The company signed a letter of intent for coal and related assets in Pike and Floyd counties from Pyramid, a regional miner which currently sells coal production from the property into the domestic pulverized coal injection market for steelmaking.
However, as Long Harbour officials confirmed, the high quality of the product and logistics location led it to also commence exploration of Asian metallurgical coal markets.
The mine, which extracts from the Whitesburg and Elkhorn seams in eastern Kentucky, is located 80 miles from river loadout facilities that have Gulf of Mexico port access.
Recent historical production from the mine is about 25,000 tons per month.
In all, the property maintains five underground and two surface mining permits, with two underground permits currently utilized.
Long Harbour said surface mine planning had begun and was expected to require minimum infrastructure costs.Â
Pyramid owns all land associated with direct mining operations, so no third-party royalties will be paid.
“We are very pleased with our progress and continue to move ahead with our due diligence, including logistics pricing and negotiations with Asian metallurgical coal buyers and will commence the process to complete a National Instrument 43-101 compliant technical report prior to signing a definitive agreement,” chief executive officer Peter Espig said.
In its initial announcement of the deal earlier this month, the company did not provide a projected close date for the transaction, which is subject to Toronto Stock Exchange Venture Exchange approval.
“We are fortunate to have an opportunity that may allow us to leverage our management and board's rich experience in the coal and shipping sectors with deep Asian networks,” Espig said at the time.
“Arbitrages exist with regards to consolidating coal from smaller producers and the US versus Asian market demand for metallurgical coal to which these assets could play a vital role.”
He added that because the mine was permitted and was already online, it had significantly mitigated start-up timing and capital expenditure exposure.
“Operations are expected to be simplified because, rather than assuming full mining responsibilities, we expect to enter into a mining contract which will allow us to leverage Pyramid's local mining expertise,” he said.
