The two permits, included with the more than 4700 acres acquired, will become known as permit No. 3 and No. 4. Both could potentially be production ready by the end of the year.
As announced last week, NAG has retained engineer Robert Taylor, who is currently working to move the permitting process forward while evaluating reserves. All the leases now held are within a 20-mile radius of the company’s target development area.
“Prospecting results for the Blue Gem seam from the newly acquired leases showed analyses typical of the Blue Gem seam mined extensively in the area,” NAG noted.
On average, results showed less than 3% ash, less than 0.75% sulfur and a BTU content of greater than 14,200. The Jellico seam, meanwhile, averages less than 10% ash, about 1% sulfur and contains greater than 12,500 BTU content.
“In addition to the Blue Gem seam, the leases also contain the Moss, Dean, Jellico and Fireclay seams, which are all considered high-quality steam coals from Kentucky,” NAG said, noting that Blue Gem – at a thickness of 48-71cm (18.8-27.9 inches) – contains a high-carbon, low-ash, low-fusion and very hard coal found only in a small area along the Tennessee and Kentucky border in the Cumberland Mountains.
“Blue Gem Coal is one of three coal seams in the world that are best suited for production of silicon metals,” the company noted.
“The other two are found in West Virginia and Colombia, South America, [and] of the three, the Blue Gem Coal seam is the most sought after.”
NAG added that Blue Gem product could bring as much as 100% higher free-on-board mine prices than high-quality steam coal.
The company announced last week that it would start production at its No. 1 complex in Whitely County this month. It has inked an agreement with Engle Hollow Mining, a NAG operator, and Kentucky Mine Power for mining and auger services as it extracts from the Jellico seam.
Kentucky Mine Power would mobilize two units immediately, perform development work over the following 10 days and begin production the following week. The coal from No. 1 will be the first to be processed by the Cobra tippling production plant.
When in full production, the complex is expected to use both auger and highwall mining methods.
Dean Schafer is acting as operations manager for all of NAG’s coal leases in the state. He is currently implementing an overall mine plan for the company.
The producer said in mid-September that it had inked a letter of intent with Safeco to operate the Cobra preparation plant complex. The 19-acre property, which includes a rail loading facility, will become a central operation and distribution port for NAG.
“Based on the thickness of the coal seam, auger mining can produce 4000-6000 net tons per month with an increase to plus-20,000 net tons per month if highwall mining techniques are commenced,” NAG said.
Production from the permit is expected to last between 12 and 18 months.
Based in Vancouver, North American Gem has a coal focus in North America, specifically in Saskatchewan, Kentucky and West Virginia.
