An Australian company, Paringa Resources, which owns the new Buck Creek No. 1 steam coal underground operation in western Kentucky set to begin construction in 2016, announced it had secured a “cornerstone” coal sales agreement totaling $220 million.
The deal with Louisville Gas and Electric Co. (LG&E) and Kentucky Utilities Company (KU) includes the 11,200 Btu/lb coal specification from the upcoming mine’s production; it will be sold at the proposed Green River barge load-out facility on a free-on-board (FoB) barge basis.
The seven-year agreement, which hinges upon construction milestones at Buck Creek No. 1, encompasses two years of construction, 2016 and 2017, as well as a five-year production period from 2018 to 2022. In all, 4.75 million tons will be delivered over the five-year period, with 750,000 tons sent in 2018 and 1 million tons to be delivered in each year from 2019 to 2022.
Paringa executives, who last month confirmed that the complex on the Hopkins County/McLean County border will award construction contracts by the end of the year, noted that executing the sales agreement will enable it to progress final negotiations with financiers for the mine’s development.
“I am very excited that Paringa has executed its cornerstone coal sales agreement with LG&E and KU,” President and CEO David Gay said. “The contract is the culmination of over a year of due diligence, negotiations, documentation and approvals on both sides.”
Paringa is expected to begin production at Buck Creek No.1 in 2018, reaching full production of 3.8 million tons per year by 2020.