Organic growth on National Coal agenda

AFTER posting a net loss again in 2005, Central Appalachian producer National Coal is now looking forward to organic growth in 2006 with ambitious expansion plans already underway in Tennessee.
Organic growth on National Coal agenda Organic growth on National Coal agenda Organic growth on National Coal agenda Organic growth on National Coal agenda Organic growth on National Coal agenda

Courtesy National Coal.

Angie Tomlinson

For 2005 National Coal recorded an adjusted EBITDA net loss of $US8.36 million, up from a loss of $3.4 million in 2004.

The year generated total revenues of $66 million on the back of a 241% increase in tonnes sold: from 357,000 tonnes in 2004 to 1.22 million tonnes in 2005.

“Our achievements in 2005 put us into position to take advantage of opportunities for organic growth into 2006 and beyond,” company chief Jon Nix said.

“The business plan that we created is being executed and expanded, especially in the area of reserve tracts we own. These assets are expected to start showing their first revenue contributions in late Q2 2006.”

National Coal plans to continue to expand coal production in 2006, leveraging the fixed cost elements of its infrastructure, and pursue additional long-term contracts, capitalising on the currently strong pricing environment for Central Appalachian coal.

In its Tennessee expansion plans, National Coal intends to focus on its owned reserves, particularly those located in the New River Tract in East Tennessee.

In the first half of this year the company will spend $7 million to build its Tennessee infrastructure through the purchase of a railroad and the refurbishment of a large preparation plant and rail loadout facility. Company subsidiary NC Railroad purchased the railroad in February this year for $1.96 million and will spend $1-1.5 million restoring the 42-mile rail line, making it available by the third quarter 2006.

Additionally, National Coal will spend about $3 million refurbishing the Baldwin preparation plant and rail loadout facility in Devonia, Tennessee. Once complete, this infrastructure will be capable of shipping 250,000t of coal per month from the owned New River property.

National Coal has five approved permits on new mining opportunities and has submitted applications for permits on six additional mining opportunities.

The company currently operates three underground mines, two surface mines and one highwall miner in addition to two preparation plants and two unit train loading facilities in Knoxville, Tennessee.

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