Corsa Coal Announces Financial Results for Third Quarter 2023

FRIEDENS, Oct. 31, 2023 - Corsa Coal Corp. (TSXV: CSO) (OTCQX: CRSXF) ("Corsa" or the "Company"), a premium quality metallurgical coal producer, today reported financial results for the three and nine months ended September 30, 2023. Corsa has filed its unaudited condensed interim consolidated financial statements for the three and nine months ended September 30, 2023 and 2022 and related management's discussion and analysis under its profile on www.sedarplus.ca.

Unless otherwise noted, all dollar amounts in this news release are expressed in United States dollars and all ton amounts are short tons (2,000 pounds per ton). Pricing and cost per ton information is expressed on a free-on-board ("FOB"), mine site basis, unless otherwise noted.

Third Quarter Highlights

• Key financial results and operational statistics are shown below:

Kevin M. Harrigan, President and Chief Executive Officer of Corsa, commented, "The third quarter of 2023 included our highest metallurgical coal shipment volume since the second quarter of 2020 and was a 13% increase over the same quarter of 2022. Operationally, our surface mines performed well in the quarter delivering improved production volumes and decreased costs, but the impact was muted in our overall results due to numerous challenges faced at our underground mines. The underground mines suffered from adverse geological conditions, that began in early August, and also a number of breakdowns which reduced equipment availability thus resulting in lower than expected coal production and increased mining costs during the quarter. Our average sales price reflected increased exposure to index prices and the impact of the lower price environment experienced in the first half of the third quarter. As a result of a 12% increase in cash production cost per ton sold and lower realized prices, cash margins in the period were lower than anticipated."

"Net income for the third quarter 2023 was primarily due to our previously announced settlement with the Pennsylvania Department of Transportation ("PennDOT") for damages resulting from certain historical takings of leased land by PennDOT in 2010 and 2011. The settlement has significantly enhanced the Company's liquidity and the settlement proceeds, which were received in October 2023, were partially utilized to prepay the amounts due in 2023 and 2024 under the Company's Main Street credit facility. With this prepayment, the Company has one further principal payment due in December 2025 under this facility."

"As we move through the fourth quarter, we are experiencing more favorable mining conditions at each of our underground mines. We continue to focus on improving coal production and lowering costs in the fourth quarter and into 2024. Our enhanced liquidity position allows for increased flexibility and optionality in our sales strategy as we balance our book between domestic and international customers with various pricing mechanisms."

Financial and Operations Summary

Coal Pricing Trends and Outlook

Price levels opened the third quarter 2023 at $233.00/metric ton ("mt") delivered-to-the-port ("FOBT") for spot deliveries of Australian premium low volatile metallurgical coal and closed the quarter at $333.00/mt FOBT. The quarterly average price for the third quarter 2023 was $263.07/mt FOBT compared to $242.92/mt FOBT in the second quarter 2023 and traded in a range from a high of $333.00/mt FOBT to a low of $221.50/mt FOBT.

The price for spot deliveries of Australian premium low volatile metallurgical coal opened the fourth quarter 2023 at $333.00/mt FOBT and was trading at $343.50/mt FOBT in the second half of October, with a high price of $367.00/mt FOBT, a low price of $333.00/mt FOBT and averaged $355.11/mt FOBT during the month. Forward curve pricing for the balance of 2023 is trading at an average of $328.67/mt FOBT. Through the first three weeks of October, fourth quarter 2023 hot-rolled steel coil prices increased in the United States by 8.6% and decreased in Europe and China by 3.2% and 2.0%, respectively. Increased steel production with limited metallurgical coal supply response, as well as restocking, support increasing metallurgical coal prices that remain above historical levels.

See "Risk Factors" in the Company's annual information form for the year ended December 31, 2022 for an additional discussion regarding certain factors that could impact coal pricing trends and outlook, as well as the Company's ongoing operations.

