NAG picks diamonds in the rough

CANADIAN explorer North American Gem is getting its feet wet in the Kentucky coalfields with one auger mine in production, one highwall operation set to start in spring, and five more sizeable leases in various stages of permitting waiting for their chance to shine.
NAG picks diamonds in the rough NAG picks diamonds in the rough NAG picks diamonds in the rough NAG picks diamonds in the rough NAG picks diamonds in the rough

Image courtesy of North American Gem.

Donna Schmidt

Published in the March 2010 Coal USA Magazine

In total, the producer holds about 5000 acres of coal reserve leases in Knox and Whitley counties, and is actively developing seven for mining permits. Four of those have been sequentially named and are in various stages of permitting.

NAG Kentucky mining operations head Dean Schafer told Coal USA the two biggest areas of concentration were the No. 1 and No. 2 operations – the former in production and the latter nearing commencement this spring. No. 1, an auger property running on a much smaller scale, is considered the company’s “education run”, helping it to get ready for the opportunities and tribulations of the No. 2 and all future leases.

The No. 1 mine in Whitley County began development, which included sediment controls and roadway construction, in October 2009. The first working crews were introduced to the wall the following month and production started in December with one auger, followed shortly by a second.

A third auger was mobilized at No. 1 in late January, and Schafer said the operation, despite its small scale, was proving to be profitable and an invaluable tool for the company’s engineering and operations staff as the other leases progress.

No. 1 extracts from the Jellico seam at 18-32 inches which would normally cause issues but Schafer said detrimental factors had actually proved to be opportunities. For example, the No. 1 mine was obtained with permits that were already active and just needed renewal, putting NAG ahead of the curve on its timeline for production.

Also, the quality of output has been a pleasant surprise. The three augers combined can potentially produce about 450-900 raw tons daily of coal measuring consistently less than 15% ash, and less than 1% sulfur according to customer analyses.

Lesson learnt at No. 1 have meant smooth sailing at the No. 2 highwall mine, which at press time was about to choose a new highwall miner system. No. 2 is permitted for the Jellico seam but will later pull from additional seams, including the rich Blue Gem seam. Schafer said the company aimed to be mining from the Blue Gem seam by this summer.

Because No. 2 already had a start on the site, ramp-up is expected to be rapid. The potential operation, still under review, will be working with a seam height range of 42-52in cutting 10ft wide, penetrating up to 800ft.

The operation is expected to produce 1000t per shift, or 20,000t monthly (at one shift) or eventually 40,000t monthly based on a two-shift schedule with a 20-day work month and two dedicated maintenance days.

No. 2 mine plans include a highwall miner and surface operations, with augering to be performed where highwall is not feasible. NAG is shopping for the surface mining equipment needed to support the miner. The company is continuing to seek out additional growth and is anxious to gain a foothold in the area. Key to that growth is obtaining previously existing walls mined before 1977, when the Surface Mine Control and Reclamation Act was passed.

The operator’s decision to omit areas that would require difficult-to-obtain hollow fill or mountain top removal permits is one of time-efficiency, as the process to mining without complex permitting procedures is easier and leaves NAG with minimal impact from the US Environmental Protection Agency.

It also is more cost efficient, as the expenditures tied into massive amounts of overburden prior to production is minimal.

The company recently retained the services of Engineering Consulting Services’ Debbie Moses who has many years of experience working in the Blue Gem seam.

Schafer said Blue Gem would be a jewel in the company’s pocket. The high-quality specialty coal is typically used for silicon metal production, which is attractive to a demanding global market and not just regional.

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