America West inks supply deal

UTAH producer America West Resources has secured a 12-month, $US7 million bituminous coal supply agreement for output from its Horizon complex.

Donna Schmidt

The deal is with a “major, multinational producer of high calcium and dolomitic lime” but the company declined to identify the buyer further.

January 1 is the start date for the deal, which provides for up to $7.14 million in coal from the complex at a flat rate with adjustments as needed for heat content variances.

“When coupled with the other supply contracts we've signed over the past several months, this new agreement increases our contracted revenue potential for coal mined from Horizon to nearly $40 million over the coming year,” company chief Dan Baker said.

“With our subsidiary, Hidden Splendor, emerging from Chapter 11 later this week, all of our attention is now concentrated on optimising production from Horizon and working to establish America West as one of the nation's most prolific producers of clean coal."

America West said December 9 that Hidden Splendor’s plan of reorganisation (POR) was confirmed by the US Bankruptcy Court for the District of Nevada and would be effective December 19.

Based on the Horizon mine’s expected coal production, the producer said it believes the Utah complex will give it a “sufficient” cash flow from operations to manage its other financial obligations to Hidden Splendor's creditors going forward.

“We are very pleased that Hidden Splendor will be emerging from bankruptcy this month,” Baker said previously.

“This will position America West well for 2009, allowing us to execute our growth strategy without distraction."

The company has extracted more than 1.3 million tons of coal from the Horizon operation since 2003.