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UPDATE 2-James River Coal idles more mines to preserve cash

Thursday, 7 Nov 2013 | 12:19 PM ET

* Four eastern Kentucky mines idled, 200 staff on furlough

Third-quarter liquidity down 35 pct from second quarter

* Adjusted loss $1.41 per share vs est loss $1.22

* Shares fall as much as 17 percent

(Adds CEO and analyst comments, compares with estimates; updates shares))

Nov 7 (Reuters) - James River Coal Co idled four more mines in Central Appalachia and temporarily laid off about 200 employees as the company looks to shore up its precarious cash position amid weak coal prices.

The company's shares fell 17 percent to $1.58 after the coal miner also posted a bigger-than-expected quarterly loss and its shipments declined.

"The balance sheet continues to be the critical issue to watch for James River Coal," Simmons & Co analyst Bill Herbert said in a note.

James River Coal's available liquidity plunged 35 percent to $71 million as of Sept. 30, from $108.8 million as of June 30.

If the liquidity were to fall below $50 million, it would amount to a covenant breach, according to terms of the company's credit facility.

"I feel relatively optimistic about where we are right now but at the same time I also need to be cautionary that a lot of agreements need to be reached and a lot of negotiating that still has to take place," Chief Executive Peter Socha said on a post-earnings conference call.

He said the company was in talks with current debt holders and also other potential investors.

Tuesday's idling brings to seven the number of James River Coal mines shut since September, as U.S. coal miners also struggle with tougher environmental regulations.

James River Coal idled production at three mines in Central Appalachia in September, and last month said about 525 employees, who were put on furlough, will be laid off in the fourth quarter. ()

Thermal coal prices have been hit as power companies opt for cheaper natural gas to generate electricity, while weak steel demand and excess supplies have weighed on price of steel-making or metallurgical coal.

James River Coal also has mines in southern West Virginia and southern Indiana.

The four mines at its Buckeye operations in eastern Kentucky in Central Appalachia produced about 1 million tons through September, or about 16 percent of total output during the period.

Shipments in the third quarter fell 34 percent to 2.1 million tons, while coal prices fell about 18 percent to $68.68 per ton.

Excluding one-time items, the company posted a loss of $1.41 per share, while analysts expected a loss of $1.22 per share, according to Thomson Reuters I/B/E/S.

The company's net loss widened to $25.5 million, or 73 cents per share, from $20.6 million, 59 cents per share, a year earlier.

James River Coal's shares recouped some of their losses to trade down 10 percent at $1.71 by early afternoon. More than 2.3 million shares changed hands by that time, more than double its 10-day average.

The shares have nearly halved in value this year.

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