Montana okays Signal Peak coal lease bid

THREE months after submitting a $US3.6 million bid for a 12 million tonne coal tract, Signal Peak Energy has been named its lease holder by the Montana Land Board.
Montana okays Signal Peak coal lease bid Montana okays Signal Peak coal lease bid Montana okays Signal Peak coal lease bid Montana okays Signal Peak coal lease bid Montana okays Signal Peak coal lease bid

The Signal Peak Bull Mountain mine. Courtesy Signal Peak Energy

Donna Schmidt

According to an Associated Press report, the five-member board voted unanimously to accept the bid for the 640-acre (260 hectare) tract, and the 10-year lease will be used to extend Signal Peak’s Bull Mountain mine.

Signal Peak was the sole bidder in an auction for the block earlier this year. State officials estimate that the royalties and revenues to come from the lease could top $15 million.

The company’s plans were met with a lot of opposition, much of it related to environmental concerns. Unions unsuccessfully sought provisions in the lease to protect the safety of workers.

Company president John DeMichiei told the AP there had been past safety problems that were attributable in part to worker inexperience. However, those conditions had improved and the mine’s rate of violations had dropped.

“There's no mine, surface mine as well as underground, that has a zero violation history,” he said.

The tract neighbors the 300-employee longwall operation near Roundup and is in the path of its growth. It has been leased in addition to federal coal parcels Signal Peak leased earlier this year from the US Bureau of Land Management.

After two federal auctions, the first of which included a failed bid that fell below agency expectations, Signal Peak was successful in leasing 35.5 million tonnes from the BLM in March.

Its $10.65 million bid, equating to 30 cents a recoverable tonne, was accepted in a BLM lease auction after an initial $5.3 million bid in November 2011 was rejected.

Signal Peak and its operating subsidiary, Bull Mountain, are owned by Boich and First Energy as well as the Gunvor Group.

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