Arch Emerges From Chapter 11

After eight months, Arch Coal has completed its financial restructuring and has emerged from Chapter 11 bankruptcy.

The producer has claimed $300 million of cash on its balance sheet as it begins again, along with debt of $363 million, consisting of a new term loan and capital leases. Officials noted that its total debt is only 7% of what it was pre-restructure. Arch, which continued to operate throughout the bankruptcy process, began trading on the New York Stock Exchange once again October 5 under the ticker symbol ARCH.

“This marks the beginning of a new era for Arch Coal,” CEO John Eaves said. “We are extremely pleased with what we have accomplished during our highly expeditious restructuring process, and are eager to move forward with our compelling plan for value creation.”

Arch, emerging as the second largest thermal coal producer in the U.S., first filed for Chapter 11 in January.

The first phase of the New Clydesdale Colliery has been commisioned in South Africa.
The first phase of the New Clydesdale Colliery has been commisioned in South Africa.

Universal Commissions Second Mine in South Africa

Universal Coal announced that the first phase of its New Clydesdale Colliery (NCC) has been successfully commissioned. In 2014, the company opened the 2.8-million-metric-ton-per-year (mt/y) Kangala coal mine. The second mine positions Universal as multimine coal operator producing both domestic and export coal for South Africa. IchorCoal NV holds a 30% interest in Universal.

Located in the Witbank basin, NCC is being developed in two phases, with production initially focusing on the Diepspruit underground area. The operation is now ramping up to Phase 1 nameplate capacity of 900,000 mt/y of export quality thermal coal. Universal expects NCC to reach full capacity by December. Commercial agreements for the offtake of product has now been finalized, according to the company.

“With NCC now up and running, we have a second ‘leg’ to stand upon in terms of cash flow sources. We look forward to achieving steady state production for Phase 1 before year’s end, as well as progressing the Phase 2 open-pit operation, which could add a further 2 million mt/y of [raw coal] to our production profile,” said Tony Weber, CEO, Universal Coal.

Phase 2 development at NCC continues to advance in line with long-term offtake discussions, and will be an open-pit development adjacent to the Roodekop project.

In related news, the Brakfontein project (50% Universal) recently received all licenses required for development. Located about 20 km south of the company’s Kangala Colliery, the project has reserves of 9.1 million mt and resources of 87.6 million mt. The company has completed a feasibility study showing the potential for integrating it with the existing infrastructure at Kangala.


Ramaco’s Brook Operation Moving Forward

The Wyoming Environmental Quality Council (EQC) has voted unanimously to permit Kentucky-based Ramaco to develop its Brook mine north of Sheridan, Wyoming, despite objections to the plan. Company CEO Randall Atkins told the Associated Press that the mine should begin production early next year and that it will be moving quickly with the remainder of Brook mine’s permitting. “We’re very pleased that the EQC agreed with our conclusion there were not any substantial damages to the surface owners,” he said.

The planned operation has met some pushback from landowners.

In all, Ramaco owns 14,500 acres in the area with about 1.1 billion tons of recoverable reserves. Brook will reportedly begin production at about 500,000 tons annually but ramp up in the long-term to 8 million tons per year.

Last month, Ramaco announced plans for the development of the elk Creek and Berwind mines in West Virginia and Virginia, thanks to a $90 million private equity investment with Energy Capital Partners Mezzanine and Yorktown Energy Partners. Ramaco currently has about 200 million tons of recoverable coal reserves in its portfolio.


Millennium Terminal DEIS Released

The Army Corps of Engineers (Corps) has released the draft environmental impact statement (DEIS) for the Millennium Bulk Terminal facility in Longview, Cowlitz County, Washington. The Corps released the report September 30, and facility owners are now reviewing the 3,000-page document.

The report is also now available for public viewing, review and comment. The input period is now open and will close November 29. Public hearings have been scheduled for October 24 and 25 in Longview and Ridgefield, Washington. Terminal CEO Bill Chapman noted that the facility, designed to have a 44-million-ton-per-year capacity, is the “right project in the right location” to help meet Asian demand for American coal.

“Our project has been subjected to an unprecedented and rigorous environmental review process, further assuring that our commitment to exemplary environmental performance will be kept,” he said. “Both state and county regulators made it clear in their draft environmental impact statement that we can meet Washington’s strict environmental standards. We’re confident the federal draft environmental impact statement by the Army Corp of Engineers will also deliver a favorable review.”

The full DEIS can be viewed at www.millenniumbulkeiswa.gov.

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