The roads and sedimentation control ponds are finished and approved, the initial mine face is completed and crews have begun mining via auger.
By contract, a second auger will commence production within 10 working days of the first, and NAG noted that preparation on the second face had started.
Coal production and brokerage firm Blue Star Energy, which serves industrial coal users and electricity suppliers in the Appalachian region, is purchasing up to 15,000 clean tons of product monthly from the operation.
Blue Star recently completed its Jellico seam analysis at the No. 1 operation and expects immediate coal delivery. The sample taken contained 8% ash, less than 1% sulfur and had a BTU of 12,800.
"This is a major step in the development of North American Gem as the identity of the company has now evolved from explorer to producer," NAG president Charles Desjardins said.
"[We have] assembled a premier team to oversee our mining operations and our planned aggressive expansion of coal production as successful permitting of North American Gem mine No. 2 is anticipated shortly.”
He noted that NAG would continue its mining permit application work “to become the operator of multiple mines operating in, but not exclusive to, the state of Kentucky during 2010”, and added that none of its planned leases, including No. 1, would be affected by the US Environmental Protection Agency’s scrutiny of mountaintop removal and valley fill issues.
“The North American Gem No. 1 mine is permitted for the use of augers to enter the coal seam from the exposed wall with minimal additional excavation and maximum cost effectiveness,” Desjardins said.
The coal from the No. 1 mine will be the first to be processed at NAG’s North American Tipple Facility. The producer said in mid-September it had inked a letter of intent with Safeco to operate the new 19-acre preparation plant complex, which also includes a rail loading facility, and the company expects the property will become its central operation and distribution port.
“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,” the company said at the time.
The new producer secured Engle Hollow Mining, a NAG operator, and Kentucky Mine Power earlier this year for mining and auger services as it extracts from the Jellico seam.
Dean Schafer is acting as operations manager for all of NAG’s coal leases in the state and is implementing an overall mine plan for the company.
In related news, NAG announced earlier this month it had signed an agreement with Kentucky firm Durabo Drilling for the exploratory drilling of its No. 3 and No. 4 permits.
The permitting process has commenced for both properties, which NAG acquired from Lonesome Pine Leasing, in preparation for the submission of official permit applications to the Kentucky Department of Natural Resources.
NAG is seeking to prove the presence of mineable coal seams below the Blue Gem seam, and aims to collect drillcore data to calculate total reserves for a certified engineering report.
“The specific seam being drilled for has been encountered in the process of oil and natural gas drilling in the area and has been measured from 1.5-2 meters in thickness and is believed to be a low-sulfur, high-BTU seam,” the company said in early November, adding that the analysis would also help determine the best mining plan for North American Gem No. 3 and No. 4.
In total, the producer has about 5000 acres of coal reserve leases in Knox and Whitley counties in Kentucky, and is actively developing seven permits – North American Gem No. 1 being the first of that group. NAG is expecting its official permit application on North American Gem No. 2 to be approved by the KDNR shortly.
North American Gem has a coal focus in North America, specifically Saskatchewan, Kentucky and West Virginia.
