But now, with macro factors having become tailwinds instead of headwinds, we can see just how meaningful our work over the last 20 months has been for our company in delivering strong results and creating value for our stakeholders.
In addition, the Chinese government's mandate to keep steel production growth at 0% compared to 2020 has led to drastic cuts in steel production.
As recently reported by the World Steel Association, global pig iron production increased by 3.4% for the first nine months of the year, with China decreasing 1.3%.
Excluding China, the rest of the world's production grew at an impressive rate of 13.9%.
During the third quarter, the Platts PLV, FOB Australia index price experienced a meteoric rise of $191 per metric ton, rising from $198 on July 1 to a high of $389 per metric ton at the end of September.
Likewise, the PLV CFR China indices increased by $295 per metric ton from $309 to a high of $604 per metric ton.
However, the majority of the rapid rise in pricing occurred in the final six weeks of the quarter, during which the PLV FOB Australian indices rose by $162 per metric ton, equivalent to 85% of the total increase for the third quarter.
This also occurred with the PLV CFR China indices rising by $232 per metric ton in the final six weeks, equivalent to 79% of the total increase for the third quarter.
Sales volume in the third quarter was 1.1 million short tons compared to 1.9 million short tons in the same quarter last year.
Our sales by geography in the third quarter were 47% into Europe, 4% into South America and 49% into Asia.
The higher, the normal sales to Asia were primarily driven by Chinese demand that we capitalized upon during the third quarter while capturing 100% of the CFR China index price on the day of the sale.
Production volume in the third quarter of 2021 was 1.1 million short tons compared to 1.9 million short tons in the same quarter of last year.
The tons produced in the third quarter resulted from running both longwalls at Mine 7 plus four continuous mining years.
Mine 4 remained idle during the third quarter.
Our gross price realization for the third quarter of 2021 was 81% of the Platts Premium Low Vol FOB Australian index price, and was lower than the 90% achieved in the prior year period.
Our spot volume in the third quarter was approximately 30% of total volumes and 38% year-to-date.
Our normal expectation of spot volume is approximately 20%.
In contrast, this year, our third quarter results were negatively impacted by the UMWA strike in which we idled Mine 4 and significantly reduced operations at Mine 7.
In the third quarter of 2021, the company recorded its largest net income in over two years on a GAAP basis of approximately $38 million or $0.74 per diluted share compared to a net loss of $14 million or $0.28 per diluted share in the same quarter last year.
Non-GAAP adjusted net income for the third quarter, excluding the nonrecurring business interruption expenses, idle mine expenses and other nonrecurring income was $0.97 per diluted share compared to a loss of $0.28 per diluted share in the same quarter last year.
Adjusted EBITDA was $105 million in the third quarter of 2021, the largest in over two years as compared to $17 million in the same quarter last year.
The quarterly increase was primarily driven by a 108% increase in average net selling prices, partially offset by a 45% decrease in sales volume.
Our adjusted EBITDA margin was 52% in the third quarter this year compared to 9% in the same quarter last year.
Total revenues were approximately $202 million in the third quarter compared to $180 million in the same quarter last year.
This increase was primarily due to the 108% increase in average net selling prices, offset partially by 45% lower sales volume in the third quarter versus the same period last year.
In addition, other revenues were negatively impacted in the third quarter this year by a noncash mark-to-market loss on our gas hedges of approximately $6 million which were entered into earlier this year before hurricane season and gas supply deficits.
The Platts Premium Low Vol FOB Australian Index price averaged $129 per metric ton higher, were up 130% in the third quarter compared to the same quarter last year.
The index price averaged $264 per metric ton for the quarter.
Demurrage and other charges reduced our gross price realization to an average net selling price of $189 per short ton in the third quarter this year compared to $91 per short ton in the same quarter last year.
Cash cost of sales was $91 million or 46% of mining revenues in the third quarter compared to $151 million or 86% of mining revenues in the same quarter last year.
The decrease in total dollars was primarily due to a $68 million impact of lower sales volume, partially offset by $8 million of higher variable costs associated with price-sensitive transportation and royalty costs.
