Elk Production Update

The picture shows the opening at the New Elk Mine of the underground portal entrance into the “Blue” seam. A Colorado State Mine Safety and Rescue Team is seen preparing to enter the mine to inspect the conditions before allowing mine staff underground.

Allegiance Coal announced on Tuesday, March 30 that it is set to begin coal production at the New Elk Mine in Las Animas County by the end of this month with plans to make initial shipments in June.

The company said electricity supply and the ventilation fans have been activated and the mine entrance has been opened. Also, Colorado State Mine Safety and Rescue team were allowed to enter, and they determined the conditions are “very good with minimal rehabilitation needed.”

“Following the inspection, mine staff were permitted to enter the mine to cross-cut 10 where water had predictably accumulated. The majority of the water has since been pumped from the mine and the Mine Safety and Rescue Team re-entered the mine to continue their inspection to the mine face,” said Allegiance Coal.

The company said two continuous miners, three shuttle cars and one roof bolter have been refurbished, while a second roof bolter and feeder breaker have been purchased and will arrive this month.

Once production begins, Allegiance has planned an 80,000-ton shipment for delivery to Convent Marine Terminal in New Orleans this June.    

The company said that once that trial shipment has been completed, supply contracts will be negotiated for 2022.

Finally, refurbishment of the railway and wash plant is also nearing completion, according to the company.

Allegiance said that based on the work that has been done so far, it will begin producing coal beginning April 19.

Looking ahead to what the demand will be like for steel-producing coal from Las Animas County, the company said, “Global industrial production has seen a strong recovery from around mid-2020, with steel production returning to pre-pandemic levels outside of China by late 2020, whilst steel production in China has continued at elevated levels for the first part of 2021.

“The limitation placed on Australian metallurgical coal exports to China, has in particular supported higher pricing for U.S. coals delivered to this market. In line with improved steel demand outlook, mills are continually expressing interest in new sources of stable, high quality metallurgical coal deliveries from reliable suppliers.”

Allegiance Coal is an Australian company based in Vancouver Canada. As of April 6, shares for the company were up 6.98 percent to 9.2 cents per share after starting the month of March below eight cents per share.

The company estimates that New Elk Mine sits atop 15 billion tons of coal. Allegiance acquired the mine in October 2020.

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