8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

____________________

FORM 8-K

____________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 1, 2014

__________________________________________

WESTMORELAND COAL COMPANY

(Exact Name of Registrant as Specified in Charter)

__________________________________________

Delaware	001-11155	23-1128670
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

9540 South Maroon Circle, Suite 200 Englewood, CO	80112
(Address of Principal Executive Offices)	(Zip Code)

Registrant's telephone number, including area code:(855) 922-6463

N/A

(Former Name or Former Address, if Changed Since Last Report)

__________________________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Douglas P. Kathol, Executive Vice President, retired from Westmoreland Coal Company after an over 10-year career with the company effective July 1, 2014. Mr. Kathol’s decision to resign from his position as our Executive Vice President was not the result of any disagreement with us on any matter relating to our operations, policies or practices.

Item 7.01. Regulation FD Disclosure

In accordance with General Instruction B.2. of Form 8-K, the information disclosed in this Item 7.01, including Exhibit 99.1, shall be not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information and Exhibit be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

On July 8, 2014, Westmoreland Coal Company (the “Company”) issued a press release announcing that it has launched a public offering of its common stock, $2.50 par value per share (the “Offering”). A copy of the press release is furnished as Exhibit 99.1 hereto and is incorporated herein by reference.

In connection with the Offering, the Company disclosed certain updated information concerning the Company's guidance for fiscal year 2014. This information is furnished as Exhibit 99.2 and is incorporated herein by reference.

The information filed or furnished herewith, including pro forma financial statements, contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects” and similar references to future periods. These statements involve known and unknown risks, which may cause the Company’s actual results to differ materially from results expressed or implied by the forward looking statements. These risks include factors such as the uncertain nature of the expected benefits from the acquisition, risks associated with the integration of the acquired business, risks associated with the Company’s industry or the economy generally, and other such matters discussed in the “Risk Factors” section of the Company’s filings with the Securities and Exchange Commission. The forward-looking statements in this report speak only as of the date of this report. Although the Company may from time to time voluntarily update its prior forward looking statements, it disclaims any commitment to do so except as required by securities laws.

Item 8.01. Other Events

In connection with the launch of the Offering, the Company intends to file a preliminary prospectus supplement, dated the date hereof, that includes the following information under the caption “Recent Developments”:

Update on Canadian Acquisition

We are ahead of schedule in transitioning the newly-acquired Canadian assets into our business. Following closing of the Canadian Acquisition, our management moved quickly to implement our efficient and cost-focused business model, including consolidating accounting, optimizing mine operations, implementing our maintenance and capital expenditure practices, idling redundant equipment and reducing Canadian corporate office overhead. Our management has met with all acquired customers and other key third parties and is actively working with these new constituents to create strong, collaborative relationships. Although our integration efforts are proceeding

-2-

smoothly to date, there can be no assurance that we will be successful or will achieve all planned synergies from the Canadian Acquisition.

Preliminary Second Quarter 2014 Results

Although our unaudited consolidated financial statements for the three months ended June 30, 2014 are not yet complete, we currently anticipate reporting Adjusted EBITDA in the range of $35.0 - $38.0 million for the three months ended June 30, 2014. This represents an approximate 21% - 31% increase from our Adjusted EBITDA of $28.9 million for the three months ended March 31, 2014. We have not completed the application of purchase accounting following closing of the Canadian Acquisition and are therefore unable to provide a range of net income (loss) for the three months ended June 30, 2014.

We have prepared our anticipated financial information within a range for the three months ended June 30, 2014 in good faith based on our internal reporting. However, our anticipated financial information for the three months ended June 30, 2014 is subject to revision based on the completion of the accounting and financial reporting processes necessary to finalize our unaudited consolidated financial statements as of and for the three months ended June 30, 2014. The preliminary financial data within the range included in this prospectus supplement has been prepared by, and is the responsibility of, our management. Ernst & Young LLP, our independent registered certified public accounting firm, has not audited, reviewed, compiled or performed any procedures with respect to such data. Accordingly, Ernst & Young LLP does not express an opinion or any other form of assurance with respect to that information. We cannot assure you that, upon completion of such accounting and financial reporting processes and finalizing the financial statements as of and for the three months ended June 30, 2014, we will not report financial results for the three months ended June 30, 2014 materially different than as set forth above.

We have not reconciled our anticipated preliminary second quarter 2014 Adjusted EBITDA range because applicable information on which this reconciliation is based is not readily available. Accordingly, a reconciliation of the second quarter 2014 Adjusted EBITDA range at this time is not available without unreasonable effort.

Item 9.01. Financial Statements and Exhibits

(a) Financial Statements of Businesses Acquired

Please see financial statements included in Exhibit 99.3 hereto.

(b) Pro Forma Financial Information

Please see pro forma financial information included in Exhibit 99.4 hereto.

-3-

(d) Exhibits

Exhibit No.	Description
23.1	Consent of Deloitte LLP
99.1	Press release dated July 8, 2014
99.2	Summary Guidance
99.3	Historical Financial Information of PMRL and CVRI
99.4	Unaudited Pro Forma Condensed Combined Financial Information

-4-

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	WESTMORELAND COAL COMPANY
Date: July 8, 2014	By:	/s/ Jennifer S. Grafton
		Jennifer S. Grafton General Counsel and Secretary

-5-

EXHIBIT INDEX

Exhibit No.	Description
23.1	Consent of Deloitte LLP
99.1	Press release dated July 8, 2014
99.2	Summary Guidance
99.3	Historical Financial Information of PMRL and CVRI
99.4	Unaudited Pro Forma Condensed Combined Financial Information

-6-

EX-23.1

EXHIBIT 23.1

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in Westmoreland Coal Company’s Registration Statement on Form S-3 (File No. 333-180946) and in the Registration Statements on Form S-8 (File Nos. 333-56904, 333-106852, 333-166393, and 333-181638) of our report dated April 25, 2014, relating to the combined consolidated financial statements of Prairie Mines & Royalty Ltd. and Coal Valley Resources Inc., appearing in the Current Report on Form 8-K dated May 2, 2014 of Westmoreland Coal Company, for the year ended December 31, 2013.

/s/ Deloitte LLP

Edmonton, Canada

July 8, 2014

EX-99.1

Exhibit 99.1

	WESTMORELAND COAL COMPANY 9540 South Maroon Circle, Suite 200 Englewood, Colorado 80112 (855) 922-6463 Telephone
NEWS RELEASE
Westmoreland Public Offering of Common Stock

Englewood, CO - July 8, 2014 - Westmoreland Coal Company (NasdaqGM:WLB) (the “Company”) announced today that it has commenced an underwritten public offering of $52 million of shares of its common stock. The Company also intends to grant the underwriters a 30-day option to purchase up to $7.8 million of additional shares of common stock.

The Company intends to use the net proceeds of this offering, including the net proceeds from any exercise of the underwriters’ option to purchase additional shares, to increase its overall financial flexibility, pursue organic and acquisition growth strategies and for general corporate purposes. 

BMO Capital Markets and Deutsche Bank Securities will act as joint book-running managers and Brean Capital and Imperial Capital will act as co-managers for the offering. When available, a copy of the preliminary prospectus supplement and accompanying base prospectus relating to this offering may be obtained by contacting:

BMO Capital Markets, Attention: Prospectus Department, 3 Times Square, New York, NY 10036, by calling (800)-414-3627 or by email at bmoprospectus@bmo.com; or

Deutsche Bank Securities, Attention: Prospectus Group, 60 Wall Street, New York, NY 10005, by calling (800)-503-4611 or by email at prospectus.cpdg@db.com.

You may also obtain these documents free of charge when they are available by visiting the Securities and Exchange Commission’s website at www.sec.gov.

The shares of common stock are being offered and will be sold pursuant to an effective shelf registration statement that was previously filed with the Securities and Exchange Commission. This press release does not constitute an offer to sell or the solicitation of an offer to buy the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. This offering is being made only by means of a prospectus supplement and the accompanying base prospectus.

About Westmoreland Coal Company

Westmoreland Coal Company is the oldest independent coal company in the United States. The Company’s coal operations include sub-bituminous and lignite coal mining in the Western United States and Canada. Its power operations include ownership of the two-unit ROVA coal-fired power plant in North Carolina.

Forward Looking Statements

This press release contains forward-looking statements as defined under the federal securities laws, including statements regarding the intended use of offering proceeds and other aspects of the common stock offering. Although management believes that expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to be correct. In addition, these statements are subject to certain risks, uncertainties and other assumptions that are difficult to predict and may be beyond the Company’s control, including market conditions, customary offering closing conditions and other factors described in the prospectus supplement and accompanying base prospectus for the offering. If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, the Company’s actual results may vary materially from what management anticipated, estimated, projected or expected.

Investors are encouraged to closely consider the disclosures and risk factors contained in the Company’s annual and quarterly reports filed from time to time with the Securities and Exchange Commission and in the prospectus supplement and accompanying base prospectus for the offering. The statements herein speak only as of the date of this press release. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

# # #

Contact: Kevin Paprzycki (855) 922-6463

EX-99.2

$225 $242 Adjusted EBITDA 2014 Full Year Pro Forma Guidance Range $18 $19 $32 $37 Q2 2013A Q2 2014E U.S. Operations Canada Operations Source: Company guidance Note: Acquisition of Canada Operations closed on 28-Apr-14. 1. Excludes results from Canada Operations prior to 28-Apr-14. 2. Shown as midpoint of guidance range. Westmoreland Adjusted EBITDA Q2 2013A vs. Q2 2014E Adjusted EBITDA Guidance (2) (US$ mm) $166 $172 $184 $190 Previous Guidance Range (Includes: U.S. Operations for the full year / Canada Operations for 8 months) New Guidance Range (Includes: U.S. Operations for the full year / Canada Operations for 8 months) 3. Includes Canada Operations results of $40mm in Q1 2014 and $1.2mm in Q2 2014, prior to the closing of the Sherritt transaction. 4. Excludes Canada Operations result of $1.2mm in Q2 2014 prior to the closing of the Sherritt transaction. (4) (4) 2014 Full Year EBITDA Guidance vs. LTM EBITDA (3) 2014 guidance expected below LTM EBITDA as at 31-Mar-14 due to:  Decreased foreign exchange rate  Restructured ROVA contract  Reduction in coal export pricing  Expiration of ICTC  ROVA maintenance schedule Midpoint: US$234 mm LTM (31-Mar-14): US$258 mm (US$ mm) Updated Guidance for Full Year 2014 (1) (US$ mm) 2014 – Combined Pro Forma Guidance by Quarter Includes Pre-Transaction Results (US$ mm) $69 $38 Q1 2014A Q2 2014E Q3 2014E Q4 2014E 2014E $55 to $60 $67 to $72 $225 to $242 (2, 3) (2, 3) (3) Majority of the difference in Q2 2014 guidance for U.S. Operations being below Q2 2013 actual is due to timing of ROVA's annual maintenance outage, the Company's coal customers’ outages, and weather and hydro related impacts.

EX-99.3

Exhibit 99.3

Combined Consolidated Financial Statements of

Prairie Mines & Royalty Ltd. and Coal Valley Resources Inc.

March 31, 2014

-1-

Prairie Mines & Royalty Ltd. and Coal Valley Resources Inc.

Interim condensed combined consolidated statement of financial position

(Unaudited)

		March 31,			December 31,
Canadian $ thousands, as at	Note	2014			2013
ASSETS
Current assets
Cash and cash equivalents		$	59,770		$	113,563
Short-term investments		201,545			140,659
Trade accounts receivable		70,631			67,775
Loans receivable		3,503			3,244
Other assets	4	1,154			2,764
Finance lease receivables	5	16,345			15,851
Inventories	6	143,491			149,741
Prepaid expenses		1,568			3,130
Due from related parties	7	—			209
		498,007			496,936
Non-current assets
Loans receivable		14,584			15,270
Other assets	4	12,378			13,406
Finance lease receivables	5	112,738			116,604
Property, plant and equipment	8	343,326			344,613
Intangible assets	9	557,533			560,256
		1,040,559			1,050,149
		$	1,538,566		$	1,547,085
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities
Loans and borrowings	10	$	299,930		$	299,657
Trade accounts payable and accrued charges		90,530			83,350
Other liabilities	11	49,125			44,673
Environmental rehabilitation obligations	12	21,930			35,026
Due to related parties	7	—			293
Related party loans	7	732,094			732,094
		1,193,609			1,195,093
Non-current liabilities
Loans and borrowings	10	—			—
Other liabilities	11	99,286			110,205
Environmental rehabilitation obligations	12	151,911			145,981
Deferred income taxes	13	121,338			118,987
		372,535			375,173
		1,566,144			1,570,266
Capital deficiency
Capital deficiency		(27,578		)	(23,181		)
		$	1,538,566		$	1,547,085

The accompanying notes are an integral part of these interim condensed combined consolidated financial statements.

