The deal includes an open-ended lease for the 19-acre property that includes the Cobra tippling production plant and rail loading facility.
The facility will become a central operation and distribution point and will crush, screen and wash as well as allow the company to purchase outside product for blending.
“North American Gem Inc. now has the ability to service a variety of customers by not only preparing coal to meet specific requirements but also the ability to purchase outside coal for producing custom-blended products for increased market potential,” NAG said.
“Specifically, plans are to service the industrial stoker markets, silicon metal producers, and electricity generators.”
The facility will be serviced by CSX railroad and enough rail capacity exists to accommodate the loading of unit trains (110 railcars), which in turn will help the company realize more favorable rates.
The first coal to run through Cobra will be from North American Gem No. 1, an auger/highwall operation with an average 3-foot (91cm) height from the Jellico seam formerly referred to as the Bays Hollow complex.
“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 last month, adding that production from the permit should last between 12 and 18 months.
The producer said Thursday that Engle Hollow Mining, the contract operator for No. 1, has secured an agreement to move a second auger to the site to establish two simultaneous working areas.
In its announcement of the pending operating agreement in September, NAG reported that samples pulled from the complex on August 26 of this year reflected an ash range of 2.27-4.67%, 0.79-1.1% sulfur, and 13,656-13,996 BTU.
At less than 10% ash, less than 1% average sulfur and greater than 12,500 BTU, initial coal sales offers are $US58/ton effective immediately, for up to 30,000 net tons monthly.
Based in Vancouver, North American Gem has a coal focus in North America, specifically Saskatchewan, Kentucky and West Virginia.
