Published in the May 2009 Coal USA Magazine

Cline Mining Corporation is currently putting the final touches on the refurbishment and development of its New Elk Coal metallurgical coal mine in southern Colorado.

New Elk has opened its east portal re-entry and as of the end of April will have its west portal re-entry approved, at which time the entire mine will reopen and the crew will be able to access the coal seams and faces, get its gear installed and begin mining.

Perhaps the timing isn’t the best for a start-up coking coal mine given plummeting steel demand, falling coal prices and the closure of existing mine, but Cline Mining backs itself.

“The company is very satisfied with the recently announced benchmark seaborne trade coal price settlements announced in Asia, and which took effect on April 1, 2009, for quality metallurgical coking coal between the major international steel mills and major coal mining companies at prices of $US128-129 per metric tonne free-on-board vessel, for top-quality product,” Cline said in a mid-April statement.

The company added New Elk had a high-quality metallurgical coal resource and a long history of selling to the US coking and steelmaking market.

“The company also has in-place mine and infrastructure and low capital and operating costs projected, and is confident in its ability to enter the metallurgical coking coal market at a low cost and to be fully competitive and economic in our industry, worldwide.”

While Cline says it has enough cash for now, it is in discussions with investors to raise ongoing financing to bring New Elk into commercial production at its full planned rate of 3 million tons per annum.

To date, Cline has travelled far down the path to 3Mtpa. It has already dewatered the lower level of the underground workings, and has installed and is operating the mine ventilation air fan system, including the steel safety doors.

Renovation of the existing mine offices and lab, as well as the site security structures and system, has been completed.

At the time of writing, Phase I, including full testing of full mine air quality, was expected to be completed in early May.

The New Elk Coal mine assets include a 550-ton per hour coal preparation plant, product coal silos and rail load-out, buildings, railway right of way, surface real estate, mining equipment, conveyor systems, electrics, underground workings with mine portal access from the plant site, mine permit and coal waste dump.

The New Elk management plan is to recommence initial coal production at an annual rate of 500,000t.

“The plan is to utilize as much of the existing infrastructure as possible, this includes refurbishment of the existing mine equipment, including the underground coal haulage rail system, and reinstallation of new in-mine coal conveyors and the mine electric power system,” Cline said in a statement.

Coal production is planned to increase with the reinstallation of the steel railway line on the right of way connecting the mine to the Burlington Northern Railroad system at the nearby town of Trinidad.

The BNR is able to service continental customers as well as export coal terminals on both the Pacific and Atlantic coasts to reach the global seaborne trade.

Initial coal production tonnage and sales will be delivered to market in trucks to the BNR rail head.

The production and sales plan calls for the increase to 3Mtpa capacity by year three with New Elk Coal reinstalling the rail line from the coal plant to the major railroad carriers, to provide unit train service from the existing mine load-out.

The New Elk Coal property contains 315Mt of National Instrument 43-101 compliant in-place metallurgical steelmaking and thermal grade coals.