America West Resources Second quarter results - Analyst Blog

Ian Gilson, CFA

America West Resources (AWSR) Second quarter results:

Although the company reported record revenue based on an all time high production rate, revenue was below our estimate due to some mine safety issues. The mine has been worked on and off for many years and removing some of the pillars and expanding the mine required some remediation work on the bolts holding up the roof. The new bolts were three times as expensive as the standard ones, much work was needed to ensure safety and the mine was re-inspected (the inspectors took some time in approving the work). After all the pillars are mined, that part of the mine will be sealed and never entered again.

Two more coal shuttle cars were added in the second quarter, which should improve productivity.

Customers have not complained of any shortfalls in deliveries, the amounts short were added to the back end of the contract.

Management still expects to move to positive cash flow in 2011.

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