Hamilton Beach 2011 Annual Report Download - page 13

Outlook for 2012
NACoal remains focused on safety,
environmental compliance and continuous
improvement programs. These well-estab-
lished programs provide a solid foundation
for all of its coal and limerock mines.
NACoal expects improved operating
performance at its coal mining operations
in 2012. Tons delivered are expected to
be slightly higher than 2011 provided
customers achieve currently planned power
plant operating levels. The company is
optimistic the issues affecting the power
plant served by the Mississippi Lignite
Mining Company (“MLMC”) have been
substantially resolved, returning MLMC to
a more regular production state in 2012.
However, some additional improvements to
the power plant operations are still expected
during the upcoming year. The unconsoli-
dated project mines are expected to have
steady, or perhaps slightly increased,
requirements in 2012. Limerock deliveries
are expected to decrease modestly in 2012
as customer requirements are expected
to be lower as a result of the continued
weakness in the southern Florida housing
and construction markets. Royalty and
other income in 2012 is expected to be
moderately higher than 2011.
NACoal’s primary focus in 2012 is
the execution and implementation of the
projects it currently has in development.
NACoal has four mines in development
stages that will not be in full production for
several years but are expected to continue
to generate modest income in 2012. Liberty
Fuels is in the development phase and
is eventually expected to produce approxi-
mately 4.8 million tons of lignite coal
annually for Mississippi Power Company’s
new Ratcliffe power plant currently being
built in Mississippi. While completion of
the project is still contingent on resolving
legal challenges to regulatory approvals
for the power plant, the project is currently
on track for initial deliveries to commence
in early 2014. Caddo Creek Resources
Company is in the permitting stage of a
project in Texas for which it expects to
mine approximately 650,000 tons of coal
annually for a customer that currently
purchases its coal from The Sabine Mining
Company. Initial deliveries are expected to
commence in early 2014. Camino Real
Fuels is in the permitting stage of a project
in Texas for which it expects to mine
approximately 2.7 million tons of coal
annually. The permitting process for this
mine has been delayed and initial deliveries
are now expected to commence in 2014.
Finally, although Demery Resources
Company has obtained its permit for a
mine in Louisiana that, at full production,
is expected to provide approximately
300,000 to 400,000 tons of coal annually,
unfavorable market conditions for its
customer are expected to delay the
commencement of deliveries at this
operation to late 2012 or early 2013.
NACoal is working on several important
new project opportunities domestically
and internationally for which it expects to
continue to incur additional expenses in
2012. In particular, in the United States,
the company continues to move forward to
obtain a permit for its Otter Creek reserve
in North Dakota in preparation for the
expected construction of a new mine. The
permit is anticipated to be issued in the
first half of 2012. NACoal is also performing
work under a mining services agreement
in India, which is designed to assist the
customer in setting up and managing
its mine.
Overall, NACoal expects net income
in 2012 to increase compared with 2011
mainly as a result of expected improve-
ments in tons delivered at MLMC. However,
higher selling, general and administrative
expenses as a result of increased employee-
related costs and development activities
are expected to partially offset these
improvements. Cash flow before financing
activities in 2012 is expected to be higher
than 2011.
Longer-Term Perspective
NACoal expects to continue its record
of operational excellence in safety, environ-
mental stewardship and production at each
of its mining operations and, over time,
deliver profitability that exceeds its financial
objectives. In 2011, NACoal’s Sabine Mine
received the prestigious “Sentinels of
Safety” award, which is given annually to
the nation’s safest mines with a minimum
of 4,000 injury-free hours.
NACoal’s vision is to continue to be
a leading low-cost miner of coal for its
customers and to provide selected value-
added mining services for companies in
the aggregates business. Over the longer
term, NACoal expects to continue its efforts
to develop new mining projects. NACoal has
historically focused on domestic projects
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