This article is 14 years old. Images might not display.
The company, which confirmed the delivery period would extend from January 1, 2012 to December 31, 2014, said the transaction represented a minimum aggregate value of about $US170 million. Pricing is variable and significant upside exists thanks to future indices.
The 2.16Mt secured by JP Morgan will be delivered at a rate of 720,000 tons annually.
The thermal coal will originate from Xinergy’s Raven Crest/Brier Creek operations in West Virginia.
"We are pleased to have secured this coal supply agreement with JP Morgan, which significantly increases our contracted tonnage and revenue for future years," Xinergy chief financial officer Michael Castle said.
"This agreement is consistent with our plans to develop our Brier Creek underground reserves, significantly increase our thermal production in West Virginia [and] broaden our customer base.”
In late March, the company’s Raven Crest subsidiary released a technical review report on Brier Creek that reflected that the Boone and Kanawha County property contained about 59.4Mt of measured and indicated mineral resources under its lease.
Of that tonnage, 27Mt are proven and probable.
The producer filed a National Instrument 43-101 report it completed with Summit Engineering’s James Canterbury.
Initial production, slated for early 2012, is expected to be 50,000 tons per month. Pending market conditions, production will ramp up to 1.2Mt per annum once it is fully developed.
Xinergy also said at the time that its anticipated total capital expenditures for the property, including mining equipment and the construction of the preparation plant, would be about $40 million.
Brier Creek, which is fully permitted, includes surface leases and coal subleases through two deep mine areas which have been faced up. Active permits are also in place for a coal preparation facility and a refuse area.
The property is adjacent to the existing Raven Crest mining complex. That property, which Xinergy acquired in April 2010, covers 12,262 acres of land and contains an estimated 17.2Mt proven and probable reserves. There are two surface mines and one highwall mine at the complex.