-2-

Prairie Mines & Royalty Ltd. and Coal Valley Resources Inc.

Interim condensed combined consolidated statement of (loss) earnings and

comprehensive (loss) income

(Unaudited)

		March 31,			March 31,
Canadian $ thousands, for the 3 months ended	Note	2014			2013
Revenue	15	$	203,201		$	179,338
Cost of sales	16	181,661			165,357
Gross profit		21,540			13,981
Administrative expenses		5,790			3,417
Other		—			(33,867		)
Operating profit		15,750			44,431
Financing income	17	(3,722		)	(3,930		)
Financing expense	17	22,249			20,276
Net finance expense		18,527			16,346
(Loss) profit before tax		(2,777		)	28,085
Income tax expense	13	2,160			7,378
Net (loss) earnings		$	(4,937	)	$	20,707
Other comprehensive income (loss)
Items that will not be subsequently reclassified to profit or loss;
Actuarial gains on pension plans, net of tax		540			2,337
Total comprehensive (loss) income		$	(4,397	)	$	23,044

The accompanying notes are an integral part of these interim condensed combined consolidated financial statements.

-3-

Prairie Mines & Royalty Ltd. and Coal Valley Resources Inc.

Interim condensed combined consolidated statement of changes in capital deficiency

(Unaudited)

Canadian $ thousands
	Common shares		Contributed surplus		Accumulated deficit			Accumulated other comprehensive loss			Total
Balance as at January 1, 2013	$	708,460	$	2,028	$	(510,161	)	$	(26,154	)	$	174,173
Net earnings	—		—		20,707			—			20,707
Actuarial gain on defined benefit obligations	—		—		—			2,337			2,337
Reclassification of actuarial losses on settlement of pension obligation	—		—		(22,842		)	22,842			—
Balance as at March 31, 2013	708,460		2,028		(512,296		)	(975		)	197,217
Net loss	—		—		(221,637		)	—			(221,637		)
Actuarial gain on defined benefit obligations	—		—		—			1,239			1,239
Balance as at December 31, 2013	708,460		2,028		(733,933		)	264			(23,181		)
Net loss	—		—		(4,937		)	—			(4,937		)
Actuarial gain on defined benefit obligations	—		—		—			540			540
Balance as at March 31, 2014	$	708,460	$	2,028	$	(738,870	)	$	804		$	(27,578	)

The accompanying notes are an integral part of these interim condensed combined consolidated financial statements.

-4-

Prairie Mines & Royalty Ltd. and Coal Valley Resources Inc.

Interim condensed combined consolidated statement of cash flow

(Unaudited)

		March 31,			March 31,
Canadian $ thousands, for the 3 months ended	Note	2014			2013
Operating activities
Net (loss) earnings		$	(4,937	)	$	20,707
Add (deduct)
Depreciation and amortization		28,305			25,018
Environmental rehabilitation obligations accretion	12	722			643
Environmental rehabilitation obligations change in estimate	12	—			(519		)
Stock based compensation expense		91			101
Impairment of inventory	6	631			—
Gain on Highvale pension		—			(39,626		)
Current income tax recovery		—			(356		)
Deferred income tax expense		2,160			7,609
Unrealized foreign exchange loss		1,827			684
(Loss) gain on disposal of property, plant and equipment		(62		)	57
Loss on disposal of intangibles		—			5,459
Loss on settlement of environmental rehabilitation obligations		261			757
Impairment		759			676
Employee benefits recovery		(558		)	(113		)
Environmental rehabilitation obligations settled		(15,884		)	(6,193		)
Financing expense		3,276			2,497
Financing expense, related parties		15,336			15,195
Financing income		(3,722		)	(3,949		)
Other items		416			1,541
		28,621			30,188
Net change in non-cash working capital items	18	6,040			(5,144		)
		34,661			25,044
Interest received		2,723			11,239
Interest paid, related parties		(8,024		)	(15,335		)
Interest paid		(3,320		)	(2,504		)
Cash provided by operating activities		26,040			18,444
Investing activities
Property, plant and equipment expenditures		(17,160		)	(13,146		)
Change in working capital		4,383			(2,326		)
Purchase of short-term investments		(60,886		)	—
Net proceeds from sale of property, plant and equipment		144			3,975
Increase in loans receivable		(505		)	(674		)
Repayments of loans receivable		932			1,007
Cash used in investing activities		(73,092		)	(11,164		)
Financing activities
Proceeds from loans and borrowings		273			—
Repayments of loans and borrowings		—			(14,984		)
Payment of financing fees on loans and borrowings		—			(4,199		)
Increase in finance lease receivables		(988		)	—
Repayment of finance lease receivables		4,360			30,384
Repayments of other equipment financing arrangements		(423		)	(711		)
Repayment of finance lease obligations		(9,963		)	(23,760		)
Cash used in financing activities		(6,741		)	(13,270		)
Change in cash and cash equivalents		(53,793		)	(5,990		)
Cash and cash equivalents, beginning of year		113,563			7,804
Cash and cash equivalents, end of year		$	59,770		$	1,814

The accompanying notes are an integral part of these interim condensed combined consolidated financial statements.

-5-

Prairie Mines & Royalty Ltd. and Coal Valley Resources Inc.

NOTES TO THE INTERIM CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
For the 3 months ended March 31, 2014

(Unaudited)

1. NATURE OF OPERATIONS AND CORPORATE INFORMATION

Prairie Mines & Royalty Ltd. (“PMRL”) is Canada’s largest coal producer, operating seven surface mines in Alberta and Saskatchewan, and is a wholly owned subsidiary of Sherritt International Corporation (“Sherritt”). PMRL supplies domestic utilities with thermal coal for electricity generation and has abundant, high-quality and strategically located reserves in Canada that are suited to providing customers with a stable, low-cost, long-term fuel supply. PMRL owns and operates the Paintearth, Sheerness, Genesee (50% interest), Poplar River, Boundary Dam and Bienfait mines, and operates the Highvale mine under contract.

On January 10, 2013, PMRL and its Highvale mine contract customer agreed to transfer operations to the customer who also owns the mine and terminate the mining contract.  On January 17, 2013 the customer assumed responsibility for direct mining activities and a transition process was completed on July 9, 2013.

PMRL directly owns a 50% joint venture interest in the Bienfait Activated Carbon Joint Venture, which produces activated carbon for the removal of mercury from flue gas, and sells char to the barbeque briquette industry from the Bienfait Char facility. PMRL also holds a portfolio of mineral rights located in Alberta and Saskatchewan from which it earns royalties on the production of coal, potash and other minerals.

Coal Valley Resources Inc. (“CVRI”) is an incorporated company established under the laws of the Province of Alberta on May 10, 2006. CVRI is a wholly owned subsidiary of Sherritt. CVRI operates two surface mines at the Coal Valley and Obed Mountain mines where the majority of coal is exported overseas to Asian utility companies and commodity traders. CVRI’s sole product is bituminous coal which has a suitable calorific value to make its sale overseas economical. Obed Mountain’s operations were suspended in November 2012.

PMRL and CVRI (collectively the “Company”) are domiciled in Edmonton, Alberta, Canada and their registered office is 100, 10123 - 99 Street, Edmonton, Alberta, T5J 3H1. The combined consolidated financial statements were authorized for issue by the Company’s directors on June 27, 2014.

2. BASIS OF PRESENTATION

The interim condensed combined consolidated financial statements of the Company are prepared in accordance with International Accounting Standard 34, “Interim Financial Reporting” as issued by the International Accounting Standards Board (“IASB”). Accordingly, certain information and footnote disclosures normally included in the annual combined consolidated financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the IASB, have been omitted or condensed.

The interim condensed combined consolidated financial statements were prepared on a going concern basis, under the historical cost convention except for certain financial assets which are presented at fair value in Canadian dollars, which is the Company’s functional currency. All financial information is presented in Canadian dollars rounded to the nearest thousands, except as otherwise noted.

-6-

Prairie Mines & Royalty Ltd. and Coal Valley Resources Inc.

NOTES TO THE INTERIM CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
For the 3 months ended March 31, 2014

(Unaudited)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

These interim condensed combined consolidated financial statements have been prepared using the same accounting policies and methods of computation as the annual combined consolidated financial statements of the Company as at and for the year ended December 31, 2013.

Accordingly, these interim condensed combined consolidated financial statements should be read in conjunction with the combined consolidated financial statements for the year ended December 31, 2013.

Principles of Consolidation

These condensed combined consolidated financial statements include the financial position, results of operations and cash flow of the Company, its subsidiaries, and its share of assets, liabilities, revenues and expenses related to its interests in joint operations. Intercompany balances, transactions, income and expenses, profits and losses, including unrealized gains and losses relating to subsidiaries and joint operations have been eliminated on consolidation.

Subsidiaries

Subsidiaries are entities over which the Company has control. Control is defined as when the Company is exposed or has rights to the variable returns from the subsidiary and has the ability to affect those returns though its power over the subsidiary. Power is defined as existing rights that give the Company the ability to direct the relevant activities of the subsidiary. Subsidiaries are fully consolidated from the date control is transferred to the Company and are de-consolidated from the date control ceases.

Joint arrangements

A joint arrangement is an arrangement whereby two or more parties are subject to joint control. Joint control is considered to be when all parties to the joint arrangement are required to reach unanimous consent over decisions about relevant business activities pertaining to the contractual arrangement.

There are two types of joint arrangements:

Joint ventures

A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control and whereby each party has rights to the net assets of the arrangement. Interests in joint ventures are recognized as an investment and accounted for using the equity method of accounting. The Company is not party to any joint ventures.

-7-

Prairie Mines & Royalty Ltd. and Coal Valley Resources Inc.

NOTES TO THE INTERIM CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
For the 3 months ended March 31, 2014

(Unaudited)

Joint operations

A joint operation is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control and whereby each party has rights to the assets and obligations for liabilities relating to the arrangement. Interests in joint operations are accounted for by recognizing the Company’s share of assets, liabilities, revenues, and expenses. The Bienfait Activated Carbon Joint Venture is classified as a joint operation.

Associate

An associate is an entity over which the Company has significant influence but does not have the power to participate in the operating and financial policies of the entity. The Company does not have any investments in associates.

4. OTHER ASSETS

Canadian $ thousands,	March 31, 2014			December 31, 2013
Deferred reclamation recoveries (a)	$	7,513		$	7,061
Deferred financing charges (b)	1,440			1,610
Pension recoveries (c)	2,899			4,629
Port reservation fee (d)	1,680			1,260
	13,532			14,560
Current portion	(1,154		)	(1,154		)
	$	12,378		$	13,406

(a) Deferred reclamation recoveries relate to a recovery of environmental rehabilitation costs from a domestic customer at two mine sites.

(b) Deferred financing charges relate the credit facility described in Note 10. They are amortized using the effective interest method over the term of the credit agreement and will be fully amortized upon extinguishment of the facility.

(c) Pension recoveries relate to a recovery from a domestic customer of employer contributions to a defined benefit plan at a 50% owned mine.

(d) Reservation fee relates to port space at an export terminal.

-8-

Prairie Mines & Royalty Ltd. and Coal Valley Resources Inc.

