Alliance Resources Partners LP said in its Aug. 8 Form 10-Q report that it was recently able to add to its reserve position for the Mountain View longwall mine in West Virginia through a deal with rival coal producer CONSOL Energy (NYSE: CNX).
In June 2013, a company subsidiary, Alliance Resource Properties LLC, acquired the rights to approximately 11.6 million tons of proven and probable medium-sulfur coal reserves, and an additional 5.9 million resource tons, in Grant and Tucker counties, W.Va., from Laurel Run Mining Co., a subsidiary of CONSOL.
The purchase price of $25.2m was allocated to owned and leased coal rights and was financed using existing cash on hand. “As a result of the coal reserve purchase, we reclassified certain tons of medium-sulfur, non-reserve coal deposits as reserves, which together with the reserves purchased above, extended the expected life of Mettiki Coal (WV), LLC’s Mountain View mine,” said the Form 10-Q.
Mountain View in part produces steam coal to supply the nearby Mt. Storm power plant of Dominion Resources (NYSE: D). U.S. Mine Safety and Health Administration data shows that the mine produced nearly 1.2 million tons of coal in the first half of this year, and around 2.3 million tons in each of 2012 and 2011.
The Mettiki Complex is made up of the Mountain View mine located in Tucker County and a prep plant located in nearby Garrett County, Md. Production from the Mountain View mine can be supplemented with coal from a smaller-scale mine operated by a third-party on property in Maryland controlled by another Alliance subsidiary, Backbone Mountain LLC. The Mountain View mine produces mid-sulfur coal which is transported by truck either to the Mettiki (in Maryland) prep plant for processing or directly to the coal blending facility at the Mt. Storm power plant. Coal processed at the preparation plant can be trucked to the blending facility at Mt. Storm or shipped via the CSX Transportation railroad, providing the opportunity to ship into the domestic and export metallurgical coal markets.