On Dec. 30, Allegiance Coal released their finalized New Elk Start-up Mine plan announcing plans to start production in June of 2021, subject to raising the required start-up capital of $13.5 million.
According to the plan, starting out production will include seven continuous miners along with other support personnel such as shuttle cars and utility vehicles at New Elk.
The company also explained how the addition of the Pratt seam coal purchased from Mays Mining would help to extend the New Elk Blue seam mine life from the previously stated 15 years, to a new estimate of 24 years.
Additionally, Allegiance determined the coal is among the cheapest to extract in the US.
“Purchasing Pratt seam coal has significantly reduced the capital demands on New Elk achieving average annual coal sales of around 1.6Mt [Metric tons],” said the company. “The Blue seam has 22Mt of saleable coal reserves at a coal seam cut-off height of four foot. The life of mine cash cost for New Elk Blue seam coal places New Elk in the lower half of the seaborne metallurgical coal cost curve and amongst the lowest cost producers of US metallurgical coal.”
Of interest to note from a sustainability side, metallurgical coal is used primarily for making steel, iron alloys, carbon, and other important metals for building large structures, special tools, trains, planes, surgical tools, implants and more.
Currently in the virgin steel-making industry, no other form of production suffices to achieve the quality of refined metal coking coal can deliver, such as what will be extracted from the New Elk Mine.
The plan outlined beginning amounts of coal extracted to be around 40 thousand tons per month (ktpm) of Blue seam in June increasing to 73 ktpm by December, along with 35 ktpm of Pratt seam from June increasing to 64 ktpm in December.
The ultimate plan is to reach 1.6Mt annualized coal sales.
With Allegiance entered into an agreement with Mays Mining, Inc. to acquire the Pratt seam coal, the two coals will be blended together to achieve the average annual coal sales of around 1.6Mt.
“While the mine plan contemplates mining the entire Blue seam reserve with just two continuous miners over a period of 24 years, the intention is to either increase or replace Blue seam production (all or part) in year three from the Primero seam,” said the company’s plan, “which has the best coal quality in the New Elk Mine. On its own, Primero seam coal is expected to command a premium price and if blended with the Pratt seam, will be very close to, if not at benchmark high, vol A coking coal.”
The start-up capital expenditure for the New Elk Mine came to $17.7 million in their finalized plan with $5 million going towards a wash-plant upgrade, $4 million on mine infrastructure conveyor systems, and other needed improvements.
It also included a $400,000 investment in rails which the company will eventually require to relay track from the mine along Highway 12 to the Jansen load-out.
Starting out, coal will be hauled via trucks and Highway 12 from the mine to a load-out in Jansen where it will be transferred to rail cars and shipped to New Orleans to be made available for the global market.