NOTES TO THE INTERIM CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
For the 3 months ended March 31, 2014

(Unaudited)

5. FINANCE LEASE RECEIVABLES

	Future minimum lease payments		Interest		Present value of minimum lease payments			Future minimum lease payments		Interest		Present value of minimum lease payments
Less than one year	$	27,882	$	11,537	$	16,345		$	27,644	$	11,793	$	15,851
Between one and five years	100,472		33,420		67,052			101,181		34,537		66,644
More than five years	106,211		18,081		88,130			112,240		19,836		92,404
Impairment (a)	—		—		(42,444		)	—		—		(42,444		)
	$	234,565	$	63,038	$	129,083		$	241,065	$	66,166	$	132,455

(a) Due to historically low thermal export prices in 2013, the Company recorded a $42,444 impairment charge in the year ended December 31, 2013 to reduce the carrying amount of finance lease receivables to their recoverable amount.

6. INVENTORIES

Canadian $ thousands,	March 31, 2014		December 31, 2013
Uncovered coal	$	7,704	$	10,832
Finished product	73,396		79,628
	81,100		90,460
Spare parts and operating materials	62,391		59,281
	$	143,491	$	149,741

For the 3 months ended March 31, 2014, the cost of inventories recognized as an expense and included in cost of sales was $167,889 (for the 3 months ended March 31, 2013 - $140,565). Depreciation and amortization included in inventories at March 31, 2014 totaled $7,342 (December 31, 2013 - $8,111). For the 3 months ended March 31, 2014, the Company recorded a lower-of-cost-and-net-realizable-value impairment for clean coal inventory at Obed Mountain mine of $631 (for the 3 months ended March 31, 2013 - $nil), which is included in cost of sales.

-9-

Prairie Mines & Royalty Ltd. and Coal Valley Resources Inc.

NOTES TO THE INTERIM CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
For the 3 months ended March 31, 2014

(Unaudited)

7. RELATED PARTY TRANSACTIONS

Related party loans

Canadian $ thousands,	March 31, 2014		December 31, 2013
Subordinated note (a)	$	377,094	$	377,094
Promissory note (b)	325,000		325,000
Loan payable (c)	30,000		30,000
	$	732,094	$	732,094

(a) Relates to the Sherritt subordinated loan to PMRL bearing interest at an annual rate of interest of 8.15%. The note is unsecured and due on June 27, 2026.

(b) Relates to a promissory note payable to Sherritt from CVRI bearing interest at an annual rate of interest of 9.00%. The note is unsecured and due on March 30, 2022.

(c) Relates to a loan payable to Sherritt from CVRI bearing an annual rate of interest of 6.00%. The loan is unsecured and is due on June 30, 2017.

All related party loans have been presented as current liabilities because the Company will be required to repay these balances in connection with the arrangement agreement between Sherritt and Westmoreland Coal Company (Note 14).

Loan interest expense

Canadian $ thousands, for the 3 months ended March 31	2014		2013
Sherritt (a)	$	7,333	$	7,213
Sherritt (b)	7,558		7,518
Sherritt (c)	445		445

(a) Relates to interest expense paid on the subordinated loan described above.

(b) Relates to interest on promissory note described above.

(c) Relates to interest expense paid on the loan payable described above.

Management and administrative services

Canadian $ thousands, for the 3 months ended March 31	2014		2013
Sherritt and other related parties	$	558	$	419

-10-

Prairie Mines & Royalty Ltd. and Coal Valley Resources Inc.

NOTES TO THE INTERIM CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
For the 3 months ended March 31, 2014

(Unaudited)

The Company, Sherritt and other related parties in the Sherritt group are involved in management and administrative services agreements (“MSAs”) effective June 1, 2006 for a period of ten years, subject to early termination under certain conditions. Pursuant to the MSAs, Sherritt agrees to provide or arrange for provision of management, administrative and support services, including the reimbursement of third-party expenditures incurred related to these services, to the Company, at amounts which are determined and agreed to by the related parties. As part of the same MSAs, the Company charges other related parties in the Sherritt group for provision of management, administrative and support services, including the reimbursement of third-party expenditures incurred related to these services, at cost. These transactions are in the normal course of operations.

As described in Note 19, PMRL holds a 50% direct interest in the Bienfait Activated Carbon Joint Venture from which it earns operator service fees. For the 3 months ended March 31, 2014 operator service fees were $1,399 (2013 - $1,818).

Due from related parties

Canadian $ thousands, as at	March 31, 2014		December 31, 2013
Sherritt and other related parties (a)	$	—	$	209

(a) Relates to payments made or received on behalf of entities owned by Sherritt for the provision of shared services described within this note. The amounts are non-interest bearing, due on demand and unsecured.

Due to related parties

Canadian $ thousands, as at	March 31, 2014		December 31, 2013
Sherritt and other related parties (a)	$	—	$	293
Sherritt (b)	7,213		—
	$	7,213	$	293

(a) Relates to payments made or received on behalf of entities owned by Sherritt for the provision of shared services described within this note. The amounts are non-interest bearing, due on demand and unsecured.

(b) Relates to accrued interest, included in other liabilities (Note 11), on promissory note described above.

-11-

Prairie Mines & Royalty Ltd. and Coal Valley Resources Inc.

NOTES TO THE INTERIM CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
For the 3 months ended March 31, 2014

(Unaudited)

8. PROPERTY, PLANT AND EQUIPMENT

Canadian $ thousands,			March 31, 2014
	Mining properties		Plant, equipment and land			Total
Cost
Balance, beginning of the period	$	562,485	$	917,597		$	1,480,082
Additions	5,193		11,967			17,160
Capitalized closure costs	5,202		1,368			6,570
Disposals	—		(11,599		)	(11,599		)
Balance, end of the period	572,880		919,333			1,492,213
Depreciation and impairment losses
Balance, beginning of the period	484,827		650,642			1,135,469
Additions	7,891		16,922			24,813
Disposals	—		(11,395		)	(11,395		)
Balance, end of the period	492,718		656,169			1,148,887
Net book value	$	80,162	$	263,164		$	343,326

Canadian $ thousands,				December 31, 2013
	Mining properties			Plant, equipment and land			Total
Cost
Balance, beginning of the year	$	518,795		$	874,351		$	1,393,146
Additions	20,945			64,272			85,217
Capitalized closure costs	23,435			(3,973		)	19,462
Disposals	(690		)	(19,227		)	(19,917		)
Transfers and movements	—			2,174			2,174
Balance, end of the year	562,485			917,597			1,480,082
Depreciation and impairment losses
Balance, beginning of the year	425,901			515,709			941,610
Additions	34,690			61,464			96,154
Disposals	(650		)	(14,167		)	(14,817		)
Transfers and movements	—			2,092			2,092
Impairment (a)	24,886			85,544			110,430
Balance, end of the year	484,827			650,642			1,135,469
Net book value	$	77,658		$	266,955		$	344,613

(a) Due to historically low thermal export prices in 2013, the Company recorded a $110,430 impairment charge in the year ended December 31, 2013 to reduce the carrying amount of property, plant and equipment to its recoverable amount.

-12-

Prairie Mines & Royalty Ltd. and Coal Valley Resources Inc.

NOTES TO THE INTERIM CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
For the 3 months ended March 31, 2014

(Unaudited)

Assets under finance lease included in above

Canadian $ thousands,	March 31, 2014		December 31, 2013
Mobile mining equipment	$	136,244	$	144,606

9. INTANGIBLE ASSETS

Canadian $ thousands,			March 31, 2014
	Royalty agreements		Mining contracts		Total
Cost
Balance, beginning of the period	$	479,000	$	236,000	$	715,000
Balance, end of the period	479,000		236,000		715,000
Amortization and impairment losses
Balance, beginning of the period	61,735		93,009		154,744
Amortization for the period	2,723		—		2,723
Balance, end of the period	64,458		93,009		157,467
Net book value	$	414,542	$	142,991	$	557,533
Remaining amortization period
Weighted-average number of years, as at March 31, 2014	38.7		—

-13-

Prairie Mines & Royalty Ltd. and Coal Valley Resources Inc.

NOTES TO THE INTERIM CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
For the 3 months ended March 31, 2014

(Unaudited)

Canadian $ thousands,			December 31, 2013
	Royalty agreements		Mining contracts		Total
Cost
Balance, beginning of the year	$	479,000	$	236,000	$	715,000
Balance, end of the year	479,000		236,000		715,000
Amortization and impairment losses
Balance, beginning of the year	50,843		34,713		85,556
Amortization for the year	10,892		7,017		17,909
Impairment (a)	—		51,279		51,279
Balance, end of the year	61,735		93,009		154,744
Net book value	$	417,265	$	142,991	$	560,256
Remaining amortization period
Weighted-average number of years, as at December 31, 2013	38.9		31.9

(a) Due to historically low thermal export prices in 2013, the Company recorded a $45,821 impairment charge in the year ended December 31, 2013 to reduce the carrying amount of intangibles to their recoverable amount. As part of the Highvale mining contract termination, for the year ended December 31, 2013, the Company also recorded a $5,458 impairment charge related to the Highvale mining contract and customer relationship intangible assets.

10. LOANS AND BORROWINGS

Canadian $ thousands,	March 31, 2014			December 31, 2013
Credit facility agreement	$	299,930		$	299,657
	299,930			299,657
Current portion	(299,930		)	(299,657		)
	$	—		$	—

Loans and borrowings have been presented as current liabilities at March 31, 2014 because the Company will be required to repay these balances in connection with the arrangement agreement between Sherritt and Westmoreland Coal Company (Note 14).

-14-

Prairie Mines & Royalty Ltd. and Coal Valley Resources Inc.

NOTES TO THE INTERIM CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
For the 3 months ended March 31, 2014

(Unaudited)

11. OTHER LIABILITIES

Canadian $ thousands, as at	March 31, 2014			December 31, 2013
Finance lease obligations	$	133,914		$	142,232
Other equipment financing arrangements	5,030			5,415
Stock-based compensation	1,505			1,598
Related party (Note 7)	7,213			—
Pension liability	(51		)	2,968
Deferred revenue	800			2,665
	148,411			154,878
Current portion of other liabilities	(49,125		)	(44,673		)
	$	99,286		$	110,205

Finance lease obligations

Canadian $ thousands,	March 31, 2014						December 31, 2013
	Future minimum lease payments		Interest		Present value of minimum lease payments		Future minimum lease payments		Interest		Present value of minimum lease payments
Less than one year	$	44,153	$	5,469	$	38,684	$	45,486	$	5,916	$	39,570
Between one and five years	101,242		6,012		95,230		109,772		7,110		102,662
	$	145,395	$	11,481	$	133,914	$	155,258	$	13,026	$	142,232

Other equipment financing arrangements

Canadian $ thousands,	March 31, 2014		December 31, 2013
	Present value of minimum lease payments		Present value of minimum lease payments
Less than one year	$	1,751	$	1,718
Between one and five years	3,279		3,697
	$	5,030	$	5,415

-15-

Prairie Mines & Royalty Ltd. and Coal Valley Resources Inc.

NOTES TO THE INTERIM CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
For the 3 months ended March 31, 2014

(Unaudited)

Pension liability

PMRL sponsors defined benefit and defined contribution pension arrangements covering substantially all employees. The following tables summarize the significant actuarial assumptions used to calculate the pension expense and obligations under the defined benefit pension plans:

As at	March 31, 2014		December 31, 2013
Plan assets
Expected long-term rate of return on plan assets	4.70	%	4.70	%
Accrued benefit obligation
Discount rate on pension obligations	4.70	%	4.70	%
Average remaining service period of active employees	4-9 years		4-9 years
Benefit costs
Inflation rate	2.50	%	2.50	%
Discount rate on benefit costs	4.70	%	4.70	%
Rate of compensation increases	3.50	%	3.50	%

Approximate asset allocations, by asset category, of PMRL’s defined benefit pension plans were as follows:

As at	March 31, 2014		December 31, 2013
Equity securities	65	%	65	%
Debt securities	33	%	33	%
Cash	2	%	2	%
	100	%	100	%

-16-

Prairie Mines & Royalty Ltd. and Coal Valley Resources Inc.

