Cloud Peak shares jump on strong fourth quarter numbers

The US-based coal miner spun off by Rio Tinto said the results were helped by stronger prices from forward sales contracts

BANGALORE (Reuters) - 

Cloud Peak Energy Inc (CLD.N: Quote), Rio Tinto's (RIO.L: Quote) (RIO.AX: Quote) U.S. coal-mining spin-off, posted higher fourth-quarter results, partly helped by stronger pricing from its forward sales contracts signed in prior years.

The company, which operates in the Powder River Basin and went public in November 2009, sees 2010 coal sales of 92 million tons to 97 million tons, and expects to produce 88 million to 93 million tons this year.

The Gillette, Wyoming-based company said 94 percent of its estimated production is committed under fixed price contracts with an average price of $12.52 a ton, while costs are likely to range $8.80 to $9.40 a ton.

On a conference call with analysts, the company said it expects lower production in 2010 to match market demand, while the average cost of production for the year will be higher -- mainly due to increased royalties from a rise in selling prices and an expected rise in diesel and crude oil prices.

In the latest quarter, the company posted earnings of $35 million from continuing operations, compared with $33 million, a year ago, on revenue that rose about 1 percent to $337 million.

Analysts, on average, were looking for revenue of $313.9 million, according to Thomson Reuters I/B/E/S.

Cloud Peak, in which Rio Tinto currently holds a 48.3 percent non-controlling stake, said it saw prices per ton jump nearly 14 percent in 2009, as a result of its forward sales contracts, helping more than offset a 3 percent decline in production.

Shares of the company jumped more than 5 percent to $17.66 in trading after the bell. They closed at $16.75 Tuesday on the New York Stock Exchange. (Reporting by Antonita Madonna Devotta in Bangalore; Editing by Jarshad Kakkrakandy)

© Thomson Reuters 2010 All rights reserved

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