CanAm gets permit for expanded coal production in Alabama

CanAm Coal (TSX VENTURE: COE)(OTCQX: COECF) said Aug. 13 that it has gotten, at its Alabama operations, a new mining permit for the Old Union II mine and two new coal leases.

On August 8, the company’s subsidiary, Birmingham Coal & Coke (BCC), was issued permit #3962 by the Alabama Surface Mining Commission. This permit, known as the Old Union II permit, allows the company to start mining operations, effective immediately.

The Old Union II permit is a five-year surface mining permit covering a total of 1,393 acres, with 1,108 minable acres. The total recoverable coal within the permit area is 1,274,750 tons. The company has begun mine development work and is targeting a September production startup. Annual production from the Old Union properties, which include the existing Old Union and the now-permitted Old Union II mine sites, is forecasted at 360,000 to 400,000 tons per year. The Old Union mine production for the first six months of 2012 was about 110,000 tons.

The coal within the Old Union II mine complex is considered to have the same qualities/characteristics as the coal that is currently being mined from the existing Old Union mine. On average, the proximate analysis has indicated 9% ash, 1% sulfur and 12,400 Btu/lb.

The application filed with the board shows that Old Union II would work the Black Creek seam, which has an average 1.17 feet in thickness in the permit area with an average of 86 feet of overburden over the seam.

CanAm also reported that BCC has acquired additional surface mining rights to two tracts of land totaling about 133 acres. These lands are an integral part of the Old Union and Old Union II mine complex and are in addition to the 574 acres of land acquired in the April-June 2012 period.

The first of the surface mining rights was acquired through Molag Timberprop LLC through a surface mining lease. The lease consists of about 40 total acres with a management estimate of 23 mineable acres. The lease has a three-year term and includes industry standard royalty provisions with no advance minimum royalties. This property is currently permitted and is within the Old Union mining complex.

The second surface mining lease is referred to by the company as the H.H. and Alice Kilgore property and will be added to the Old Union II mine permit. It is about 93 total acres in size with a management estimate of 64 mineable acres. The lease has an indefinite term that runs until the mining and reclamation are completed and includes standard royalty provisions with no advance minimum royalties. This is a key acquisition because this property will allow for direct and easy access to the eastern portion of the Old Union II mine site from County Road 21.

“We are excited about our new Old Union II permit as it will allows us to expand our mining operations, increase our production of high quality thermal coal and continue to meet our customer commitments,” said Tom Lewis, Vice President of BCC. “In addition, the acquisition of the Kilgore property will save us time and money as we avoid having to undertake a major bridge project.”

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.