Corsa Coal reported third-quarter sales of 455,525 tons of metallurgical coal. On a year-to-date basis, low-volatile met coal sales volumes are up 17% versus 2017, and total met sales volumes are up 22% compared to year-to-date September 2017. This growth has been accomplished despite supply-chain disruptions to export terminals and rail service, the company said.

“In the third quarter of 2018, we began to realize returns on the investments made during the first half of the year, and we believe these investments will yield further improvement in the quarters ahead,” said George Dethlefsen, CEO of Corsa Coal. “Overall, our cash mining costs per ton sold were down 16% in the third quarter of 2018 compared to first half 2018 levels.”

Dethlefsen said this was a result of more favorable geology and putting newly rebuilt mining equipment in service at the Casselman mine. At the Acosta mine, Corsa achieved full production levels and the highest quarterly production rate since the start of the mine.

“Supply disruptions in the United States and Australia have created a fragile supply situation for metallurgical coal and specifically for the low-volatile metallurgical coal that we produce,” Dethlefsen said. “Pricing on the U.S. East Coast is at one-year highs and Australian spot prices are up approximately $35/ton, or 20%, since the beginning of the third quarter.

“The forward pricing curve now averages around $200 per metric ton (mt) FOB Vessel for all of 2019. This uptick in pricing is expected to positively impact Corsa’s fourth-quarter 2018 earnings as well as 2019 earnings. Port congestion on the U.S. East Coast has improved significantly, which will serve to substantially reduce demurrage expenses in the coming quarters.”

He added that higher average-realized prices and margin expansion will continue in the fourth quarter and into 2019, which will lead to strong free cash flow generation in the upcoming quarters.

“Our face mining equipment rebuild initiative is complete and fully funded, we foresee favorable geologic conditions at our mines and the supply-demand balance for metallurgical coal remains favorable for metallurgical coal producers,” he said.

During the third quarter, Corsa upgraded equipment at the Horning mine, which is now producing a low ash, low sulfur metallurgical coal. The company also upgraded mining equipment at the Acosta mine. The company is waiting for a mining permit for the Keyser project, which could happen by the end this year.

The company also said it believes a recently completed exploration drilling campaign around the Casselman mine could significantly increase the reserve life of that mine.