Pacific Coal advances La Caypa deep mine, minemouth power project

Pacific Coal Resources Ltd. (TSXV: PAK), a coal producer in Colombia, said Dec. 5 that it has advanced the La Caypa underground initiative, re-focused operations at the Cerro Largo property, signed an agreement relating to La Tigra exploration and signed a Barranquilla port sale memorandum of understanding (MOU).

Company management said it believes Pacific Coal’s strategic re-focus is positioning the company towards significantly improved operations and liquidity.

La Caypa underground mine – The company is advancing towards operation of an underground mine at La Caypa, with anticipated production of thermal coal beginning by the end of 2013. Pacific Coal’s new management team has begun negotiations for this underground mine operation with OXBOW, a leader in underground coal production in the United States, which also operates globally. Underground production at La Caypa is expected to reach 0.7 million tonnes in 2014 and over 1 million tonnes annually from 2015 onwards. This production will be in addition to La Caypa’s continued open-pit mine production of about 1 million tonnes per year.

Cerro Largo operations – Based on the high Btu and low sulfur levels of Cerro Largo’s thermal coal, management has decided that this coal is ideal for power generation, specifically a minemouth electric plant. Pacific Coal is in discussions with Pacific Power Generation Corp. and Proelectrica & CIA S.C.A. ESP to create a new joint venture company which would focus on building the plant, which is anticipated to have a maximum production capacity of 150 MW, and marketing the energy produced. 

La Tigra exploration – Asphaltite exploration continues at La Tigra.  Pacific Coal has signed an agreement with a third-party to perform analysis of exploration results, at the third-party’s cost, to determine the site’s prospects.

Barranquilla port – Pacific Coal signed an MOU for the sale of its interest in Sociedad Portuaria Terminal de las Flores S.A., the subsidiary that owns the Barranquilla port concession, with an anticipated completion of the sale by January 2013.

Cost reduction program – Pacific Coal has undertaken a comprehensive cost cutting program, including payroll and G&A reductions. During the third quarter of 2012, actions taken contributed to a decrease of 20% in G&A expenses to $3.6m as compared to $4.4m in the second quarter of 2012, in addition to the 12% and 9% decrease already realized in the first and second quarter of 2012 respectively. Based on the continued success of the cost cutting program, management expects a continued decrease in the quarterly G&A run rate to about $2.75m by the fourth quarter of 2012.

Pacific Coal is a Canada-based mining company engaged in the acquisition, exploration and production of coal and coal-related assets from properties located in Colombia.

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.