Coal news and updates

Armstrong Energy to close Lewis Creek coal mine in Kentucky by spring 2015

Armstrong Energy will close its Lewis Creek underground thermal coal mine in Ohio County, Kentucky, by the end of the March 2015 because of persistent geological problems at the mine, which has been operational for less than two years, the company said Thursday.

Current production from Lewis Creek will be transferred to other western Kentucky mines operated by Armstrong Coal, a unit of St. Louis-based Armstrong Energy, including the Kronos deep mine also in Ohio County, Richard Gist, chief financial officer, said on a third-quarter 2014 results conference call.

Armstrong posted revenues of $108.9 million in the July-September period on 2.3 million st of production, a decrease of about 100,000 st compared with the year-ago period. Much of the decline was blamed on Lewis Creek, which was expected to have a bright future when it opened in late 2012.

Difficult mining conditions were encountered at Lewis Creek almost immediately after it opened, and Armstrong indicated earlier in 2014 it might shut the mine. But on an August 14 conference call, Armstrong said a decision to abandon Lewis Creek portal had been delayed because of new drilling results that left the company considering accessing the western Kentucky No. 8 seam that lies beneath the No. 9 seam currently mined at Lewis Creek.

Lewis Creek produced 578,130 st of high-sulfur coal in the first three quarters of 2014, although output dipped to only 108,425 st in the third quarter. The mine produced 618,495 st in 2013.

A new underground mine being developed by Armstrong at its Parkway complex in Muhlenberg County, Kentucky, should be in production by the second quarter of 2015, according to CEO Hord Armstrong.

The new mine will produce coal from the No. 8 seam, which is similar in quality to the more prevalent No. 9 seam in western Kentucky.

Armstrong said his company expects 2014 coal sales of about 9.4 million st at an average price of $46.85/st, an increase of almost $2/st over 2013. "We have experienced some delayed tons in the quarter and customers are moving those tons over to early 2015," he added.

In 2016, Armstrong Energy could produce in excess of 10 million st for the first time, added Martin Wilson, the company's president.

Armstrong projects coal sales of 9.7 million st in 2015, of which 90% already is committed and priced.

The company, Hord Armstrong said, is "guardedly optimistic" about its future. Armstrong supplies electric utilities with scrubbed power plants in the US Midwest and Southeast.

Source: Platts