Fourth Quarter 2023 Update and Calendar Year 2024 Sales Update

The Company's fourth quarter 2023 sales volumes are expected to be lower than the third quarter of 2023 due to decreased production from our deep mines in the previous quarter and decreased availability of purchased coals. Metallurgical coal selling prices are expected to be higher than the third quarter of 2023 due to improved spot market pricing. Cash cost of sales are expected to be higher than the previous quarter due to higher cost inventories to start the quarter and seasonal impacts due to increased vacation and holidays in the fourth quarter although mining conditions are expected to be improved. Selling, general and administrative expenses are expected to be slightly higher than the third quarter 2023. The main priorities of the Company are increasing efficient production, reducing costs, and increasing our ability to participate in the metallurgical coal spot market. We are committed to improving the Company's balance sheet with minimized downside financial risk but are also focused on organic growth opportunities to complement our existing operations. The Company's capital allocation and deployment strategy will be aligned with these priorities and the Company's financial position.

For calendar year 2024, Corsa has to date committed sales of nearly 700,000 tons at an FOB mine price of nearly $145/ton. The price per ton is the equivalent of $257/mt FOBT for Australian premium low volatile metallurgical coal.

Financial Statements and Management's Discussion and Analysis

Refer to Corsa's unaudited condensed interim consolidated financial statements for the three and nine months ended September 30, 2023 and 2022 and related management's discussion and analysis, filed under Corsa's profile on www.sedarplus.ca, for details of the financial performance of Corsa and the matters referred to in this news release.

Non-GAAP Financial Measures

Corsa uses certain non-GAAP financial measures to measure its performance internally and to assist in business decision-making as well as providing key performance information to senior management. These measures are not recognized under International Financial Reporting Standards ("GAAP"). Corsa believes that, in addition to the conventional measures prepared in accordance with GAAP, certain investors and other stakeholders also use these non-GAAP financial measures to evaluate Corsa's operating and financial performance; however, these non-GAAP financial measures do not have any standardized meaning and therefore may not be comparable to similar measures presented by other issuers. Accordingly, these non-GAAP financial measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.

Management uses the following non-GAAP financial measures:

• EBITDA - earnings before deductions for interest, taxes, depreciation and amortization;
• Adjusted EBITDA - EBITDA adjusted for change in estimate of reclamation and water treatment provision for non-operating properties, impairment and write-off of mineral properties and advance royalties, gain (loss) on sale of assets and other costs, stock-based compensation, non-cash finance expenses and other non-cash adjustments. Adjusted EBITDA is used as a supplemental financial measure by management and by external users of our financial statements to assess our performance as compared to the performance of other companies in the coal industry, without regard to financing methods, historical cost basis or capital structure; the ability of our assets to generate sufficient cash flow; and our ability to incur and service debt and fund capital expenditures;
• Realized price per ton sold - revenue from coal sales less transportation costs from the mine site to the loading terminal divided by tons of coal sold. Management evaluates our operations based on the volume of coal we can safely produce or purchase and sell in compliance with regulatory standards, and the prices we receive for our coal. Our sales volume and sales prices are largely dependent upon the terms of our contracts, for which prices generally are set based on an index. We evaluate the price we receive for our coal on an average realized price on an FOB mine site per short ton basis;
• Cash production cost per ton sold - cash production costs of sales excluding purchased coal costs, all included within cost of sales, divided by tons of produced coal sold. Cash production cost is based on cost of sales and includes items such as manpower, royalties, fuel, and other similar production related items, pursuant to IFRS, but relate directly to the costs incurred to produce coal and sell it on an FOB mine site basis. Cash production cost per ton sold is used as a supplemental financial measure by management and by external users to assess our operating performance as compared to the operating performance of other companies in the coal industry. Purchased coal is excluded as the purchased coal costs are based on market prices of coal purchased and not the cost to produce the coal;
• Cash cost purchased coal per ton sold - purchased coal costs divided by tons of purchased coal sold. Management uses this measure to assess coal purchases against the market price at which this coal will be sold;
• Cash cost per ton sold - cash production costs of sales, included within cost of sales, divided by total tons sold. Management uses cash cost per ton sold to assess our overall financial performance on a per ton basis to include the Company's production and purchased coal cost in total; and
• Cash margin per ton sold - calculated difference between realized price per ton sold and cash cost per ton sold. Cash margin per ton sold is used by management and external users to assess the operating performance as compared to the operating performance of other coal companies in the coal industry.

