At Rosa in Blount County, crews completed construction of the complex’s wash plant last week and it is now in the commissioning phase. In anticipation of the facility’s opening, the company has stockpiled some of its coal production and now has approximately 30,000 tons on hand.
“Auger mining operations are meeting production targets and a second auger is scheduled to be delivered in early November 2011,” officials said.
“With the addition of this second auger, [we anticipate] production and sales … in excess of 10,000 tons per month of clean metallurgical coal by December 2011.”
Novadx said the production is fully contracted – it entered deals earlier this year at a selling price of $150 per ton. It also inked a $180/t contract and anticipates renewing the transactions at that price at expiration.
At the Rex complex in Campbell County, Tennessee, crews continue to work on rehabilitation and development of the entry and mains.
Following the development of additional mains to support future growth, Novadx has also begun producing coal from the mine.
“Coal seam thickness measurements in the mine are ranging between 36 and 42 inches, in line with nearby drill hole intercepts used in the calculation of the Rex mine's reserves,” the company said.
“The company is stockpiling this initial production in anticipation of a permit amendment being granted for the construction and operation of a portable wash plant at the mine site,” noting the amendment review is in the advanced stages.
In the meantime, Rex’s wash plant site has been secured and work will begin once the amendment is granted.
Novadx said it expected rehab and development of the mine should be completed by the end of December with commercial production commencing in January, initially with a single mining unit. Additional units would be added as the operation is developed.
“Each mining unit has the capability of producing in excess of 20,000 tons per month of clean coal, the majority of which will meet the specification for a silicon metal grade coal,” officials said of production targets.
“Initial production currently being stockpiled has been analyzed and the results are meeting anticipated customer specifications … and the company anticipates entering into contracts for the 2012 calendar year.”
Novadx is also examining various leasing opportunities to grow reserves and resources at Rex.
Last week, the Vancouver-based company announced it was terminating its acquisition of Ikerd Mining along with associated Kentucky assets, citing recent developments which had emerged during the due diligence process as the reason for its change of heart.
The management agreement, which also covered Ikerd Terminal and Ikerd Transportation, was initially announced on May 26 for an undisclosed sum.
The termination notice had been delivered to Ikerd and under the withdrawal, Novadx president Neil MacDonald demanded Ikerd repay all money due under the agreement as well as its credit facility.
Novadx has also filed a lawsuit against Ikerd and managing member Frank Ikerd for breach of contract, breach of good faith and fair dealing, fraud, misrepresentation and unjust enrichment.
MacDonald said the company was “fortunate” to have discovered the issues prior to the transaction closing.
“We move forward with a cash position of approximately $US8.3 million and continue to have strong operations and development at our [Rosa and Rex mines],” MacDonald said.
“We will continue to identify and pursue the acquisition of quality projects with established coal reserves in the Appalachia coal region, with a view to further enhancing value to our shareholders.”
The Ikerd assets consisted of four permitted surface coal mines and related mining equipment in eastern Kentucky, as well as a stoker plant and rail load out facilities.