NOTES TO THE INTERIM CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
For the 3 months ended March 31, 2014

(Unaudited)

Actuarial reports and updates are prepared by independent actuaries for funding and accounting purposes. Net pension plan expense relating to defined contribution plans, included in cost of sales in the condensed combined consolidated statement of (loss) earnings and comprehensive (loss) income, was as follows:

Canadian $ thousands, for the 3 months ended March 31	2014		2013
Defined contribution plan current service cost	$	2,475	$	2,832

Net pension plan expense relating to defined benefit plans was as follows:

Canadian $ thousands, for the 3 months ended March 31	2014			2013
Current service cost	$	263		$	559
Net interest cost	19			160
Settlement/curtailment gain	(851		)	(39,732		)
Total defined benefit plan expense	$	(569	)	$	(39,013	)

Amounts recognized in the combined consolidated statement of financial position are as follows:

Canadian $ thousands	March 31, 2014			December 31, 2013
Accrued benefit obligations
Balance, beginning of period	$	40,926		$	152,607
Current service cost	256			2,607
Benefits paid	(1,098		)	(3,671		)
Interest cost	469			1,886
Actuarial (gains)	—			(856		)
Acquisitions, settlements and curtailments	(851		)	(111,647		)
Balance, end of period	39,702			40,926
Plan assets
Fair value, beginning of period	37,962			104,026
Employers' contributions	671			3,365
Benefits paid	(1,098		)	(3,382		)
Interest on assets	450			1,477
Administrative cost	(7		)	(27		)
Actuarial gains	1,994			4,418
Acquisitions, settlements and curtailments	—			(71,915		)
Fair value, end of period	39,972			37,962
Impact of asset ceiling	219			4
Net accrued pension (asset) liability	$	(51	)	$	2,968

-17-

Prairie Mines & Royalty Ltd. and Coal Valley Resources Inc.

NOTES TO THE INTERIM CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
For the 3 months ended March 31, 2014

(Unaudited)

Total cash payments for the 3 months ended March 31, 2014 in respect of the Company’s defined benefit and defined contribution pension plans consisting of cash payments made by the Company directly to employees, their beneficiaries or estates, payments to the plans, and payments to a third-party service provider on behalf of the employees were $2,475 (for the 3 months ended March 31, 2013 - $2,832).

12. PROVISIONS

Environmental rehabilitation obligations

The following is a reconciliation of the environmental rehabilitation provision:

Canadian $ thousands	3 Months Ended March 31, 2014			12 Months Ended December 31, 2013
Balance, beginning of the period	$	181,007		$	174,706
Additions	3,693			34,246
Change in estimates	3,281			(13,022		)
Settled during the period	(14,862		)	(17,530		)
Accretion	722			2,607
Balance, end of the period	173,841			181,007
Current portion	(21,930		)	(35,026		)
	$	151,911		$	145,981

Contingencies

The Company is contingently liable by way of the letters of credit issued. The Company has issued $143,552 (December 31, 2013 - $143,552) in letters of credit providing reclamation security and an additional $15,187 (December 31, 2013 - $15,575) in other letters of credit.

The Company has been subject to reassessments of income tax for past years. Certain amounts have been accrued for these assessments and are considered appropriate. The Company does not believe that unfavorable decisions in any pending procedure, or the threat of procedures related to any future assessment or any amount it might be required to pay will have a material impact on the financial condition of the Company.

-18-

Prairie Mines & Royalty Ltd. and Coal Valley Resources Inc.

NOTES TO THE INTERIM CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
For the 3 months ended March 31, 2014

(Unaudited)

13. INCOME TAXES

Income tax expense is comprised of the following:

Canadian $ thousands, for the 3 months ended March 31	2014			2013
Current tax (recovery) expense	$	—		$	(356	)
Deferred tax expense
Origination and reversal of temporary differences	(679		)	7,734
Derecognition (recognition) of tax assets	2,839			—
Deferred tax (recovery) expense	2,160			7,734
Income tax (recovery) expense	$	2,160		$	7,378

14. SALE OF COAL ASSETS

On December 24, 2013, Sherritt announced its divestiture of the coal business for total consideration of $971 million. A group led by Altius Minerals Corp. has acquired Sherritt’s entire royalty portfolio and its interest in coal development assets for cash consideration of $481 million. Westmoreland Coal Company acquired Sherritt’s operating coal assets for total consideration of $490 million, comprised of $355 million in cash and assumption of finance leases of $135 million, subject to closing adjustments. Sherritt indemnified Westmoreland Coal Company for all costs incurred by the Company associated with the October 31, 2013 incident at the Obed Mountain mine. The transaction was completed on April 28, 2014.

The transaction required that all loans and borrowings and related party loans were repaid upon closing of the purchase by Westmoreland Coal Company. These liabilities have been presented as current liabilities on the combined consolidated statement of financial position. The provision for costs associated with the October 31, 2013 incident at the Obed Mountain mine are consistent with the Cooperation Agreement between Westmoreland Coal Company and Sherritt.

-19-

Prairie Mines & Royalty Ltd. and Coal Valley Resources Inc.

NOTES TO THE INTERIM CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
For the 3 months ended March 31, 2014

(Unaudited)

15. SEGMENTED INFORMATION

Canadian $ thousands, for the 3 months ended March 31										2014
	Prairie Mining			Mountain Mining			Royalties			Total
Revenue	$	110,528		$	81,794		$	10,879		$	203,201
Cost of sales	98,535			82,979			147			181,661
Gross profit (loss)	11,993			(1,185		)	10,732			21,540
Administrative expenses	2,932			134			2,724			5,790
Gain on contract termination	—			—			—			—
Impairment loss	—			—			—			—
Operating (loss) profit	9,061			(1,319		)	8,008			15,750
Financing income	(3,712		)	—			(10		)	(3,722		)
Financing expense	12,326			9,923			—			22,249
Net finance expense (income)	8,614			9,923			(10		)	18,527
(Loss) earnings before tax	447			(11,242		)	8,018			(2,777		)
Income tax (recovery) expense	2,160			—			—			2,160
Net (loss) earnings	$	(1,713	)	$	(11,242	)	$	8,018		$	(4,937	)
Supplemental information
Depreciation and amortization	$	13,167		$	12,414		$	2,724		$	28,305
Property, plant and equipment expenditures	10,733			6,427			—			17,160
Canadian $ thousands, as at March 31, 2014
Non-current assets	432,534			193,484			414,541			1,040,559
Total assets	$	859,514		$	260,186		$	418,966		$	1,538,666

-20-

Prairie Mines & Royalty Ltd. and Coal Valley Resources Inc.

NOTES TO THE INTERIM CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
For the 3 months ended March 31, 2014

(Unaudited)

Canadian $ thousands, for the 3 months ended March 31										2013
	Prairie Mining			Mountain Mining			Royalties			Total
Revenue	$	112,197		$	56,381		$	10,760		$	179,338
Cost of sales	100,096			64,809			452			165,357
Gross profit (loss)	12,101			(8,428		)	10,308			13,981
Administrative expenses	(2,239		)	1,764			3,892			3,417
Other	(39,313		)	—			5,446			(33,867		)
Operating profit (loss)	53,653			(10,192		)	970			44,431
Financing income	(3,921		)	—			(9		)	(3,930		)
Financing expense	10,284			9,992			—			20,276
Net finance expense (income)	6,363			9,992			(9		)	16,346
Earnings (loss) before tax	47,290			(20,184		)	979			28,085
Income tax expense (recovery)	12,756			(5,378		)	—			7,378
Net earnings (loss)	$	34,534		$	(14,806	)	$	979		$	20,707
Supplemental information
Depreciation and amortization	$	11,471		$	9,655		$	3,892		$	25,018
Property, plant and equipment expenditures	8,492			4,654			—			13,146
Canadian $ thousands, as at December 31, 2013
Non-current assets	436,307			196,577			417,265			1,050,149
Total assets	$	855,214		$	269,349		$	422,522		$	1,547,085

Geographic segments

The Company earns revenue from several geographic regions as follows:

Canadian $ thousands, for the 3 months ended March 31	2014		2013
Canada	$	119,115	$	118,596
Asia	59,643		39,436
United States	6,085		6,154
Other foreign countries	18,358		15,152
	$	203,201	$	179,338

-21-

Prairie Mines & Royalty Ltd. and Coal Valley Resources Inc.

NOTES TO THE INTERIM CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
For the 3 months ended March 31, 2014

(Unaudited)

Significant customers

The Company earns the majority of its coal and royalty revenue from a small number of customers from each segment as follows:

Canadian $ thousands, for the 3 months ended March 31	2014		2013
Prairie Mining segment
Revenue	$	112,845	$	108,368
Number of major customers	3		4
Mountain Mining segment
Revenue	$	51,959	$	52,092
Number of major customers	3		3

16. COST OF SALES

Cost of sales includes the following select information:

Canadian $ thousands, for the 3 months ended March 31	2014			2013
Employee costs	$	46,729		$	53,627
Depreciation and amortization on property, plant and equipment and intangible assets	28,134			24,868
Gain on environmental rehabilitation obligations	(1,020		)	(1,433		)

-22-

Prairie Mines & Royalty Ltd. and Coal Valley Resources Inc.

NOTES TO THE INTERIM CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
For the 3 months ended March 31, 2014

(Unaudited)

17. NET FINANCE EXPENSE

Canadian $ thousands, for the 3 months ended March 31	2014			2013
Interest income on loans and finance lease receivables	$	(3,012	)	$	(3,901	)
Interest income on cash and cash equivalents	(710		)	(29		)
Total financing income	(3,722		)	(3,930		)
Interest expense on Sherritt promissory note	7,333			7,213
Interest expense on subordinated note	7,558			7,518
Interest expense on finance lease obligations and other equipment financing arrangements	1,719			1,914
Interest expense on Sherritt loan payable	445			445
Accretion expense on environmental rehabilitation obligations	722			643
Interest expense on loans and borrowings	2,720			1,790
Other finance charges	488			216
Foreign exchange loss	1,264			537
Total financing expense	22,249			20,276
Net finance expense	$	18,527		$	16,346

18. NET CHANGE IN NON-CASH WORKING CAPITAL ITEMS

Canadian $ thousands, for the 3 months ended March 31	2014			2013
Trade accounts receivable	$	566		$	(4,689	)
Inventories	5,258			(12,706		)
Prepaid expenses	1,029			(957		)
Due from related parties	(538		)	(144		)
Trade accounts payable and accrued charges	125			11,661
Due to related parties	(400		)	1,691
	$	6,040		$	(5,144	)

-23-

Prairie Mines & Royalty Ltd. and Coal Valley Resources Inc.

NOTES TO THE INTERIM CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
For the 3 months ended March 31, 2014

(Unaudited)

19. INTEREST IN JOINT VENTURE

PMRL has a contractual arrangement with another company for the production and sale of activated carbon to coal fired utility plants in Canada and the United States. PMRL acts as operator for the plant facilities and the other venturer conducts marketing activities.

PMRL accounts for its 50% interest in the Venture using proportionate consolidation. The following is a summary of PMRL’s proportionate interest in the Venture which has a December 31 reporting date:

Canadian $ thousands,	March 31, 2014			December 31, 2013
Current assets	$	5,185		$	5,038
Non-current assets	32,426			32,747
Current liabilities	(1,234		)	(785		)
Non-current liabilities	(719		)	(650		)
Net assets	$	35,658		$	36,350
Canadian $ thousands, for the 3 months ended March 31	2,014			2,013
Revenue	$	3,909		$	3,589
Expenses	2,514			2,137
Net earnings	$	1,395		$	1,452

20. FINANCIAL RISK AND CAPITAL RISK MANAGEMENT

Risk management policies and hedging activities

The Company is sensitive to changes in commodity prices, foreign-exchange and interest rates. The Company’s Management Committee has overall responsibility for the establishment and oversight of the Company’s risk management framework. Although the Company has the ability to address its price-related exposures through the use of options, futures and forward contacts, it does not generally enter into such arrangements.

Credit risk

The Company’s sale of coal, activated carbon and char exposes it to the risk of non-payment by customers. The Company manages this risk by monitoring the credit worthiness of its customers, covering some exposure through receivables insurance, documentary credit and seeking pre-payment or other forms of payment security from customers with an unacceptable level of credit risk. Although the Company seeks to manage its credit risk exposure, there can be no assurance that it will be successful in eliminating all potential material adverse impacts of such risks.

-24-

Prairie Mines & Royalty Ltd. and Coal Valley Resources Inc.

