MARKETS

America West signs supply deal with utility

UTAH producer America West Resources has contracted with a major northwestern US electric power c...

Donna Schmidt
America West signs supply deal with utility

The Salt Lake City-based company did not name the buyer in the purchase and sale agreement, but confirmed that the transaction provided for it to supply compliant thermal coal from its Horizon operation.

The agreement is for five years at about $40 million in base tons. An additional seven-year purchasing option is also specified, equating to an additional $27 million in optional tons.

The coal from Horizon will be delivered to the customer on a predetermined shipping schedule at monthly intervals beginning in 2011 and continuing through 2015, or longer if the seven additional years are exercised.

America West chief executive Dan Baker said that, with the latest agreement in hand, the producer had secured sales of up to $400 million over the next five years, and total potential sales of almost $500 million over the next decade.

"Expansion is our key focus now,” he said, noting that it had become necessary to more than double the company’s workforce for the next two years from 80 miners to about 160.

“Moreover, with more than 3 miles of underground highway now developed within Horizon and a well-defined mining plan that provides for ramping our production to as much as 5 million tons per year upon implementing our longwall mining strategy, we believe we are ideally positioned to begin fully optimizing our coal assets and are well on our way to establishing America West as a major US coal producer."

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