Coal International develops West Virginia sites

WITH its asset base now boasting coal properties around the world following an acquisition-packed 2005, AIM-listed Coal International is now concentrating on bringing its West Virginia operations into full production.

Angie Tomlinson

Last year Coal International purchased King Coal and Maple Coal operations in West Virginia, taking 100% control of the companies in December 2005. In light of the recent spate of mining accidents, and the changes to mining regulations, Coal International said it had not been deterred in developing its mines in the state.

“The Company, in developing its new operations, is working closely with state and federal environmental, health and safety experts in the re-establishment of mining operations at Gauley Eagle and Maple Coal,” company chief executive W Durand Eppler said in his 2006 interim report.

“The regulatory environment in West Virginia remains workable in spite of recent mining accidents and increased regulatory scrutiny. New regulations are likely to be implemented on a reasonable basis.”

Since acquiring control of its West Virginia properties, Coal International commissioned consultants Marshall Miller and Associates to audit the company’s reserves and resources and corporate business plan. Once completed Coal International will make its Statement of Reserves and Operations available to shareholders.

In early January the company re-established underground mining operations at the Silo Mains underground mine and has now transferred operations to a mining contractor.

The contractor will be staffing up for multiple shifts over the next few days, which will free up the company’s development team to focus its efforts on reopening the company’s second underground mine, the Birch 2-A, on the Gauley Eagle property.

Initial production to date has amounted to approximately 7000 ROM tonnes, which has been stockpiled in anticipation of completion of the refurbishment of the Gauley Eagle coal preparation plant – expected shortly.

Coal International said mining conditions to date had been better than anticipated.

The existing coal preparation plant at Gauley Eagle, with a nominal capacity of 900 tonnes per hour, has been completely refurbished by King Coal, at a cost of about $US7 million and is expected to commence commissioning within the next week.

The plant will be capable of washing all of King Coal’s Gauley Eagle production as well as provide coal preparation to local coal operators on a third-party basis.

King Coal has also commenced operations at the Crooked Run surface mine, its first surface mine on the Gauley Eagle property. Following receipt of mining and blasting permits, and equipment mobilisation of its surface mining contractor, initial earthmoving began this week. The company expects to be able to ship both ROM and washed coal to utility customers from its surface operations.

The company is stockpiling coal from early production in anticipation of commencing its first shipments in the coming weeks. Coal International said it had secured an initial contract with a local utility customer that offered potential expansion.

Mine planning and engineering are advancing at Coal International’s Maple Coal property with a goal of establishing the company’s first surface mining operation later in 2006 and mine planning and permitting activities to establish a significant underground mine in 18-24 months.

Alternatives for coal preparation, transportation and marketing are being evaluated and development plans established. The company said there had been significant market interest in the company’s planned production.

At Coal International’s Deepgreen Coal Recovery operation, Coal International said the influence of new management had already resulted in a significant turnaround in operating performance. Process improvements and re-established operating standards, including product quality, have resulted in Deepgreen now selling its production at prices more than double previous levels.

On top of buying operations in West Virginia, last year the company acquired 19.6% of British Columbia explorer NEMI Northern Energy Mining and subscribed to 20% of the issued capital of Energybuild Holdings, which holds the licence to operate the Aberpergwym deep mine, Wales.

During 2005, Coal International placed 5 million ordinary shares to Cambrian Mining to raise £5 million ($US8.7 million) and strengthened its ties with the company through a relationship agreement under which Coal International will be offered first right of refusal of all coal projects (other than North American projects) sourced by Cambrian Mining after April 2005.

Coal International reported a £296,000 loss for the six months to December 31, 2005.

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