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Rhino Resource Partners narrows Q1'16 loss on cost cutting efforts

Rhino ResourcePartners LP reported a net loss of $1.2 million for the first quarterof 2016 compared to a $3.8 million net loss in the same period last year, accordinga May 6 earnings report.

Coal sales generated $36.7 million of the total $40.4 millionrevenue for the quarter. In the same period last year, Rhino's total revenue was$56.2 million, with coal representing $45.6 million of that. Total coal sales forthe period decreased 9.5% to 800,000 tons, primarily due to lower sales from CentralAppalachia partially offset by sales from its new Pennyrile operation.

"Natural gas prices remainat historic lows and have continued to adversely affect the steam coal markets,"said Rhino general partner President and CEO Joe Funk in a release. "We have resumed mining operations at a majority of ourCentral Appalachia operations in 2016 to fulfill customer contracts that we securedfor the upcoming year. Future market conditions will determine the duration thatour remaining Central Appalachia operations remain idle."

The company said it will continue the suspension of its cash distribution for common units in thecurrent quarter as Funk said the company would focus on cash generation.

"We successfully managed our costs during the quarter tooffset lower coal revenues, which kept our debt levels relatively flat during thequarter," he said, adding that Rhino's balance sheet had "relatively lowdebt level" in comparison to a number of their competitors in the market. Thecompany will work with creditors to extend its credit agreement through to the endof 2017, he said.

Rhino said it is working with lenders to extend its senior creditfacility to December 2017, but since the credit facility expires in July its debtliability was classified as a current liability "The classification of thepartnership's credit facility balance as a current liability raises substantialdoubt of the partnership's ability to continue as a going concern for the next twelvemonths," it said.

The company is also exploringa potential joint venture called Encore Global Commodities LLC, focusing on marketingRhino's coal with ION Carbon & Minerals LLC, a subsidiary of Funk said that Encorecould become a "significant marketing entity for all Rhino coals."

Funk said delays from customers accepting shipments in NorthernAppalachia "adversely affected" results from that region in the most recentquarter. He said that the company's Pennyrile assets became a positive cash flowproducer this quarter.

In March, Rhino entered a $9 million securities agreement with — one of thefew companies buying upcoal assets.

Rhino is one of a number of coal companies under the current market and regulatoryconditions.