Cash cost of sales per short ton, FOB port, was approximately $86 in the third quarter compared to $78 in the same quarter last year.
Depreciation and depletion expenses for the third quarter of this year were $29 million compared to $28 million in last year's third quarter.
The net increase of $1 million was primarily due to two things.
First, the immediate recognition of $8 million of expense related to Mine 4 depreciation that would have normally been capitalized as inventory as it was produced.
However, since Mine 4 is currently idled, it was instead directly expensed.
Second, these expenses were lower by $7 million due to the 45% decrease in sales volume.
SG&A expenses were about $7 million or 3.7% of total revenues in the third quarter of 2021 and were lower than the same quarter last year, primarily due to lower employee related expenses and lower professional fees.
During the third quarter, we incurred incremental nonrecurring business interruption expenses of $7 million directly related to the ongoing UMWA strike.
As a result of the ongoing UMWA strike that began April 1, we idled Mine 4 in the second quarter.
We incurred $9 million of expenses in the third quarter associated with the idiling of Mine 4 and reduced operations at Mine 7.
Net interest expense was about $9 million in the third quarter includes interest on our outstanding debt, interest on equipment financing leases, plus amortization of our debt issuance costs associated with our credit facilities, partially offset by interest income.
We recorded income tax expense of $5 million during the third quarter of this year compared to a benefit of $8 million in the same quarter last year.
During the third quarter of 2021, we generated $52 million of free cash flow, which resulted from cash flows provided by operating activities was $63 million less cash used for capital expenditures and mine development cost of $11 million.
Free cash flow in the third quarter of this year was negatively impacted by an $18 million increase in net working capital.
Cash used in investing activities for capital expenditures and mine development costs were $11 million during the third quarter of this year compared to $28 million in the same quarter last year.
Cash flows used by financing activities were $51 million in the third quarter of 2021 and consisted primarily of payments on our ABL facility at $40 million, payments for capital leases of $8 million, and the payment of the quarterly dividend of $3 million.
Our total available liquidity at the end of the third quarter was $356 million, representing a 24% increase over the second quarter and consisted of cash and cash equivalents of $268 million and $87 million available under our ABL facility.
This is net of outstanding letters of credit of approximately $9 million.
Our balance sheet has a leverage ratio of 0.6 times adjusted EBITDA.
We believe we are well positioned to fulfill our customer volume commitments for 2021 of approximately 4.9 million to 5.5 million short tons through a combination of existing coal inventory and expected production during the fourth quarter.
If we're able to reach an agreement soon with the union, we believe that we could ramp to a run rate of production of approximately 7.5 million short tons in about three to four months.
If we are unable to reach a contract with the union in the near term, we believe our production and sales volume to be between 5.5 million and 6.5 million short tons.
This could possibly include restarting the Mine 4 longwall as early as January with a small number of crews working on limited shift schedule.
We have recently started in the fourth quarter one continuous mining we did at Mine 4.

Summary:
In contrast, this year, our third quarter results were negatively impacted by the UMWA strike in which we idled Mine 4 and significantly reduced operations at Mine 7.
In the third quarter of 2021, the company recorded its largest net income in over two years on a GAAP basis of approximately $38 million or $0.74 per diluted share compared to a net loss of $14 million or $0.28 per diluted share in the same quarter last year.
Non-GAAP adjusted net income for the third quarter, excluding the nonrecurring business interruption expenses, idle mine expenses and other nonrecurring income was $0.97 per diluted share compared to a loss of $0.28 per diluted share in the same quarter last year.
As a result of the ongoing UMWA strike that began April 1, we idled Mine 4 in the second quarter.
We incurred $9 million of expenses in the third quarter associated with the idiling of Mine 4 and reduced operations at Mine 7.
We believe we are well positioned to fulfill our customer volume commitments for 2021 of approximately 4.9 million to 5.5 million short tons through a combination of existing coal inventory and expected production during the fourth quarter.