Alberta, Canada-based producer Athabasca Minerals Inc. announced its financial results for the three and nine months ended Aug. 31, 2014, which includes record revenue and the second highest quarterly net income ever.
Corporate-owned aggregate operations generated Q3 2014 revenue of $5,982,196, a 206.1 percent increase over Q3 2013 revenue of $1,954,643. Although revenue from corporate-owned pits increased substantially over the comparative quarter, revenue from corporate-owned pits for the Q3 YTD 2014 decreased by 1.8 percent to $10,805,234 from Q3 YTD 2013 revenue of $11,000,678.
Q3 aggregate demand at the Susan Lake Pit increased significantly compared with the first half of the year, and aggregate demand is expected to remain active through Q4 2014. Management continues to work with ESRD regarding a potential boundary change. A detailed soil analysis program has been completed and management will continue to work with ESRD to maximize resource recovery in the Susan Lake pit.
Aggregate management fees from Susan Lake during Q3 2014 were $3,344,688, a decrease of 7.6 percent from Q3 2013 Susan Lake aggregate management fees of $3,620,506. Aggregate operating expenses during Q3 2014 were $4,905,626, an increase of 53.8 percent over Q3 2013 aggregate operating expenses of $3,190,078.
Of the $1,715,548 increase in aggregate operating expenses over the comparative quarter, $876,349 of that amount is due specifically to increased hauling costs for the 175.8 percent greater tonnage volume sold from corporate pits. The next largest expense increase resulted from higher cost of sales associated with the higher volume of aggregates removed from inventory for sales made during Q3 2014.
Third quarter 2014 was the strongest from a gross revenue perspective relative to any other on record. This was a result of a large gravel sales order at the Kearl pit, which was completed during Q4 2014. In addition, the corporation opened the Km248 aggregate operation, which produced at a record daily average rate with improved cost per ton compared to earlier production at corporate-owned pits. Sales from the Km248 pit commenced in Q3 2014 and continue into Q4 2014.
Beginning in Q2 2014 and continuing into the third quarter management undertook a review of operating parameters and operational performance which included benchmarking key performance indicators and implementing cost control measures. These initiatives have resulted in a reduction in input costs and a reduction in cost per ton for inventory being produced and subsequently sold.
Management is actively pursuing and bidding on gravel contracts that may commence during Q4 2014 and continue into fiscal 2015. Contract fulfillment would come from both existing gravel inventories and from new inventory production. Currently processed and stockpiled inventory of 493,000 tons of gravel and 457,000 tons of sand is located across five corporate pits and stockpile sites.
Management is focused on opportunities to sell its existing aggregate inventory, and is actively negotiating with various customers who have expressed interest for the purchase of aggregates from its corporate-owned aggregate operations and stockpile sites. The corporation is well-positioned to supply regional customers through its current inventory mix at multiple locations.
President and CEO Dom Kriangkum stated, “We are pleased to see the demand for aggregates in the Fort McMurray region increase during Q3 2014, and anticipate continuing strength during Q4 2014, when demand for aggregates is traditionally highest during the second half of the year. We have realized some significant recent success from implementing a number of cost reduction opportunities in extraction and processing that we targeted in the first half of 2014.”