NOTES TO THE INTERIM CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
For the 3 months ended March 31, 2014

(Unaudited)

Liquidity risk

Liquidity risk arises from financial obligations of the Company and in the management of its assets, liabilities and capital structure. The Company manages this risk by regularly evaluating its liquid financial resources to fund current and long-term obligations and to meet its capital commitments in a cost-effective manner. The main factors that affect liquidity include realized sales prices, production levels, cash production costs, working capital requirements, capital-expenditure requirements, scheduled repayments of loans and borrowings, credit capacity and debt and equity capital market conditions. The Company’s liquidity requirements are met through a variety of sources, including cash and cash equivalents, cash generated from operations, existing credit facilities, leases, and debt and equity capital markets.

Based on management’s assessment of its financial position and liquidity at March 31, 2014 management believes the Company will be able to satisfy its current and long-term obligations as they come due.

Financial obligation maturity analysis

The Company’s significant contractual commitments, obligations, and interest and principal repayments on its financial liabilities are as follows:

Canadian $ thousands, as at March 31, 2014	Total		Falling due within 1 year		Falling due between 1-2 years		Falling due between 2-3 years		Falling due between 3-4 years		Falling due between 4-5 years		Falling due more than 5 years
Loans and borrowings	$	300,671	$	300,671	$	—	$	—	$	—	$	—	$	—
Trade accounts payable and accrued charges	90,530		90,530		—		—		—		—		—
Finance lease obligations	145,395		44,152		41,198		34,732		24,101		1,212		—
Pension obligations	15,794		2,623		2,654		2,333		1,372		1,036		5,776
Other equipment financing	5,444		1,966		1,700		1,034		637		107		—
Operating leases	11,104		3,188		491		909		909		909		4,698
Environmental rehabilitation obligations (1)	209,554		19,671		25,719		26,533		18,944		19,302		99,385
Related party loans	732,094		732,094		—		—		—		—		—
Total	$	1,510,586	$	1,194,895	$	71,762	$	65,541	$	45,963	$	22,566	$	109,859

(1) Environmental rehabilitation obligations are undiscounted.

Market risk

Market risk is the potential for financial loss from adverse changes in underlying market factors, including interest rates and foreign-exchange rates.

-25-

Prairie Mines & Royalty Ltd. and Coal Valley Resources Inc.

NOTES TO THE INTERIM CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
For the 3 months ended March 31, 2014

(Unaudited)

Foreign-exchange risk

The Company is exposed to foreign exchange fluctuations on its United States dollar denominated thermal export coal sales and certain finance lease obligations. Fluctuations in the CDN/US exchange rate could materially affect the Company’s net earnings. The Company does not currently use derivative instruments to mitigate these currency risks. Based on revenue denominated in U.S. dollars, a strengthening or weakening of $0.01 in the Canadian dollar to the US dollar, with all other variables held constant, would have a $66 unfavorable or favorable impact, respectively, on net earnings. A change in foreign exchange on United States dollar denominated finance lease obligation payments would not materially increase borrowing costs.

Interest rate risk

The Company is exposed to interest rate risk based on its outstanding loans and borrowings and short-term and other investments. A change in interest rates could increase borrowing costs and investment income. Fluctuations in interest rates would not materially affect the Company’s net earnings.

Capital risk management

The Company’s objectives, when managing capital, are to maintain financial liquidity in order to preserve its ability to satisfy financial obligations as they come due and deploy capital to maintain and grow the business.

The Company’s financial strategy is designed to maintain a flexible capital structure consistent with the objectives stated above and to respond to business growth opportunities and changes in economic conditions. In order to maintain or adjust its capital structure, the Company may issue new common shares, repay outstanding debt, issue new debt, refinance existing debt with different characteristics, acquire or dispose of assets, or adjust the amount of cash and short-term investment balances.

The Company is subject to two financial covenants on the credit facility based on the combined financial position of PMRL and CVRI as follows: EBITDA-to-interest expense ratio of not less than 4:1 and total debt-to-EBITDA ratio of no more than 3:1. The Company monitors these covenants on a quarterly basis and is in compliance with them as at and for the 3 months ended March 31, 2014. The Company is also subject to minimum capital requirements as part of its environmental reclamation bonding program with the Alberta provincial government as described in Note 12. Other than these two restrictions, the Company is not subject to any other externally imposed capital requirements.

-26-

Prairie Mines & Royalty Ltd. and Coal Valley Resources Inc.

NOTES TO THE INTERIM CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
For the 3 months ended March 31, 2014

(Unaudited)

In the definition of capital, which has not changed from the prior year, the Company includes shareholders’ equity, current and non-current loans and borrowings, related party loans and undrawn credit facilities.

Canadian $ thousands, as at	March 31, 2014			December 31, 2013
Shareholder's equity	$	(27,578	)	$	(23,181	)
Loans and borrowings	299,930			299,657
Undrawn senior credit facility agreement	50,000			50,343
Related party loans	732,094			732,094
Undrawn CAT Finance credit facility agreement	52,432			49,210
	$	1,106,878		$	1,108,123

21. FINANCIAL INSTRUMENTS

Financial instrument hierarchy

Financial instruments at fair value through profit or loss have been ranked using a three-level hierarchy that reflects the significance of the inputs used in determining fair value. The following table identifies the hierarchy levels and values:

Canadian $ thousands, as at	Hierarchy level	March 31, 2014		December 31, 2013
Held-for-trading, measured at fair value
Cash equivalents	1	$	59,770	$	113,563
Short-term investments	1	201,545		140,659

The followings assets have been ranked Level 1 since their market value is readily observable:

Cash equivalents

These are liquid Canadian Government treasury bills having original maturity dates of three months or less.

Short-term investments

These are liquid Canadian Government treasury bills having original maturity dates greater than three months and less than one year.

-27-

Prairie Mines & Royalty Ltd. and Coal Valley Resources Inc.

NOTES TO THE INTERIM CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
For the 3 months ended March 31, 2014

(Unaudited)

Fair values

As at March 31, 2014, the carrying amounts of cash and cash equivalents, short-term investments, trade accounts receivable, current portion of loans receivable, current portion of other assets, current portion of finance lease receivables, current portion of other liabilities and trade accounts payable and accrued charges are at fair value or approximate fair value due to their immediate or short terms to maturity.

The fair values of non-current loans and borrowings and other liabilities approximate their carrying amount. The fair value of a financial instrument on initial recognition is normally the transaction price, the fair value of the consideration given or received. The fair values of non-current loans receivable and finance lease receivables are estimated based on discounted cash flows. Due to the use of judgment and uncertainties in the determination of the estimated fair values, these values should not be interpreted as being realizable in the immediate term.

-28-

EX-99.4

Exhibit 99.4

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following unaudited pro forma condensed combined financial information is based on the historical financial statements of Westmoreland Coal Company and Subsidiaries, or Westmoreland, and the combined consolidated historical financial statements of the Prairie Mines & Royalty Ltd. ("PMRL") and Coal Valley Resources Inc. ("CVRI") (collectively referred to as the "Canadian Subsidiaries") and has been prepared to reflect the acquisition of PMRL and CVRI, or the Canadian Acquisition, from Sherritt International, Inc. which was completed on April 28, 2014. They are presented for illustrative purposes only and may not be indicative of the combined company’s financial position or results of operations that would have actually occurred had the Canadian Acquisition been completed at or as of the dates indicated, nor are they indicative of our future operating results or financial position. The data in the unaudited pro forma condensed combined consolidated balance sheet as of March 31, 2014 assume the Canadian Acquisition was completed on that date. The data in the unaudited pro forma condensed combined consolidated statements of operations for the three months ended March 31, 2014 and 2013 assume the Canadian Acquisition was completed as of January 1, 2013.

The unaudited pro forma condensed combined consolidated financial information should be read in conjunction with the other materials filed with this Current Report on Form 8-K.

The Canadian Acquisition has been accounted for as a business combination in accordance with FASB ASC Topic 805. For purposes of these unaudited pro forma condensed combined financial statements, the acquisition price of the Canadian Subsidiaries has been allocated to the tangible assets acquired and liabilities assumed based on a preliminary estimate of those assets and liabilities. The actual amounts recorded upon finalization of the purchase price allocation may differ materially from the information presented in the accompanying unaudited pro forma condensed combined financial statements. Our financial statements issued after the completion of the Canadian Acquisition will reflect such fair values, which may materially differ from the amounts allocated to such tangible and intangible assets and liabilities in the historical financial statements of the Canadian Subsidiaries and will determine a new basis in such assets and liabilities that will be reflected in our accounting. In addition, the Canadian Acquisition will result in an increase in our leverage, leading to an increase in interest expense. As a result, amounts presented in our future consolidated financial statements and footnotes will not be comparable with those of historical periods and with the pro forma financial statements included in this Current Report on Form 8-K.

The combined consolidated financial statements provided to us in respect of the Canadian Subsidiaries (which form the basis of the unaudited pro forma combined financial information) were prepared in accordance with International Financial Reporting Standards, or IFRS, and therefore are not directly comparable to our financial statements which are prepared in accordance with generally accepted accounting principles in the United States or GAAP. Adjustments were made to the Canadian Subsidiaries’ combined consolidated financial statements from IFRS to GAAP by evaluating and documenting the existing differences between IFRS and GAAP. IFRS is a set of accounting principles more focused on objectives and principles and less reliant on detailed rules than GAAP. There are significant and material differences in several key areas between GAAP and IFRS which would affect Westmoreland. Additionally, GAAP provides specific guidance in classes of accounting transactions for which equivalent guidance in IFRS does not exist. Adjustments were also made to convert Canadian dollars to US dollars based on historical exchange rates, which may differ from future exchange rates.

The integration of the businesses we are acquiring in the Canadian Acquisition may not achieve the desired results. The unaudited pro forma condensed combined consolidated statements of operations and the unaudited pro forma condensed combined consolidated balance sheet do not reflect the cost of any integration activities or benefits from the Canadian Acquisition and synergies that may be derived from any integration activities, both of which may have a material effect on the consolidated results of operations in periods following the completion of the Canadian Acquisition.

Once the necessary due diligence has been completed, the final purchase price has been determined and the purchase price adjustments have been completed, actual results may differ materially from the information presented in this unaudited pro forma condensed combined consolidated financial information.

Westmoreland Coal Company

Unaudited Pro Forma Condensed Combined Balance Sheet

As of March 31, 2014

	PMRL and CVRI Historical		Removal of Royalty and Highvale (a)			IFRS to GAAP, Currency Adjustments, and Reclassifications(b)			PMRL and CVRI Adjusted		Westmoreland Historical		Pro forma adjustments related to financing				Pro forma adjustments related to acquisition				Total Pro Forma
	(CAD in thousands)								(USD in thousands)
Assets
Current assets:
Cash and cash equivalents	$	59,770	$	—		$	(6,709	)	$	53,061	$	61,900	$	385,014		(c)	$	(436,237	)	(f)	$	63,738
Receivables:
Trade	70,631		(4,423		)	(8,416		)	57,792		64,715		—				—				122,507
Contractual third party reclamation receivables	—		—			—			—		8,213		—				—				8,213
Other	—		—			—			—		1,375		—				—				1,375
	70,631		(4,423		)	(8,416		)	57,792		74,303		—				—				132,095
Inventories	143,491		—			(22,195		)	121,296		35,447		—				25,000			(g)	181,743
Restricted investments and bond collateral	—		—			—			—		16,900		(16,900		)	(c)	—				—
Lease receivables	19,848		—			(8,166		)	11,682		—		—				—				11,682
Deferred tax assets	—		—			5,219			5,219		—		—				1,807			(g)	7,026
Other current assets	204,267		(3		)	(21,092		)	183,172		16,643		—				(182,344		)	(g)	17,471
Total current assets	498,007		(4,426		)	(61,359		)	432,222		205,193		368,114				(591,774		)		413,755
Property, plant and equipment:
Land and mineral rights	—		—			—			—		278,198		—				249,829			(g)	528,027
Plant and equipment	1,391,668		—			75,860			1,467,528		673,189		—				(1,353,161		)	(g)	787,556
	1,391,668		—			75,860			1,467,528		951,387		—				(1,103,332		)		1,315,583
Less accumulated depreciation, depletion and amortization	1,048,342		—			(27,843		)	1,020,499		461,754		—				(1,020,499		)	(g)	461,754
Net property, plant and equipment	343,326		—			103,703			447,029		489,633		—				(82,833		)		853,829
Advanced coal royalty	—		—			—			—		7,263		—				—				7,263
Reclamation deposits	—		—			—			—		75,315		—				—				75,315
Restricted investments and bond collateral	—		—			—			—		523,483		(467,319		)	(c)	48,085			(f)	104,249
Contractual third party reclamation receivables	—		—			—			—		88,036		—				—				88,036
Intangible assets	557,533		(557,533		)	—			—		1,099		—				—				1,099
Lease receivables	127,322		—			(43,428		)	83,894		—		—				—				83,894
Other assets	12,378		—			32,692			45,070		17,125		5,511			(d)	(37,266		)	(g)	30,440
Total Assets	$	1,538,566	$	(561,959	)	$	31,608		$	1,008,215	$	1,407,147	$	(93,694	)		$	(663,788	)		$	1,657,880

