New Elk drilling reveals high-quality met reserve

CLINE Mining’s pre-production drilling program at the planned New Elk operation in Colorado, set to commence production later this year, has confirmed that the mine’s seams contain high-quality metallurgical steelmaking coking coal.
New Elk drilling reveals high-quality met reserve New Elk drilling reveals high-quality met reserve New Elk drilling reveals high-quality met reserve New Elk drilling reveals high-quality met reserve New Elk drilling reveals high-quality met reserve

Cline Mining Corporation's New Elk metallurgical coal mine in southern Colorado.

Donna Schmidt

The Canadian producer said Thursday that nine drillholes have been completed to date at the mine near Trinidad, Las Animas County, and six more are planned to delineate specific reserves.

“The present drilling program has also been directed to the newly identified coal seams designated Red, Blue, Yellow and Green,” Cline officials said.

“These seams were found at shallower depths, sequential with the Maxwell, Apache and Allen seams, and all relatively flat and parallel in sequence.”

The drilling results so far indicate that the new seams are similar to the Allen, Maxwell and Apache seams already mined and thus could be a significant additional resource for the future.

When the 15-hole program is complete, the results are expected to support Cline’s initial 20-year mine plan. The program should be complete by next month.

Specifications on the coal on an “as received” basis are 7.0-8.0 FSI and 8.5% each of ash and moisture content. Additionally, according to determinations by SGS Consulting, the coal contains a sulfur max of 0.5% and a BTU/lb of 13,500-14,000.

Cline has set a projection of 55 million tons from New Elk, at a rate of about 3Mt annually, from a 315Mt resource as quantified by a 2008 Behre Dolbear technical report.

The company’s preliminary assessment consultant, Agapito Associates, relied on the earlier figures for its National Instrument 43-101 compliant report completed in March.

New Elk’s economic revenues are expected to be positive as well, totaling approximately $US7 million during the first two decades of operation and using current coal prices.

“The mine has ample coal resources for the future, and after bringing the present mine back into production, the company proposes to evaluate a mine expansion and increase production by up to 100 per cent,” the company said, noting it is already placing mine infrastructure to support such a move.

First production is expected in the fourth quarter of this year, and New Elk’s production budget for 2011 is 1.2Mt, which it will ramp up to 3Mt annually by 2013.

While Cline has not detailed its total workforce expectations, the Colorado mine has hired about 80 workers.

The producer said in July it had received the required permits from the Colorado Department of Transportation to truck coal from New Elk to Cline’s loadout at the Jansen Rail Yard nearby in Trinidad.

“The … loadout links the coal mine to the Burlington Northern Santa Fe railway unit train service and its continental rail network, allowing access to the major Pacific and Atlantic North American bulk coal export terminals, as well as US steel mills,” Cline said.

“The New Elk mine will be able to truck up to 3 million tons of metallurgical steelmaking coal a year to the rail yard until the New Elk steel railway line is reinstalled on the existing right-of-way from the loadout at the mine to the BNSF rail line at Jansen to provide continued unit train service.”

New Elk has also received the necessary state environmental permits to operate earlier this year, including the Colorado Department of Reclamation, Mining and Safety’s coal mine reclamation permit and air emissions permits and water quality discharge permits from the Colorado Department of Public Health and Environment.

Its roof control, ventilation and dust control, mine rescue compliance, emergency mine evacuation and emergency response plans have all been approved by the US Mine Safety and Health Administration. The mine is currently operating under these approved plans.

“Cline's New Elk Coal Mine in Colorado has a long and successful history of producing and delivering high-quality metallurgical coal from its underground mine in southern Colorado to the steelmaking industry,” the company said in July.

Aside from reserves, the mine assets Cline acquired at New Elk include silos, buildings, conveyor systems, electricals, underground workings, portal access from the plant and surface real estate. Also included were the mine permit and coal refuse disposal site.

In addition to Colorado, Cline Mining has coal interests in British Columbia, Canada, and also mines iron ore in Madagascar and gold in northern Ontario, Canada.