Moravec stepped down “to pursue other opportunities and this decision was not the result of any disagreement” with Rhino, the company said. Moravec entered into a “consulting arrangement with the general partner of the partnership commencing immediately upon his final day of employment,” it added. Rhino is organized as a master limited partnership.
Two years ago, Moravec played an instrumental role during the company’s successful efforts to go public in the U.S.
Prior to becoming executive vice president, Moravec served as senior vice president of business development for Rhino Energy, starting in March 2007, and president of the company’s Kentucky operations beginning in September 2009. Before joining Rhino, he was employed by PNC Bank for more than 22 years.
Rhino produces both steam and metallurgical coal in three regions of the country: Central Appalachia, Northern Appalachia and the Illinois Basin. The company mines more than 7 million tons of coal annually and had proven and probable reserves of 285.4 million tons and an estimated 122.2 million tons of non-reserve coal deposits as of March 31, 2010.
Rhino Resource Partners posted solid earnings in the fourth quarter and for all of 2011 but is proceeding cautiously amid the current market downturn by avoiding projects on which a payback is less than a sure thing. “We have chosen to go with what we have contracted, but as the market allows we’ll bring some other projects online,” David Zatezelo, president and CEO, told analysts during a March 1 conference call to discuss earnings.
For 2012, Rhino has sales commitments of 96.1%, at an average price of $66.85/ton, for the 4.9 to 5.1 million tons of coal it expects to produce, Zatezelo said. The company is “a little less than 50% committed in 2013,” he said.
In other news, Rhino earned $12.7 million in the final three months of 2011, compared to $5.7 million a year earlier. Quarterly coal sales totaled 1.3 million tons, up from 1.1 million tons in the fourth quarter of 2010. Total revenues increased to $101 million from $75.4 million in the comparable period of 2010.
For all of 2011, Rhino earned $38.1 million, down slightly from $41.1 million in 2010. The company sold 4.9 million tons of coal last year, versus 4.3 million tons in 2010. Total revenues surged to $367.2 million last year, up from $305.6 million in 2010.
Despite the encouraging results, Zatezelo said he was “very concerned this market will take some time to recover.” In the meantime, Rhino must make sure “we’re not bringing on things that the market is not prepared for…we have to make money with what we do.”
Unlike some coal producers, Rhino has yet to experience a customer delay or cutback in coal deliveries. Part of the reason could be the company’s strategy of not focusing “on one particular customer or one particular region,” he said. “We think it’s a strength that we have diversity in the different basins.” Rhino has a presence in Central Appalachia, Northern Appalachia, the Illinois Basin, as well as Utah.
In Central Appalachia, Rhino continues development of the Tug River complex in eastern Kentucky. Its new Tug River prep plant is nearly completed and is expected to be operating in the second quarter. The Remining 3 surface mine is fully permitted to begin production once market conditions warrant. “We will have production from the mine in Q1,” Zatezelo said, although “we’re not going to expand it as rapidly as we thought unless the market picks up in that area.” Remining 3 has a maximum run rate of 375,000 tons annually.
In Northern Appalachia, Rhino received a condition permit for its Leesville mine in February. In addition, the Hopedale underground mine in Ohio is in the process of permitting the No. 7 seam reserve that will be accessed from the existing portal and infrastructure.
Rhino continues discussions with potential customers about a base sales contract for its proposed underground mine near Taylorville, Ill. Out West, Rhino’s Castle Valley mine in Utah is fully operational and is counted on to be a long-term cash flow contributor to the company. Rhino said it also has made substantial progress in safety and operating improvements at the Eagle No. 1 metallurgical coal mine that is part of its Rhino Eastern joint venture with Patriot Coal Co. in Raleigh and Wyoming counties in West Virginia. “Eagle No. 1 continues to run well,” Zatezelo said.