The charges relating to the tragic UBB accident will be further known with Massey’s second quarter financials, chairman Don Blankenship said.

“While Massey anticipates further analysis will be required, the company estimates the range of loss to be $US80 million to $150 million for charges related to the benefits being provided to the families of the fallen miners, costs associated with the rescue and recovery efforts, insurance deductibles, possible legal and other contingencies,” he said.

“In addition, the full book value of equipment, mine and longwall panel development and mineral rights at the mine potentially impacted by the disaster is approximately $62 million.

“Massey will assess these assets for possible impairment once full access to the mine is restored but it does expect to recover much of the equipment.”

For the March quarter, the Appalachian producer reported net income of $33.6 million, compared to $43.4 million in the first quarter of last year. Produced coal revenue was $571.8 million, a significant year-on-year drop from 2009’s $681 million.

Overall produced tons sold in the first quarter fell from 10.8 million tons to 8.5Mt, but Massey officials noted that met shipments were up 33% to 2.4Mt and industrial coal was up almost 29%.

As generators continued to draw down high stockpiles, however, utility shipments took a hit and were down 37%.

Weather-related production issues and transport disruptions caused significant problems for Massey’s production and shipments in the period, particularly the first two months.

"The first quarter demonstrated how important it is to have diverse market involvement,” Blankenship said.

“Our strong metallurgical coal shipments partially offset the weakness we experienced in the utility coal markets."

Blankenship noted that despite a difficult winter that resulted in tough operating conditions in January and February, the producer had shipped more than 1 million tons of metallurgical coal in March.

"With our plans to mitigate most of the lost production at the Upper Big Branch mine, we believe the first quarter's metallurgical coal volume is approximately in line with our capabilities in the second half of 2010."

Price increases in the utility and industrial market, paired with an increase in met coal sold during the quarter, left Massey with a higher average produced coal revenue of $67.38 compared to $63.03 in the first quarter of 2009.

Met tonnage accounted for 28% of total tons sold, versus 2009’s 17%.

To offset the production lost at the Upper Big Branch operation, which is closed indefinitely as investigators determine the cause of an explosion on April 5 that killed 29 miners, Massey is implementing a plan to increase production at its other locations.

The company will move from a five-day to a six-day work week through the addition of Saturday production at all metallurgical operations, and the addition of three continuous miner sections at the active mines of the Elk Run resource group.

“In total, the mitigation plan represents approximately 1.3 million tons of annualized metallurgical coal production,” officials said.

“At the same time, the impacts of the UBB tragedy on productivity are not yet predictable.”

Massey said that, excluding its acquisition of Cumberland Resources that was just finalized and not yet integrated into second-quarter projections, it anticipated full-year 2010 produced coal shipments of 35-37Mt with average realization between $70.50 and $72/t.

“Because the company is uncertain as to the impact of the force majeure levels that will be triggered by the UBB tragedy and the potential for related impacts on other sales due to quality switching and contract buyouts … these estimates may need to be revised as more details become known,” the company noted.

Looking ahead, the company said its 2011 coal shipment projections range from 37-42Mt at an average price of $73-82/t. Current committed tonnage for the year is 34.1Mt, with 22.7Mt priced at $68.50/t; sold and priced totals include 2.2Mt of met product.

For 2012, committed tonnage totals 17.7Mt, with 8.7Mt sold and priced at about $70/t. Sold and priced tons include approximately 900,000 tons of metallurgical coal.

Massey’s met production capacity prior to the Cumberland acquisition was about 11Mt, with the newly purchased private company adding 5Mt of capacity.

Most of that production is committed to the steam coal market for this year.

“The restart of the Bandmill plant, recommencement of operations at the Upper Big Branch mine, and planned development of the Rowland resource group are expected to add approximately 4Mt of annual metallurgical coal production capacity between 2011 and 2012,” company officials said.

“Total annual metallurgical coal production capacity is expected to be approximately 20 million tons by the end of 2012.”

In Massey’s financial conference call Thursday, Massey was prepared for the level of UBB mine explosion-related questions, and Blankenship was quick to reassure analysts of Massey’s position amid shareholder lawsuits and public criticism against the him and the company.

"The explosion was not caused by willful disregard for safety regulations as the media would have you believe," he said.

"Some of the implications have been that we don't focus on safety and we don't put dollars on safety. Nothing could be further from the truth."

Massey’s board also backed Blankenship in a public statement on Thursday afternoon following the quarterly call.

"During times like these, a change in senior management is not appropriate or in the best interest of our members and shareholders," lead independent director Bobby Inman said.

"Therefore, we want to emphasize that Don Blankenship has the full support and confidence of the Massey Energy board of directors."