Westmoreland Coal Company

Unaudited Pro Forma Condensed Combined Balanced Sheet (Continued)

As of March 31, 2014

	PMRL and CVRI Historical			Removal of Royalty and Highvale (a)			IFRS to GAAP, Currency Adjustments, and Reclassifications(b)			PMRL and CVRI Adjusted			Westmoreland Historical			Pro forma adjustments related to financing				Pro forma adjustments related to acquisition				Total Pro Forma
	(CAD in thousands)									(USD in thousands)
Liabilities and Shareholders' Deficit
Current liabilities:
Current installments of long-term debt	$	299,930		$	—		$	9,434		$	309,364		$	48,586		$	(18,000	)	(e)	$	(271,356	)	(g)	$	68,594
Trade payables	90,530			(516		)	(9,701		)	80,313			62,598			—				—				142,911
Production taxes	—			—			—			—			46,794			—				—				46,794
Workers' compensation	—			—			—			—			712			—				—				712
Postretirement medical benefits	—			—			—			—			13,955			—				—				13,955
SERP	—			—			—			—			390			—				—				390
Deferred revenue	—			—			—			—			16,034			—				—				16,034
Asset retirement obligation	19,355			—			(1,844		)	17,511			22,227			—				10,635			(g)	50,373
Other current liabilities	51,700			(40		)	(42,930		)	8,730			24,390			—				(15,233		)	(g)	17,887
Preferred shares note	732,094			—			(732,094		)	—			—			—				—				—
Total current liabilities	1,193,609			(556		)	(777,135		)	415,918			235,686			(18,000		)		(275,954		)		357,650
Long-term debt, less current installments				—			91,470			91,470			751,645			(63,000		)	(e)	—				780,115
Workers' compensation, less current portion	—			—			—			—			6,680			—				—				6,680
Excess of black lung benefit obligation over trust assets	—			—			—			—			9,376			—				—				9,376
Post retirement medical benefits, less current portion	—			—			—			—			271,275			—				—				271,275
Pension and SERP benefits, less current portion	—			—			—			—			23,524			—				—				23,524
Deferred revenue, less current portion	—			—			—			—			43,299			—				—				43,299
Asset retirement obligation, less current portion	151,911			—			(8,365		)	143,546			259,036			—				(48,566		)	(g)	354,016
Intangible liabilities	—			—			—			—			5,339			—				—				5,339
Deferred tax liabilities	121,338			(104,547		)	2,712			19,503			—			—				4,310			(g)	23,813
Other liabilities	99,286			(656		)	(101,064		)	(2,434		)	7,503			—				2,434			(g)	7,503
Total Liabilities	1,566,144			(105,759		)	(792,382		)	668,003			1,613,363			(81,000		)		(317,776		)		1,882,590
Shareholders' deficit:
Preferred Stock	—			—			—			—			121			—				—				121
Common Stock	708,460			—			(24,550		)	683,910			37,155			—				(683,910		)		37,155
Other Paid in Capital	2,028			—			(1,935		)	93			134,952			—				(93		)		134,952
Accumulated other comprehensive loss	804			—			25,842			26,646			(63,369		)	—				(26,646		)		(63,369		)
Accumulated earnings (deficit)	(738,870		)	(456,200		)	824,633			(370,437		)	(315,075		)	(12,694		)		364,637				(333,569		)
Total shareholders' deficit	(27,578		)	(456,200		)	823,990			340,212			(206,216		)	(12,694		)		(346,012		)		(224,710		)
Noncontrolling interest	—			—			—			—			—			—				—				—
Total equity (deficit)	(27,578		)	(456,200		)	823,990			340,212			(206,216		)	(12,694		)		(346,012		)		(224,710		)
Total Liabilities and Shareholders' Deficit	$	1,538,566		$	(561,959	)	$	31,608		$	1,008,215		$	1,407,147		$	(93,694	)		$	(663,788	)		$	1,657,880

See Notes to Unaudited Pro Forma Condensed Combined Financial Statements

Westmoreland Coal Company

Unaudited Pro Forma Condensed Combined Statement of Operations

Three months ended March 31, 2014

	PMRL/CVRI Historical			Removal of Royalty and Highvale (a)			IFRS to GAAP, Currency Adjustments, and Reclassifications (b)			PMRL and CVRI Adjusted			Westmoreland Historical			Pro forma adjustments related to financing				Pro forma adjustments related to acquisition				Total Pro Forma
	(CAD in thousands)									(USD in thousands)
Revenues	$	203,201		$	(10,879	)	$	(18,907	)	$	173,415		$	180,202		$	—			$	—			$	353,617
Costs and expenses:
Cost of sales	153,527			(147		)	(18,542		)	134,838			138,630			—				2,299			(i)	275,767
Depreciation, depletion, and amortization	28,134			(2,724		)	(1,880		)	23,530			16,059			—				(18,677		)	(j)	20,912
Income from equity affiliates	—			—			(1,265		)	(1,265		)	—			—				—				(1,265		)
Selling and administrative	5,790			—			(590		)	5,200			13,331			—				—				18,531
Heritage health benefits	—			—			—			—			3,544			—				—				3,544
Loss (gain) on sales of assets	—			—			(56		)	(56		)	38			—				—				(18		)
Restructuring charges	—			—			—			—			397			—				—				397
Other operating income	—			—			—			—			150			—				—				150
	187,451			(2,871		)	(22,333		)	162,247			172,149			—				(16,378		)		318,018
	15,750			(8,008		)	3,426			11,168			8,053			—				16,378				35,599
Other income (expense):
Interest expense	(6,913		)	—			1,187			(5,726		)	(20,798		)	(9,143		)	(h)	—				(35,667		)
Interest income	3,722			(11		)	(1,506		)	2,205			302			—				—				2,507
Loss on foreign exchange	—			—			—			—			(6,790		)	—				—				(6,790		)
Other income	(15,336		)	—			15,336			—			93			—				—				93
	(18,527		)	(11		)	15,017			(3,521		)	(27,193		)	(9,143		)		—				(39,857		)
Income (loss) before income taxes	(2,777		)	(8,019		)	18,443			7,647			(19,140		)	(9,143		)		16,378				(4,258		)
Income tax expense (benefit)	2,160			(2,022		)	2,607			2,745			(110		)	—				1,108			(k)	3,743
Net income (loss)	(4,937		)	(5,997		)	15,836			4,902			(19,030		)	(9,143		)		15,270				(8,001		)
Less: net loss attributable to noncontrolling interests	—			—			—			—			—			—				—				—
Net income (loss) attributable to Parent company	(4,937		)	(5,997		)	15,836			4,902			(19,030		)	(9,143		)		15,270				(8,001		)
Less: preferred stock dividend requirements	—			—			—			—			261			—				—				261
Net income (loss) per share applicable to Common shareholders	$	(4,937	)	$	(5,997	)	$	15,836		$	4,902		$	(19,291	)	$	(9,143	)		$	15,270			$	(8,262	)
EBITDA RECONCILIATION
Net income (loss)										$	4,902		$	(19,030	)									$	(8,001	)
Income tax expense (benefit)										2,745			(110		)									3,743
Other loss (income)										—			(93		)									(93		)
Interest income										(2,205		)	(302		)									(2,507		)
Loss on foreign exchange										—			6,790											6,790
Interest expense										5,726			20,798											35,667
Depreciation, depletion and amortization										23,530			16,059											20,912
Accretion of ARO and receivable										1,426			3,479											7,204
Amortization of intangible assets and liabilities										—			153											153
EBITDA										36,124			27,744											63,868
Customer payments received treated as lease receivables under GAAP										4,971			—											4,971
Restructuring expenses										—			397											397
(Gain)/loss on sale of assets and other adjustments										1,963			38											2,001
Share-based compensation										82			728											810
Adjusted EBITDA										$	43,140		$	28,907										$	72,047

Westmoreland Coal Company

Unaudited Pro Forma Condensed Combined Statement of Operations

Three months ended March 31, 2013

	PMRL/CVRI Historical			Removal of Royalty and Highvale (a)			IFRS to GAAP, Currency Adjustments, and Reclassifications (b)			PMRL and CVRI Adjusted			Westmoreland Historical			Pro forma adjustments related to financing				Pro forma adjustments related to acquisition				Total Pro Forma
	(CAD in thousands)									(USD in thousands)
Revenues	$	179,338		$	(23,176	)	$	(1,837	)	$	154,325		$	161,448		$	—			$	—			$	315,773
Costs and expenses:
Cost of sales	140,489			(11,036		)	3,434			132,887			130,421			—				1,628			(i)	264,936
Depreciation, depletion, and amortization	24,868			(3,902		)	1,314			22,280			14,426			—				(17,427		)	(j)	19,279
Income from equity affiliates	—			—			(1,439		)	(1,439		)	—			—				—				(1,439		)
Selling and administrative	3,417			2,161			503			6,081			11,887			—				—				17,968
Heritage health benefits	—			—			—			—			3,951			—				—				3,951
Loss (gain) on sales of assets	—			—			2,719			2,719			(234		)	—				—				2,485
Impairment loss	—			11,848			(11,848		)	—			—			—				—				—
Other operating income	(33,867		)	34,176			(3		)	306			(4,737		)	—				—				(4,431		)
	134,907			33,247			(5,320		)	162,834			155,714			—				(15,799		)		302,749
	44,431			(56,423		)	3,483			(8,509		)	5,734			—				15,799				13,024
Other income (expense):
Interest expense	(5,100		)	61			3,361			(1,678		)	(10,160		)	(8,761		)	(h)	—				(20,599		)
Interest income	3,930			(279		)	(1,402		)	2,249			297			—				—				2,546
Other income	(15,176		)	—			15,176			—			70			—				—				70
	(16,346		)	(218		)	17,135			571			(9,793		)	(8,761		)		—				(17,983		)
Income (loss) before income taxes	28,085			(56,641		)	20,618			(7,938		)	(4,059		)	(8,761		)		15,799				(4,959		)
Income tax expense (benefit)	7,378			(13,896		)	72			(6,446		)	28			—				7,785			(k)	1,367
Net income (loss)	20,707			(42,745		)	20,546			(1,492		)	(4,087		)	(8,761		)		8,014				(6,326		)
Less: net loss attributable to noncontrolling interests	—			—			—			—			(1,702		)	—				—				(1,702		)
Net income (loss) attributable to Parent company	20,707			(42,745		)	20,546			(1,492		)	(2,385		)	(8,761		)		8,014				(4,624		)
Less: preferred stock dividend requirements	—			—			—			—			340			—				—				340
Net income (loss) per share applicable to Common shareholders	$	20,707		$	(42,745	)	$	20,546		$	(1,492	)	$	(2,725	)	$	(8,761	)		$	8,014			$	(4,964	)
EBITDA RECONCILIATION
Net loss										$	(1,492	)	$	(4,087	)									$	(6,326	)
Income tax expense (benefit)										(6,446		)	28											1,367
Other loss (income)										—			(70		)									(70		)
Interest income										(2,249		)	(297		)									(2,546		)
Interest expense										1,678			10,160											20,599
Depreciation, depletion and amortization										22,280			14,426											19,279
Accretion of ARO and receivable										1,758			3,180											6,566
Amortization of intangible assets and liabilities										—			164											164
EBITDA										15,529			23,504											39,033
Customer payments received treated as lease receivables under GAAP										5,879			—											5,879
(Gain)/loss on sale of assets and other adjustments										6,422			(234		)									6,188
Share-based compensation										100			2,386											2,486
Adjusted EBITDA										$	27,930		$	25,656										$	53,586

Westmoreland Coal Company and Subsidiaries

Notes to Unaudited Pro Forma Condensed Combined Financial Statements

Note 1. Basis of Presentation

The unaudited pro forma condensed combined financial information presented are based on the historical financial statements of Westmoreland Coal Company and the combined consolidated financial statements of the Canadian Subsidiaries and have been prepared to reflect the Canadian Acquisition. They are presented for illustrative purposes only and may not be indicative of the combined company’s financial position or results of operations that would have actually occurred had the Canadian Acquisition been completed at or as of the dates indicated, nor are they indicative of our future operating results or financial position. The data in the unaudited pro forma condensed combined consolidated balance sheet as of March 31, 2014 assume the Canadian Acquisition was completed on that date. The data in the unaudited pro forma condensed combined consolidated statements of operations for the three months ended March 31, 2014 and 2013 assume the Canadian Acquisition was completed as of January 1, 2013.

