Modern Coal has acquired access to approximately 33 million tons of coal reserves in eastern Kentucky. Modern Coal will be able to reach the additional coal through mines operated on properties acquired as part of a previously announced joint venture with Global Earth Energy Inc. (GLER). Modern Coal believes the additional coal will be a superb addition to the acquired properties and will extend the productive life of the acquired properties by many years. This will also strengthen Modern Coal’s ability to offer high-volume long-term contracts to a wider variety of coal purchasers.
The coal reserves on the acquired properties and the additional reserves are produced from numerous seams including the Amburgy, Elkhorn 1, Elkhorn 2, Elkhorn 3, Elkhorn 3.5, and Elkhorn 4. These seams contain highly volatile bituminous coals with a sulfur content varying from 0.65% to 1.4% and with thermal parameters ranging from 12,000 to 13,500+ BTU. These coal qualities are in strong demand primarily due to their exceptionally high thermal content but also because of environmental restrictions imposed on both electric utility and industrial users of steam and stoker coal, respectively. The Elkhorn seams are particularly suitable for the premium-priced stoker market and comprise over 85% of the coal on the acquired properties and the additional reserves. The coal can be found in numerous overlapping coal seams, promoting operating efficiencies.
The principal mining method will be subsurface mining. While production of the additional coal will require an extension of subsurface mines on the acquired properties, all of the existing underground and surface infrastructure will be available to support the extended mining operations, thereby reducing the capital expenditures compared to a greenfield operation.
