OREANDA-NEWS.  February 1, 2012.  During Q4 2011 the Company produced 2.57 mln tonnes of coal, which exceeded Q3 volume by 5.3% (2.44 mln tonnes). At the same time coal production has grown up 14.6% compared to Q4 2010 (2.24 mln tonnes), The Company kept production volumes at a high level due to significant growth in demand for coal in Russia and globally caused by the onset of winter and the start of the heating season in many countries in the Northern hemisphere.

Enriching plant "Kaskad", which produces export quality coal, continued work at 100% capacity. The volume of quarterly production of enriched coal slightly decreased to 186 thousand tonnes (Q3 2011: 199 thousand tonnes), due to the scheduled factory maintenance service during the winter period.

In the Q4 2011 the volume of coal sorted by coal-crushing and screening units remained at the Q3 level and amounted 1.51 mln tonnes, up 30.1% higher than Q4 2010 (1.16 mln tonnes). This coal is directed at meeting the needs of consumers via our retail network in Western Siberia.

The volume of coal sales in Q4 2011 increased by 18.9% to 3.34 mln tonnes (Q3 2011: 2.81 mln tonnes). The Company sold 2.60 mln tonnes of own coal and 741 thousand tonnes of coal purchased from third-parties on an “Ex Works” basis, of which the Company processed 152 thousand tonnes of coal.

The main driver of sales growth were deliveries to Russia, which during the quarter increased by 31.4% due to seasonal peak in demand for coal and reached 1.57 mln tonnes (Q3 2011: 1.2 mln tonnes). Export sales rose by 9.6% to 1.77 mln tonnes compared to 1.61 mln tonnes in Q3. It should be noted a substantial increase in export sales compared with the Q4 2010, which amounted to 59.3% (Q3 2010: 1.11 mln tonnes).

In Q4 2011 the general average coal price net of VAT and railroad tariffs increased by 4.5% to RUB 1,285 per tonne (Q3 2011: RUB 1,229 per tonne). The average domestic price reached RUB 1,192 per tonne down 6.9% quarter-on-quarter (Q3 2011: RUB 1,280 per tonne). The export price continued to increase and reached RUB 1,367 per tonne, being 14.8% higher than the price in Q3 – RUB 1,191 per tonne.
In 2011 the Company increased total coal production volume by 28.4% year-on-year to 8.74 mln tonnes (2010: 6.8 mln tonnes), having accomplished its annual production plan. During the year management has implemented a strategy of increasing the share of high added value products in total sales structure. In 2011 the volume of coal sorted by coal-crushing and screening units increased by 35.4% to 5.56 mln tonnes (2010: 4.1 mln tonnes). During 2011 the coal enrichment plant “Kaskad” worked on full designed capacity and produced 736 thousand tonnes coal of export quality. As a result the volume of processed products of coal by the Company increased from 63.3% to 2010 to 72.0% in 2011.

During 2011 coal sales volume increased by 24.8% year-on-year and reached 10.66 mln tonnes (2010: 8.54 mln tonnes). The pick-up in sales was driven by export volumes, which increased by 72.0% year-on-year to 6.45 mln tonnes (2010: 3.75 mln tonnes). Thus, the proportion of export sales increased to 61.4% in 2011. The domestic sales volume decreased by 12.1% to 4.21 mln tonnes (2010: 4.79 mln tonnes).

8.58 mln tonnes of own-produced coal were sold and 2.08 mln tonnes of coal were purchased from third parties on “Ex works” basis, of which the Company processed 578 thousand tonnes of coal.

Following the results of 2011 the Company’s largest export markets remained Eastern European countries (54.7% of export volume) and Asia-Pacific region (45.3% of export volume). Export deliveries to customers in Eastern Europe grew in 2011 by 65.6% year-to-year, reaching a level of 3.53 mln tonnes (2010: 2.13 mln tonnes). Deliveries in the Asian-Pacific region grew by 80.2% year-to-year and amounted to 2.92 mln tonnes of coal (2010: 1.62 mln tonnes).

During 2011 the average price of coal increased by 25.6% year-on-year to RUB 1,228 per tonne net of VAT and railroad tariffs (2010: RUB 977 per tonne). The average export price reached RUB 1,237 per tonne, exceeding 2010 price by 21.2% (RUB 1,021 per tonne). This growth is due to restoration of global demand for coal. The average domestic price increased by 23.6% year-on-year from RUB 943 to RUB 1,213 per tonne. The major reason was the increased share of sorted coal sales.

Management is satisfied with the Q4 and full year 2011 operational results and would like to thank all employees and partners of KTK for their efforts and contribution to sustainable development of the Company in 2011.

The Company plans to release its audited full year 2011 IFRS statements on April, 4 2012. A conference-call to discuss the financial results will be held the same day at 5 PM Moscow time (1 PM London time, 9 AM New-York time). Conference call details will be issued separately.