Producing Coal and Cash Flow in Alabama

Canam Coal (COE.V or COECF) just came out with their second quarter numbers on Friday.  The company has transitioned to a steady state of production which should produce 60 to 80k tons of coal on a monthly basis going into the second half of 2013.  The balance sheet is improving with operating cash flow five times better than the prior year.  Free cash flow is turning positive from negative and should increase over the second half of 2013 into 2014.  All of Canam's new coal mines have opened and are operating near planned efficiency.  This past July was a record month of production as it sold 67,500 tons of coal.  According to the company, they can sustain this rate for the foreseeable future.  No new equipment is needed in the near term which reduces expenditures.  All of CanAm's 2013 production is sold out and a majority of 2014 production has been sold as off-take.  This may be due to CanAm's low sulfur and ash coal profile which receive premium pricing.  I expect CanAm to generate increasing free cash flow over the coming months and to gain recognition by the investment community.

 

Disclosure: Author/Interviewer is shareholder of CanAm Coal and the company is a sponsor on my website.