Cobalt, Riverside ink sales deal

CANADIAN producer Cobalt Coal has signed a sales contract with Alpha Natural Resources subsidiary Riverside Energy for the purchase of metallurgical output from Cobalt’s revived Westchester operation in West Virginia.
Cobalt, Riverside ink sales deal Cobalt, Riverside ink sales deal Cobalt, Riverside ink sales deal Cobalt, Riverside ink sales deal Cobalt, Riverside ink sales deal

Courtesy Cobalt Coal.

Donna Schmidt

Under the deal, Riverside has been given a fixed price for 8000 tons of coal from the McDowell County mine, with any production above that amount available for spot market sale.

Cobalt has targeted March 1 to start commercial production on the contract, which is set for 12 months.

"This is a pivotal event for our company, as our Westchester coal mine can now be returned to operational status,” Cobalt president and chief executive officer David Lewis said.

“The completion of this sales contract is very important as it has allowed us to hedge the bulk of our production in 2010, while still permitting acceptable exposure of the corporation to what is a rapidly strengthening spot market for metallurgical coal."

The company said the near-term cash flow from the mine would permit it to “aggressively” seek growth through additional high-grade met coal acquisitions in Appalachia.

Westchester, which extracts from the Sewell coal seam, had produced coal from the fourth quarter of 2008 through the second quarter of last year, but was forced to temporarily suspend production in April 2009 due to difficult economic conditions.

Headquartered in Calgary, Cobalt has an operating branch in Welch, West Virginia.

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