Engineering & Mining Journal

OCT 2017

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NEWS - THIS MONTH IN COAL 28 E&MJ; • OCTOBER 2017 www.e-mj.com Whitehaven Posts Impressive Results Whitehaven Coal, Australia's leading in- dependent coal company with five op- erating mines in northwest New South Wales, has reported a net profit after tax of $405.4 million for the fiscal year ending June 30. While costs had in- creased modestly to $58 per metric ton (mt), the company reported sales of $1.77 billion, up 52%. Total run-of-mine (ROM) coal pro- duced and sold during the period year was 23.1 million mt and 20.7 million mt, respectively, a respective 13% and 3% in- crease, which reflected the ongoing ramp up of Maules Creek mine and strong per- formance from the Gunnedah open cuts. "The hard work that preceded fiscal year 2017 has been rewarded by the company reporting its highest ever profit for the year," said Whitehaven Coal Man- aging Director and CEO Paul Flynn. "This is a fitting result for a company celebrat- ing its 10-year anniversary of listing on the ASX and reflects well on all of those people who have shared and participated in the journey." Full-year ROM coal production from Maules Creek increased 24% to 9.7 mil- lion mt. ROM coal production from the smaller open cuts was 6.1 million mt, up by 6%. Metallurgical coal sales contin- ue to grow in line with expectations and reached 21% of total sales for the year. "Whitehaven's high-quality coal, which produces more energy and fewer emissions per ton than almost all com- peting coals, is being widely and rapidly accepted in the growing Asian market," Flynn said. For fiscal year 2018, Whitehaven ex- pects to sell 22 million mt to 23 million mt. Costs for the year are likely to increase slightly as production of metallurgical coal increases and the strip ratio at Maules Creek moves toward the life of mine ratio. Paringa Breaks Ground on New Poplar Grove Mine Paringa Resources Ltd., the newest en- trant in the Illinois Basin (ILB) steam coal market, began construction in August on its 2.8-million-ton-per-year (t/y) Poplar Grove underground steam coal mine, the first of two deep mines planned by the Australian company for its extensive Buck Creek reserve in western Kentucky. Site work got under way in the Mc- Lean County/Hopkins County area near the Green River less than 18 months af- ter the company flip-flopped its original plans and decided to build the low-capi- tal expenditure Poplar Grove mine before the 3.8-million-t/y Cypress mine. Current plans call for Poplar Grove to produce its first coal around mid-2018, and ramp up output from both the western Kentucky Nos. 9 and 11 seams by the end of 2020. Depending on market conditions, construction could start on the fully per- mitted Cypress mine in early 2019. Poplar Grove is expected to have a mine life of 25 years, and Cypress, a life of around 18 years. Under an amended "cornerstone" sales agreement, Paringa is contracted to deliver a total of 4.75 million tons of 11,200 Btu/ lb product from Poplar Grove over a five-year period, starting in 2018, to Louisville Gas & Electric Co. (LG&E;) and Kentucky Utilities Co. (KU), the state's largest electric utilities and sub- sidiaries of Pennsylvania-based PPL Corp. LG&E; and KU serve more than 1.1 million customers and own four major coal-burn- ing power plants in the commonwealth. The LG&E;/KU contract begins at $40.50/ton for the first 750,000 deliv- ered tons, escalating to $45.75/ton for the final 1 million tons sold. The vast majority of Poplar Grove's 2018 produc- tion is earmarked for LG&E;/KU, although some tons will be reserved for test burns at other utilities. As Paringa moves through the con- struction phase and nears first coal from Poplar Grove, it plans to begin partic- ipating actively in the coal solicitation process to sell additional coal to electric utilities located in the Ohio River market. Eventually, the company also intends to aggressively target coal sales to the sec- ondary Southeastern market. Paringa said it was drawn to the west- ern Kentucky part of the ILB because of the quality of the coal, the dynamics of the region's market and the inherent infrastructure and transportation advan- tages. It plans to make heavy use of the nearby Green River, a deep, navigable wa- terway that empties into the Ohio River less than 30 miles from the mine site. Paringa credits the administration of U.S. President Donald Trump, a strong supporter of the coal industry, for its de- cision to move the Poplar Grove project to the construction stage. "Without the Trump administration ending the 'war on coal,' we would not be building out this mine," the company said. "The administration has been effectively removing barriers and reg- ulations that were unfairly punitive for the coal industry." Grant Quasha, Paringa's managing direc- tor and CEO, said he believes the next 12 months will be "very exciting as we progress through the construction phase and toward first coal production, advance negotiations with utilities located within the Ohio River and Southeast markets potentially leading to additional sales contracts, continue discus- sions with advisers for a potential listing on major U.S. stock exchange, and begin to roll out our public relations and digital market- ing campaign throughout North America." Whitehaven is ramping up production at its Maules Creek mine (above) in New South Wales.

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