July 14, 2010 / 1:14 PM / 8 years ago

UPDATE 2-Grande Cache Q1 sales volumes drop, warns on FY11

* Q1 sales volumes 0.45 mln tonnes

* Sees sales at lower end of outlook in 2011

* Sees Q2 sales as lowest in year

* Move to new mining area to impact FY production timing (Recasts, adds details, company comment, updates share movement)

July 14 (Reuters) - Grande Cache Coal Corp GCE.TO reported a fall in first-quarter sales volumes and said its fiscal 2011 sales could be at the lower end of its outlook, citing higher inventory levels at its customers.

The metallurgical coal producer, which sees fiscal 2011 sales volumes in the range of 2 million to 2.2 million tonnes, also said it expects second-quarter sales volumes to be the lowest of the fiscal year.

For the first quarter ended June 30, the Canadian coal miner reported sales volumes of 0.45 million tonnes, out of which 92 percent was metallurgical coal.

Grande Cache, which is developing new mining areas and redeploying equipment at certain pits, had reported metallurgical coal sales volumes of 0.51 million tonnes in the corresponding quarter last year.

The company, which holds coal leases in the Smoky River Coalfield in west central Alberta, has started production at its No. 8 mining area and plans to have three separate truck and shovel fleets operating at the pit by the end of the year.

Grande Cache, which expects to ramp up its production to 3.5 million tonnes by 2013, said it would be better positioned to achieve the target, following the development at No. 8 pit.

“Once we redeploy the machinery at No. 8 pit, we will be producing about 2 million to 2.5 million tonnes of coal per year from the pit, which would be a significant development,” Chief Financial Officer Ian Bootle told Reuters.

Grande Cache also said the timing of production and sales throughout the fiscal year will be impacted by the transition to the new mining area, but would result in higher sales volumes in the last half of the year.

Shares of the Calgary, Alberta-based miner were down 1 percent at C$5.73 Wednesday afternoon on the Toronto Stock Exchange. (Reporting by Arnika Thakur and Ashutosh Joshi in Bangalore; Editing by Aradhana Aravindan)

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