April 1, 2015 – Athabasca Minerals Inc. experienced a net loss for its aggregates operations in 2014 despite improved sales volumes, production costs and revenue.
March 31, 2015 – Athabasca Minerals Inc. experienced a net loss for its aggregates operations in 2014 despite improved sales volumes, production costs and revenue.
Aggregate Operations 2014 Highlights
- Revenue, net of royalties at Susan Lake, was $26.33 million for 2014 as compared to $25.36 million in 2013
- EBITDA for 2014 (thirteen months) improved significantly as the year progressed due to improved sales volumes and improved production costs. Annual EBITDA of $3.5 million consisted of $5.1 million from June to December 2014 as compared to $(1.6) million from December 2013 to May 2014.
- A net loss of $0.83 million was recorded for the thirteen month period in 2014 as compared to a net profit of $1.92 million for the twelve month period in 2013.
- Developed two new aggregate operations at the Cowper and KM248 pits through agreements with DeneCo Aggregates Ltd., a First Nations company.
- Management entered into a Joint Venture Agreement with Wood Buffalo Métis Corporation to explore, develop, and produce aggregates for ten years.
President and CEO Dom Kriangkum said; “We have recognized significant success through the implementation of a number of cost reduction opportunities in the extraction and processing of aggregates in 2014. Despite slow demand during the first two quarters, we supplied in excess of 8,000,000 tonnes of aggregates to regional customers, and built up significant inventory at our corporate owned aggregate operations to meet future demand.”
Susan Lake sales volumes in 2014 of 7.5 million tonnes were 20% lower than 2013. Demand levels were impacted by poor weather in the first half of the year and the impact of dropping oil prices in the last quarter of the year. Management maintained operations at historical levels, while continuing to clear land and strip topsoil which should enable the Corporation to maximize sales volumes in future periods.
Athabasca managed to increase aggregate sales volumes slightly from the Corporate owned pits in 2014 to 571,000 tonnes. In the latter half of 2014, Athabasca management implemented several cost improvement strategies which enabled the Corporation to produce gravel at a lower operating cost. By optimizing production levels at the crusher, labour requirements were reduced and associated equipment hours were minimized reducing maintenance and operational costs to ensure a higher margin product going forward.
The Corporation is well positioned from a resource and equipment base to increase production tonnes based on the successful award of contracts and overall demand in the target areas. Management continues to focus on further developing existing relationships with the major oil sands and SAGD operators, including continued analysis and exploration of new aggregate deposits.
Sales guidance for 2015 at the Corporate pits is 0.5 million tonnes. Management continues to strive for production optimization levels and tighter cost controls as it prepares for the heavy demand aggregate season. Strategic inventory was established in 2014 in core areas which will allow management to quickly react to any sudden demand changes as the economy changes.
Capital spending in 2015 for the existing gravel operations is anticipated to be lower than previous years as the existing infrastructure allows management to meet the forecasted product demands.
With the uncertainty in the region due to the drop in oil prices, sales from Susan Lake in 2015 have been forecasted for 6.5 million tonnes. While recognizing that the potential impact of lower oil prices could be significant, management believes that this projected tonnage is still appropriate and conservative, as it would be comparable to the 2009 annual sales volume recorded at Susan Lake.
The Company has secured contracts for approximately 50% of their production for 2015.
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