Pro forma adjustments reflected in the unaudited pro forma condensed combined consolidated balance sheet are based on items that are directly attributable to the proposed Canadian Acquisition and factually supportable. Pro forma adjustments reflected in the unaudited pro forma condensed combined consolidated statements of operations are based on items directly attributable to the Canadian Acquisition, factually supportable and expected to have a continuing impact on Westmoreland.

The combined consolidated financial statements provided to us in respect of the Canadian Subsidiaries (which form the basis of the unaudited pro forma combined financial information regarding the Canadian Subsidiaries presented herein) were prepared in accordance with IFRS, and therefore are not directly comparable to our financial statements which are prepared in accordance with GAAP. IFRS is a set of accounting principles more focused on objectives and principles and less reliant on detailed rules than GAAP. There are significant and material differences in several key areas between GAAP and IFRS which would affect Westmoreland. Additionally, GAAP provides specific guidance in classes of accounting transactions for which equivalent guidance in IFRS does not exist. Adjustments were made to the Canadian Subsidiaries’ financial statements from IFRS to GAAP by evaluating and documenting the existing differences between IFRS and GAAP. Adjustments were also made to convert Canadian dollars to US dollars based on historical exchange rates, which may differ from future exchange rates.

At this time, Westmoreland has not completed a detailed valuation analysis to determine the fair values of the Canadian Subsidiaries’ assets and liabilities and accordingly, the unaudited pro forma condensed combined consolidated financial statements include a preliminary allocation of the purchase price based on assumptions and estimates which, while considered reasonable under the circumstances, are subject to changes, which may be material. Additionally, Westmoreland has not completed the due diligence necessary to identify items that could significantly impact the purchase price allocation or the assumptions and adjustments made in preparation of these unaudited pro forma condensed combined consolidated financial statements.

Upon completion of a detailed valuation analysis, there may be additional increases or decreases to the recorded book values of the Canadian Subsidiaries’ assets and liabilities, including, but not limited to, mineral reserves, property and equipment, asset retirement obligations, leases and loans receivable, capital lease obligations, coal supply agreements and other intangible assets that will give rise to future amounts of depletion, depreciation and amortization expenses or credits; or interest income and expense; that are not reflected in this unaudited pro forma condensed combined consolidated financial information. Accordingly, once the necessary due diligence is completed, the final purchase price is determined and the purchase price allocation is completed, actual results may differ materially from the information presented in this unaudited pro forma condensed combined consolidated financial information. Additionally, the unaudited pro forma condensed combined balance sheet and the unaudited pro forma condensed combined statements of operations and do not reflect the cost of any integration activities or benefits from the Canadian Acquisition and synergies that may be derived from any integration activities, both of which may have a material impact on the consolidated results of operations in periods following the completion of the Canadian Acquisition.

Certain amounts in the Canadian Subsidiaries’ combined consolidated balance sheet and statements of operations have been reclassified to conform to the Westmoreland presentation.

Note 2. Preliminary Purchase Price

The preliminary purchase price of approximately $452.3 million was made up of $322.8 million of cash consideration and the assumption of an estimated $129.5 million of capital leases, which includes certain adjustments provided for in the Arrangement Agreement, relating to, among other things, working capital, indebtedness, pension plan funding and coal inventory.

Note 3. Pro forma adjustments

(a) Reflects the removal of the Highvale Mine and Royalty Ltd. from the historical financial statements of the historical PMRL and CVRI. The Highvale contract mining operation was terminated in January 2013. The royalty business was transferred to another party concurrently with the closing of the Canadian Acquisition.

(b) Reflects adjustments for IFRS to GAAP conversion, currency adjustments from Canadian dollars to US dollars based on historical exchange rates, and certain reclassifications to conform to the presentation of Westmoreland’s financial statements. IFRS to GAAP adjustments include the removal of approximately $6.7 million of deferred stripping costs from the balance sheet and related adjustments to the statements of operations. Additionally, certain equipment in the amount of $83..0 million has been reclassified from Leases and loans receivables to Property, plant and equipment; with resulting adjustments to the income statement. Reclassifications involved the movement of capital lease obligations of approximately $38.0 million from Other current liabilities to Current installments of long-term debt and approximately $91.5 million from Other liabilities to Long-term debt, less current installments. See Appendix A for further detailed breakdown of the components of this column related to the Balance Sheet and Statement of Operations as of and for the three months ended March 31, 2014. See Appendix B for further detailed breakdown of the components of this column related to the Statement of Operations for the three months ended March 31, 2013.

Also, intercompany debt of approximately $732 million has been removed from the balance sheet and related financing costs from the statements of operations. The intercompany debt of $732 million was settled through a series of transactions and equity transfers within Sherritt prior to Westmoreland Coal Company’s acquisition of the Canadian Subsidiaries. As a result, Westmoreland Coal Company did not have any cash flows related to the settlement of the intercompany debt.

(c) Reflects the following pro forma adjustments to financing:

Amounts released from Restricted investments and bond collateral at closing of the acquisition:
Proceeds for the issuance of the 10.75% Senior Secured Notes, net of commitment fees	$	454,219
WML Debt reserve release	13,100
	467,319
Senior Notes escrow release	16,900
Cash outflows:
Make-whole fees for the early extinguishment of the term debt issued by Westmoreland Mining, LLC, or WML, referred to herein as the WML Notes	(11,487		)
Repayment of principal on the WML Notes	(81,000		)
Debt issuance costs	(6,718		)
	$	385,014

(d) Reflects debt issuance costs of $6.7 million from issuing the 10.75% Senior Secured Notes and the write off of $1.2 million of unamortized debt issuance costs for the early extinguishment of the WML Notes.

(e) Reflects a reduction for the repayment of the current portion of the WML Notes of $18.0 million and the noncurrent portion of the WML Notes of $63.0 million.

(f) Reflects the following pro forma adjustments to cash flows related to the acquisition (in thousands):

Initial payment for Canadian Subsidiaries	$	282,788
Estimated payment for Canadian Subsidiaries for working capital adjustment	40,000
	322,788
Settlement of foreign currency derivative related to initial payment for the Canadian Subsidiaries	6,503
Other acquisition costs	5,800
Bonding related to the environmental requirements in connection with the Canadian Acquisition	48,085
Elimination of PMRL and CVRI cash and cash equivalents at March 31, 2014	53,061
	$	436,237

(g) Reflects adjustments to record amounts at estimated fair value. Management has used certain estimates and assumptions in estimating fair value, however, a detailed analysis has not been completed on the individual assets and liabilities of the Canadian Subsidiaries and actual results may differ materially from these estimates.

The detailed estimated preliminary purchase price allocation is as follows (in thousands):

Cash to be paid	$	322,788
Assumption of capital leases obligations	129,478
	$	452,266
Allocation:
Trade receivables	$	57,792
Inventories	146,296
Leases and loans receivable	95,576
Land and mineral reserves	249,829
Property, plant and equipment	114,367
Other assets	8,632
Deferred tax assets	7,026
Less assumption of other liabilities:
Asset retirement obligations	(123,126		)
Trade payables	(80,313		)
Deferred tax liabilities	(23,813		)
	$	452,266

The pro forma adjustments to the unaudited pro forma condensed combined statement of operations are of a recurring nature and follow:

(h) Reflects the interest expense of the 10.75% Senior Secured Notes. Also includes amortization of debt issuance costs (11.7% assumed effective interest rate) related to the debt obtained for the Canadian Acquisition and amortization of debt premium (9.2% assumed effective interest rate).

(i) Reflects the adjustment to the accretion expense of the asset retirement obligations as a result of adjustments to record these items at fair market value.

(j) Reflects the adjustment to depreciation, depletion and amortization expense of the land and mineral rights and plant and equipment as a result of adjustments to record these items at fair market value.

(k) Reflects the income tax effect of the pro forma adjustments based on a 34% statutory rate for Westmoreland Coal Company and an estimated Canadian statutory rate of 26% for PMRL and CVRI. Adjustments have been made under the assumption that Westmoreland Coal Company and CVRI have full valuation allowances recorded against their net deferred tax assets.

Appendix A

Pro Forma Balance Sheet Adjustments

As of March 31, 2014

(In thousands)

	IFRS to US GAAP																					Currency			Reclassifications
	Pushdown		Inventory			ARO			Pension		Equity Method			Lease Receivable			Deferred Taxes		IFRS to US GAAP															Reclassifi- cations
	(1)		(2)			(3)			(4)		(5)			(6)			(7)		Subtotal			(8)			(9)		(10)		(11)		(12)			Subtotal			Total
Assets
Current assets:
Cash and cash equivalents	$	—	$	—		$	—		$	—	$	(1,122	)	$	—		$	—	$	(1,122	)	$	(5,587	)	$	—	$	—	$	—	$	—		$	—		$	(6,709	)
Current - Trade Receivables	—		—			—			—		(2,320		)	—			—		(2,320		)	(6,096		)	—		—		—		—			—			(8,416		)
Inventories	—		(6,703		)	(1,001		)	—		(1,718		)	—			—		(9,422		)	(12,773		)	—		—		—		—			—			(22,195		)
Lease receivables	—		—			—			—		—			(6,936		)	—		(6,936		)	(1,230		)	—		—		—		—			—			(8,166		)
Deferred tax assets	—		—			—			—		—			—			5,769		5,769			(550		)	—		—		—		—			—			5,219
Other current assets	—		—			—			—		(25		)	—			—		(25		)	(19,457		)	—		—		—		(1,610		)	(1,610		)	(21,092		)
Total current assets	—		(6,703		)	(1,001		)	—		(5,185		)	(6,936		)	5,769		(14,056		)	(45,693		)	—		—		—		(1,610		)	(1,610		)	(61,359		)
Property, plant and equipment:
Plant and equipment	—		—			10,811			—		(38,087		)	157,119			—		129,843			(154,531		)	—		—		100,548		—			100,548			75,860
Less accumulated depreciation, depletion and amortization	—		—			11,179			—		(5,661		)	74,097			—		79,615			(107,458		)	—		—		—		—			—			(27,843		)
Net property, plant and equipment	—		—			(368		)	—		(32,426		)	83,022			—		50,228			(47,073		)	—		—		100,548		—			100,548			103,703
Lease receivables	—		—			—			—		—			(77,038		)	—		(77,038		)	(8,834		)	—		—		42,444		—			42,444			(43,428		)
Other assets	—		—			—			—		35,658			—			—		35,658			(4,576		)	—		—		—		1,610			1,610			32,692
Total Assets	$	—	$	(6,703	)	$	(1,369	)	$	—	$	(1,953	)	$	(952	)	$	5,769	$	(5,208	)	$	(106,176	)	$	—	$	—	$	142,992	$	—		$	142,992		$	31,608

Appendix A (continued)

Pro Forma Balance Sheet Adjustments (continued)

As of March 31, 2014

(In thousands)