For a reconciliation of non-GAAP financial measures to GAAP measures, see the tabular presentation at the end of this news release.

Qualified Person

All scientific and technical information contained in this news release has been reviewed and approved by David E. Yingling, Professional Engineer and the Company's mining engineer, who is a qualified person within the meaning of National Instrument 43-101 - Standards of Disclosure for Mineral Projects.

Caution

Potential developments and market conditions discussed in this news release are considered to be forward looking information. Readers are cautioned that actual results may vary from this forward-looking information. See "Forward-Looking Statements" below.

Information about Corsa

Corsa is a coal mining company focused on the production and sales of metallurgical coal, an essential ingredient in the production of steel. Our core business is producing and selling metallurgical coal to domestic and international steel and coke producers in the Atlantic and Pacific basin markets.

Forward-Looking Statements

Certain information set forth in this press release contains "forward-looking statements" and "forward-looking information" (collectively, "forward-looking statements") under applicable securities laws. Except for statements of historical fact, certain information contained herein including, but not limited to, statements relating to improved profitability, adjusted EBITDA and financial results, the ability to manage the Company going forward, the expected price volatility of the metallurgical coal market, the future demand for steel and its production, and the availability of its supply, changes to sales margins and expected profitability, the expected sales volumes and cash costs of sales of the Company in the fourth quarter of 2023 constitute forward-looking statements which include management's assessment of future plans and operations and are based on current internal expectations, assumptions and beliefs, which may prove to be incorrect. Some of the forward-looking statements may be identified by words such as "will", "estimates", "expects" "anticipates", "believes", "projects", "plans", "capacity", "hope", "forecast", "anticipate", "could" and similar expressions. These statements are not guarantees of future performance and undue reliance should not be placed on them. Such forward-looking statements necessarily involve known and unknown risks and uncertainties. These risks and uncertainties include, but are not limited to: changes in market conditions, governmental or regulatory developments, the operating status and capabilities of our customers and competitors; various events which could disrupt operations and/or the transportation of coal products, including the geological conditions at the Company's mines, global conflicts, labor stoppages, the outbreak of disease and severe weather conditions; and management's ability to anticipate and manage the foregoing factors and risks. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The reader is cautioned not to place undue reliance on forward-looking statements. Corsa does not undertake to update any of the forward-looking statements contained in this press release unless required by law. The statements as to Corsa's capacity to produce coal are no assurance that it will achieve these levels of production or that it will be able to achieve these sales levels.

The TSX Venture Exchange has in no way passed on the merits of this news release. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Non-GAAP Financial Measures Reconciliation

EBITDA and Adjusted EBITDA for the three months ended September 30, 2023 and 2022

EBITDA and Adjusted EBITDA for the nine months ended September 30, 2023 and 2022

Realized price per ton sold for the three months ended September 30, 2023 and 2022

Realized price per ton sold for the nine months ended September 30, 2023 and 2022

Cash cost per ton sold, cash production cost per ton sold, and cash cost per purchased coal per ton sold for the three months ended September 30, 2023 and 2022

Cash cost per ton sold, cash production cost per ton sold, and cash cost per purchased coal per ton sold for the nine months ended September 30, 2023 and 2022

Cash margin per ton sold for the three months ended September 30, 2023 and 2022

Cash margin per ton sold for the nine months ended September 30, 2023 and 2022

SOURCE Corsa Coal Corp.