Xinergy’s South Fork Coal seeks prep plant permit

The West Virginia Department of Environmental Protection said in an Aug. 17 notice that the South Fork Coal Co. LLC unit of Xinergy Ltd. is seeking an Article 11/West Virginia National Pollutant Discharge Elimination water permit in Greenbrier County.

The permit is needed in order to open and operate a new coal preparation plant and loadout facility and to discharge treated water and storm water into unnamed tributaries of/and North Fork of Big Clear Creek of Big Clear Creek of the Meadow River of the Gauley River, all feeding into the Kanawha River.

Said an Aug. 13 financial report from Xinergy on this operation: “In January 2011, we acquired 14,000 acres of coal mineral leases in Greenbrier County, West Virginia through our wholly owned subsidiary, South Fork Coal Company, LLC (‘South Fork’). The acquisition included permits that were recently transferred to the Company by the West Virginia Department of Environmental Protection for the surface mine we refer to as Lost Flats. We received all necessary final approvals and permits in the fourth quarter of 2011 for Lost Flats and began development work in December 2011. The Lost Flats mine is a high quality, mid-volatility metallurgical surface mine in the Sewell coal bed that began limited production in April 2012. We also leased approximately 21,000 additional acres adjacent to this property in January 2012 that is expected to increase our reserve base at these properties. In August 2012, the Company received the necessary permits for a second surface mine we refer to as Blue Knob.”

The financial filing noted that the company in the second quarter of this year entered into definitive documentation to acquire for $4m a mid-vol met coal property adjacent to the South Fork property, which, upon closing, would significantly increase its premium mid-vol met reserves and production.

Xinergy began selling coal in April from the Lost Flats mine. Production has been targeted at about 10,000 tons per month and is expected to continue at reduced levels until Xinergy completes the construction of the planned prep plant and rail loading facility that is projected to commence in the third quarter of 2012. The plant and loading facility are anticipated to be fully operational by the end of the second quarter of 2013 at which time Xinergy anticipates increasing output from the Lost Flats mine as well as the recently-permitted Blue Knob surface mine.

“Cash costs have been steadily decreasing as we continue to normalize production and are expected to settle at approximately $100 per ton as we approach run rate production of 70,000 to 80,000 tons per month,” said the financial statement about the South Fork operation.

Currently pending with the DEP’s mining division are two South Fork Coal applications, for the Clearco Loadout and Haulroad No. 2. The Blue Knob permit was issued on Aug. 2 and covers 852 acres, with mining to take place in the Sewell, Sewell A and Sewell B coal seams.

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.