	IFRS to US GAAP																						Currency			Reclassifications
	Pushdown		Inventory			ARO			Pension			Equity Method			Lease Receivable			Deferred Taxes		IFRS to US GAAP																	Reclassifi- cations
	(1)		(2)			(3)			(4)			(5)			(6)			(7)		Subtotal			(8)			(9)			(10)			(11)		(12)			Subtotal			Total
Liabilities and Shareholders' Deficit
Current liabilities:
Current installments of long-term debt	$	—	$	—		$	—		$	—		$	—		$	—		$	—	$	—		$	(28,574	)	$	—		$	—		$	—	$	38,008		$	38,008		$	9,434
Trade payables	—		—			—			—			(1,234		)	—			—		(1,234		)	(8,467		)	—			—			—		—			—			(9,701		)
Asset retirement obligation	—		—			—			—			—			—			—		—			(1,844		)	(2,575		)	—			—		—			(2,575		)	(4,419		)
Other current liabilities	—		—			—			—			—			—			—		—			(4,922		)	2,575			—			—		(38,008		)	(35,433		)	(40,355		)
Preferred shares note	—		—			—			—			—			—			—		—			(69,745		)	—			(662,349		)	—		—			(662,349		)	(732,094		)
Total current liabilities	—		—			—			—			(1,234		)	—			—		(1,234		)	(113,552		)	—			(662,349		)	—		—			(662,349		)	(777,135		)
Long-term debt, less current installments	—		—			—			—			—			—			—		—			—			—			—			—		91,470			91,470			91,470
Asset retirement obligation, less current portion	—		—			7,469			—			(719		)	—			—		6,750			(15,115		)	—			—			—		—			—			(8,365		)
Deferred tax liabilities	—		—			(1,003		)	—			—			—			5,769		4,766			(2,054		)	—			—			—		—			—			2,712
Other liabilities	—		—			—			(219		)	—			—			—		(219		)	(9,375		)	—			—			—		(91,470		)	(91,470		)	(101,064		)
Total Liabilities	—		—			6,466			(219		)	(1,953		)	—			5,769		10,063			(140,096		)	—			(662,349		)	—		—			(662,349		)	(792,382		)
Shareholders' deficit:
Common Stock	—		—			—			—			—			—			—		—			(24,550		)	—			—			—		—			—			(24,550		)
Other Paid in Capital	—		—			—			—			—			—			—		—			(1,935		)	—			—			—		—			—			(1,935		)
Accumulated other comprehensive loss	—		—			—			247			—			(952		)	—		(705		)	26,547			—			—			—		—			—			25,842
Accumulated earnings (deficit)	—		(6,703		)	(7,835		)	(28		)	—			—			—		(14,566		)	33,858			—			662,349			142,992		—			805,341			824,633
Total shareholders' deficit	—		(6,703		)	(7,835		)	219			—			(952		)	—		(15,271		)	33,920			—			662,349			142,992		—			805,341			823,990
Total Liabilities and Shareholders' Deficit	$	—	$	(6,703	)	$	(1,369	)	$	—		$	(1,953	)	$	(952	)	$	5,769	$	(5,208	)	$	(106,176	)	$	—		$	—		$	142,992	$	—		$	142,992		$	31,608

Appendix A (continued)

Pro Forma Statement of Operations Adjustments

Three months ended March 31, 2014

(In thousands)

	IFRS to US GAAP																						Currency			Reclassifications
	Pushdown		Inventory			ARO			Pension			Equity Method			Lease Receivable			Deferred Taxes		IFRS to US GAAP															Reclassifi- cations
	(1)		(2)			(3)			(4)			(5)			(6)			(7)		Subtotal			(8)			(9)		(10)		(11)		(12)			Subtotal			Total
Revenues	$	—	$	—		$	—		$	—		$	(3,909	)	$	2,946		$	—	$	(963	)	$	(17,944	)	$	—	$	—	$	—	$	—		$	—		$	(18,907	)
Costs and expenses:
Cost of sales	—		(3,535		)	(439		)	—			(2,188		)	—			—		(6,162		)	(13,805		)	—		—		—		1,426			1,426			(18,541		)
Depreciation, depletion, and amortization	—		—			(1,177		)	—			(386		)	1,947			—		384			(2,419		)	—		—		—		155			155			(1,880		)
Income from equity affiliates	—		—			—			—			(1,396		)	—			—		(1,396		)	131			—		—		—		—			—			(1,265		)
Selling and administrative	—		—			—			119			—			—			—		119			(554		)	—		—		—		(155		)	(155		)	(590		)
Loss (gain) on sales of assets	—		—			—			—			—			—			—		—			—			—		—		—		(56		)	(56		)	(56		)
Obed incident response costs	—		—			—			—			—			—			—		—			—			—		—		—		—			—			—
Restructuring charges	—		—			—			—			—			—			—		—			—			—		—		—		—			—			—
Impairment loss	—		—			—			—			—			—			—		—			—			—		—		—		—			—			—
Other operating income	—		—			—			—			—			—			—		—			—			—		—		—		—			—			—
	—		(3,535		)	(1,616		)	119			(3,970		)	1,947			—		(7,055		)	(16,646		)	—		—		—		1,369			1,369			(22,332		)
Operating income (loss)	—		3,535			1,616			(119		)	61			999			—		6,092			(1,297		)	—		—		—		(1,369		)	(1,369		)	3,425
Other income (expense):
Interest expense	—		—			(856		)	—			(61		)	—			—		(917		)	734			—		—		—		1,369			1,369			1,187
Interest income	—		—			—			—			—			(1,276		)	—		(1,276		)	(228		)	—		—		—		—			—			(1,504		)
Other income	15,336		—			—			—			—			—			—		15,336			—			—		—		—		—			—			15,336
	15,336		—			(856		)	—			(61		)	(1,276		)	—		13,143			506			—		—		—		1,369			1,369			15,018
Income (loss) before income taxes	15,336		3,535			760			(119		)	—			(277		)	—		19,235			(791		)	—		—		—		—			—			18,444
Income tax expense (benefit)	2,000		921			134			(91		)	—			(72		)	—		2,891			(284		)	—		—		—		—			—			2,607
Net income (loss)	$	13,336	$	2,614		$	626		$	(28	)	$	—		$	(205	)	$	—	$	16,344		$	(507	)	$	—	$	—	$	—	$	—		$	—		$	15,837

_____________________

(1) Under IFRS, pushdown accounting was not permitted for standalone financial statements, while under US GAAP, pushdown accounting is required when the subsidiary is 100% owned by the parent.

(2) Adjustments to inventories and cost of sales for pit inventories related to the inclusion of stripping costs into inventories under IFRS and exclusion of stripping costs under US GAAP.

(3) Under IFRS, the determination of the present value of the asset retirement obligation (ARO) is adjusted each reporting period to current discount rates, while under US GAAP, changes in discount rates are only applied to changes in estimates.

(4) Under US GAAP, pension benefits expense includes the amortization of actuarial losses and transition obligations resulting in a $0.12 million increase in selling and administrative expense.

(5) Under IFRS, the operations of the Bienfait joint venture are accounted for using proportional consolidation, while under US GAAP, it is accounted for using equity method accounting.

(6) Under IFRS, certain arrangements with customers treat activities as leasing activities, while under US GAAP, these activities are treated as normal operating activities and the related assets are treated as property of the Company.

(7) Under IFRS, deferred tax assets and liabilities are recorded as long term while, under US GAAP they are recorded as current or long term, as appropriate.

(8) Currency adjustments: Balance sheet currency translations were calculated at the March 31, 2014 historical spot rate of 1.1053 for CAD/USD. The Statement of operations was translated at the historical average rate of 1.1035 of CAD/USD.

(9) Obed incident reclamation liabilities of $2.6 million were recorded under current ARO and reclassified to Other current liabilities.

(10) Elimination from Intercompany debt of approximately $662.3 million (CAD732.1 million) since the debt was settled prior to the closing of the Canadian Acquisition.

(11) $100.5 million of Property, plant and equipment and $42.4 million of Lease receivables were reclassed to intangibles under the column "Removal of Royalty and Highvale" related to the impairment recorded by Sherrritt as of December 31, 2013.

(12) This column includes reclassifications to conform to the Company's presentation as follows: (1) $1.6 million of deferred financing costs was reclassified from current to noncurrent, (2) $38.0 million and $91.5 million of current and long-term capital lease obligations, respectively, were reclassified to debt obligations, (3) accretion expense of $1.4 million included in interest expense was reclassified to cost of sales, (4) gain on sale of assets of $0.06 million included in interest expense was reclassified to gain on sale of assets and (5) $0.16 million of depreciation expense recorded in selling and administrative were reclassified to depreciation, depletion and amortization.

Appendix B

Pro Forma Statement of Operations Adjustments

Three months ended March 31, 2013

(In thousands)

	IFRS to US GAAP																					Currency			Reclassifi- cations
	Pushdown			Inventory			ARO			Pension			Equity Method			Lease Receivable			IFRS to US GAAP
	(1)			(2)			(3)			(4)			(5)			(6)			Subtotal			(7)			(8)			Total
Revenues	$	—		$	—		$	—		$	—		$	(3,589	)	$	3,125		$	(464	)	$	(1,374	)	$	—		$	(1,837	)
Costs and expenses:
Cost of sales	2,686			2,271			(305		)	—			(1,809		)	—			2,844			(1,167		)	1,758			3,434
Depreciation, depletion, and amortization	(1,029		)	—			655			—			(364		)	2,100			1,363			(197		)	149			1,314
Income from equity affiliates	—			—			—			—			(1,452		)	—			(1,452		)	13						(1,439		)
Selling and administrative	—			—			—			707			—			—			707			(55		)	(149		)	503
Loss (gain) on sales of assets	—			—			—			—			—			—			—			—			2,719			2,719
Impairment loss	(11,848		)	—			—			—			—			—			(11,848		)	—			—			(11,848		)
Other operating income	—			—			—			—			—			—			—			(3		)				(3		)
	(10,191		)	2,271			350			707			(3,624		)	2,100			(8,387		)	(1,410		)	4,477			(5,320		)
Operating income (loss)	10,191			(2,271		)	(350		)	(707		)	36			1,025			7,924			36			(4,477		)	3,483
Other income (expense):
Interest expense	—			—			(1,135		)	—			(36		)	—			(1,171		)	55			4,477			3,361
Interest income	—			—			—			—			—			(1,382		)	(1,382		)	(20		)	—			(1,402		)
Other income	15,176			—			—			—			—			—			15,176			—			—			15,176
	15,176			—			(1,135		)	—			(36		)	(1,382		)	12,624			35			4,477			17,135
Income (loss) before income taxes	25,367			(2,271		)	(1,485		)	(707		)	—			(357		)	20,547			71			—			20,618
Income tax expense (benefit)	4,630			(592		)	(387		)	(3,544		)	—			(93		)	14			57			—			72
Net income (loss)	$	20,737		$	(1,679	)	$	(1,098	)	$	2,837		$	—		$	(264	)	$	20,533		$	13		$	—		$	20,546

_____________________

(1) Under IFRS, pushdown accounting was not permitted for standalone financial statements, while under US GAAP, pushdown accounting is required when the subsidiary is 100% owned by the parent.

(2) Adjustments to inventories and cost of sales for pit inventories related to the inclusion of stripping costs into inventories under IFRS and exclusion of stripping costs under US GAAP.

(3) Under IFRS, the determination of the present value of the asset retirement obligation (ARO) is adjusted each reporting period to current discount rates, while under US GAAP, changes in discount rates are only applied to changes in estimates.

(4) Under US GAAP, pension benefits expense includes the amortization of actuarial losses and transition obligations resulting in a $0.7 million increase in selling and administrative expense.

(5) Under IFRS, the operations of the Bienfait joint venture are accounted for using proportional consolidation, while under US GAAP, it is accounted for using equity method accounting.

(6) Under IFRS, certain arrangements with customers treat activities as leasing activities, while under US GAAP, these activities are treated as normal operating activities and the related assets are treated as property of the Company.

(7) Currency adjustments: The Statement of operations was translated at the historical average rate of 1.0089 of CAD/USD.

(8) This column includes reclassifications to conform to the Company's presentation as follows: (1) accretion expense of $1.8 million included in interest expense was reclassified to cost of sales, (2) gain on sale of assets of $2.7 million included in interest expense was reclassified to gain on sale of assets and (3) $0.15 million of depreciation expense recorded in selling and administrative were reclassified to depreciation, depletion and amortization.