Grande Cache Coal earns net income of $27.7 million during fiscal 2011

Coal sales for the fiscal year ended March 31, 2011, were 1.55 million tonnes, down from 1.77 million tonnes in fiscal 2010. Sales during the fourth quarter were 0.37 million tonnes compared to 0.43 million tonnes in the comparable period of last year. The decrease in sales volumes was due to lower coal production as a result of the transition to the new No. 8 surface mining area during the year and the challenging conditions experienced in the initial stages of mining in the new operating area.

The average total sales price for the year was $172 per tonne, up from $132 per tonne in fiscal 2010. The higher selling price represents a recovery of global steel markets, which translated into higher demand and pricing for metallurgical coal. Fiscal 2010 coal prices were negatively impacted by the global economic slowdown when demand for metallurgical coal was low. The average selling price for the three months ended March 31, 2011 was $181 per tonne, a 53% increase over $118 per tonne in the fourth quarter of last fiscal year.

Revenue earned during fiscal 2011 was $268.1 million, up 15% from $232.5 million last year, reflecting higher coal prices partially offset by lower sales volumes. Fourth quarter revenue was $67.3 million, compared to $50.7 million in the same period of fiscal 2010.

The average unit cost of sales for the year was $127 per tonne, up from $100 per tonne in fiscal 2010. The increase in the unit cost of sales reflects lower sales volumes, as well as an increase in direct mining costs, most notably for repairs and maintenance and external contractor services. Fourth quarter cost of sales was $141 per tonne, compared to $94 per tonne in the same period last year.

At March 31, 2011, the Corporation’s cash balance was $17.1 million reflecting a $70.3 million decrease during the fiscal year. Internally generated cash and capital leases were used to fund capital additions totaling $175.7 million during the fiscal year as part of a three year initiative to expand the mining operations.

The primary mine development work at the No. 8 surface pit was completed during fiscal 2011. This included the majority of the pre-stripping, road building and infrastructure development required to commence production. A new fleet of equipment was added and there are presently three separate truck and shovel fleets operating concurrently in No. 8 pit.

The Corporation continues to work cooperatively with the regulatory bodies reviewing its application for the new No. 12 South B2 underground mine that was submitted in November 2009. All of the supplemental information requests received to date have been responded to and the Corporation anticipates receiving the necessary approvals to commence mining before the end of the current calendar year.

As disclosed on March 30, 2011, the Corporation entered into an agreement with Westshore Terminals Limited Partnership to exclusively handle Grande Cache Coal’s west coast exports until March 31, 2022.

As previously announced, the Corporation anticipates sales volumes of 2.2 to 2.4 million tonnes in fiscal 2012. Approximately 80% of the annual sales volume will be sold under quarterly or spot pricing arrangements, which is consistent with industry practice. A small portion of traditional annual priced contracts remain in place. The Corporation anticipates that the average selling price for metallurgical coal for the three months ended June 30, 2011 will be in the range of US$230 to US$240 per tonne, which includes carryover tonnage from the previous fiscal year and shipments under annual price contracts.

Please refer to the Outlook section below for additional guidance information for fiscal 2012.

An updated version of the Grande Cache Coal corporate presentation dated June 2011 will be available on the Corporation’s website at www.gccoal.com.

“During fiscal 2011 we made significant capital asset investments, including the development of No. 8 surface pit, adding ten new Komatsu 830E haul trucks and acquiring a new P&H 2800 electric shovel” said Robert Stan, President and Chief Executive Officer. “We believe fiscal 2011 was an opportune time to invest in expansion initiatives as coal prices rebounded and we had a significant cash balance available. Global steel production continues to grow year over year and indications are we will see a strong metallurgical coal market over the next several years. We continue to strive towards our goal of increasing annual production to a target rate of 3.5 million tonnes by the end of fiscal 2013.”

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