Brown, Australian company want to buy shut Walter mine

Australia-based Attila Resources Ltd. said May 22 that it plans to buy into, along with former Cyprus Amax Coal head Don Brown, Walter Energy’s (NYSE: WLT) long-shut Coke No. 1 deep mine in Shelby County, Ala.

Attila said that a Brown company, TBL Metallurgical Resources LLC, has an option with Walter Minerals, a unit of Walter Energy, to buy the Coke No. 1 mine and related assets. Attila has entered into an option deal with Brown for 70% of Kodiak Mining Co. LLC, the Walter company that now controls these assets.

Brown and TBL would be the other major partner in this project and provide management services for the project, Attila said. TBL will retain 20% of the project, with the other 10% to be possibly be held by various parties, including Konkera Pty Ltd.

In the 1990s, Brown headed Cyprus Amax Coal, which was dismembered in a series of transactions and no longer exists.

Coke No. 1 produces a high-vol coking coal and was shut in 2008 due to underperformance by mining contractors and inadequate mine ventilation, said Attila. A consultant hired by Attila, Stagg Resource Consultants, estimates an exploration target at the mine of 80 million to 100 million tonnes of coal.

Attila would get the rights to two coal seams on the property, the Atkins and Coke, which average 0.9 meters to 3 meters in thickness within the property. The purchase from Walter would include the mine, mining equipment on-site and infrastructure including a 300 tonnes per hour prep plant.

TBL has also entered into an agreement to lease the underground mining rights to the Atkins and Coke coal seams on an approximate 7,770 acre property from RGGS Land & Minerals, which previously leased the underground mining rights to Kodiak Mining when it operated the Coke No 1 mine.

“Stagg has determined the quality of the washed coal on a dry basis is anticipated to be in the range of 3 to 6 percent ash, 0.6 to 1.0 percent sulfur, 32 to 36 percent volatile matter, 56 to 62 percent fixed carbon, 8,000 to 8,300 kcal/kg heat content, and with a Free Swelling Index in the range of 7 to 9,” said Attila. “This information is based on analysis from the Kodiak Project to be leased and from adjoining properties.”

The “temporarily idled” prep plant is currently listed with the U.S. Mine Safety and Health Administration as the Kodiak #1 plant of Kodiak Mining. The Coke No. 1 mine is listed with MSHA as “abandoned,” with last production in 2008 (69,487 tons produced that year), with 95,336 tons produced in 2007.

“Attila Resources Limited is an Australian based minerals exploration and development company that has secured options to acquire mining tenements located in the northern Perth Basin and the Paddington-Kalgoorlie-Kambalda gold belt,” said the company website. “Attila’s aim is to build a substantial company focusing on the exploration and development of mineral deposits. Whilst in the near term Attila will be focused on exploring and developing its Western Australian coal and gold assets, it will also actively pursue corporate opportunities, both domestically and internationally, to assist in achieving the Company’s growth objectives.”

“On December 26, 2008, the Company announced the permanent closure of the underground coal mine owned by the Kodiak Mining Company, LLC (‘Kodiak’), located in Shelby County, Alabama, as a result of high operational costs, difficult operating conditions and a challenging pricing environment for Kodiak’s product,” said Walter Energy’s (then known as Walter Industries) February 2009 annual Form 10-K report. “As a result of the closure of the Kodiak mine in December 2008, historical results have been presented as discontinued operations.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.