TerraCom Ltd. warned of reduced forecast revenues for the December quarter due to delays in shipping coal from its Blair Athol coal mine.
The company warned that current and anticipated rail and supply chain constraints are expected to impact the delivery of coal from Blair Athol mine to the Dalyrmple Bay Coal Terminal during the December quarter.
This will likely have an impact on the timing of shipping and the receipt of revenues. The constraints will also likely result in additional supply chain costs. TerraCom remains uncertain on the duration and actual impact of these constraints.
However, TerraCom confirmed that mining activities at Blair Athol are continuing without interruption, and the site remains fully operational.
Despite delays, Blair Athol holds significant coal inventories at the site and at port, comprising approximately 140,000 tonnes of site product, 11,000 tonnes of port product, and 42,000 tonnes of site run-of-mine coal.
This represents an equivalent saleable product position of approximately 186,000 tonnes, which is broadly in line with two Blair Athol shipments or around one month of sales.
TerraCom said that this coal, as well as forecast production, would have been sent to port and sold throughout the balance of the December quarter and converted to revenue and cashflows.
However, the build-up of this substantial volume of saleable product is expected to result in short-term working capital constraints and cashflow challenges for the company.
The company is working on managing these challenges and is implementing a range of initiatives to support near-term liquidity, including additional shipment prepayment arrangements, creditor management and further capital and cost reductions at Blair Athol.
TerraCom assured its shareholders that the underlying operational performance of Blair Athol remains strong and the long-term market outlook for thermal coal and energy demand is unchanged.
