Paringa says new coal seam may add to its western Kentucky mining plans

Paringa Resources Ltd. said Oct. 19 that an additional major contiguous coal seam (called the WK No. 11) has been discovered approximately 65 to 80 feet above its Poplar Grove mine’s WK No. 9 seam as a result of a recent drilling program at this western Kentucky property.

There is the potential to access the WK No. 11 seam from the planned underground mine operations for Poplar Grove’s WK No. 9 seam, which may significantly increase the capacity of the mine. The thickness of the WK No. 11 seam averages 5 feet with clean coal quality characteristics similar to the Poplar Grove Mine’s WK No. 9-seam product.

Alliance Coal‘s River View deep mine (located 40 miles northwest of Poplar Grove) also mines both the WK No. 11 and No. 9 coal seams and is the most productive underground room-and-pillar coal mine in the U.S., Paringa noted.

Paringa said it will now undertake further drilling for the WK No. 11 seam to complete the geological model and to assess the potential for a two-seam operation at Poplar Grove.

Paringa President and CEO David Gay said: “The discovery of the WK No. 11 coal seam above Poplar Grove’s WK No. 9 seam is a game changer for Paringa. The ability to significantly increase the capacity at Poplar Grove for minimal capex truly transforms the mine and significantly increases the strategic nature of the Buck Creek Complex. This discovery reinforces that Buck Creek is undoubtedly the best undeveloped thermal coal project in the United States.”

He added: “We are seeing significant improvements in the US thermal coal market with natural gas prices almost doubling from their March lows, widespread evidence of higher long term contract prices and significantly improved general investor sentiment for thermal coal in the US. In the history of Paringa, this is the most exciting time to be funding the best undeveloped thermal coal project in the US and we will continue to focus on the most optimal way to bring Poplar Grove into production.”

Paringa will immediately conduct additional exploration drilling at the Poplar Grove Mine’s WK No. 11 seam with additional coal quality results expected. The first stage of this additional exploration will commence during the fourth quarter of 2016 and will include at least six additional seam measurements.

Paringa’s proposed 1.8 million ton per annum (Mtpa) Poplar Grove Mine for the Western Kentucky No. 9 (WK No. 9) seam, is located immediately south of the company’s proposed 3.8 Mtpa Cypress Mine, also in the WK No. 9 seam, with both mines located within the Buck Creek Complex.

An exploration target for the Poplar Grove WK No. 11 seam has been estimated to be between an additional 85 million to 110 million tons with in-situ quality estimated to range from 12,000 to 12,200 Btu/lb. The company said mining conditions for the WK No. 11 coal seam appears to be excellent with the immediate roof consisting of a black shale horizon overlain by an extremely competent limestone. In general, the WK No. 11 seam is about one foot thicker than the WK No. 9 coal seam in the Poplar Grove area.

Preliminary coal quality results from the 2016 drilling of the WK No. 11 seam at Poplar Grove demonstrates particularly attractive coal quality properties compared to existing and new mines being developed in the Illinois Basin. On a product basis, together with a 4% addition to equilibrium moisture, results for HMG-26 and HMG-27 show a high average heat content of 12,307 Btu/lb (6,842 kcal/kg) which compares very favorably with other producing mines in the Illinois Basin.

Coal qualities for the WK No. 11 seam are expected to be similar to the WK No. 9 seam with slightly higher raw ash and slightly lower washed ash. Washed coal quality data has been received for HMG-26 and HMG-27. The coal samples were shipped to SGS North America Inc., an ISO 9001 certified laboratory located in Henderson, Kentucky, for analysis.

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.