National Coal Corp. Announces Construction of Mine 12
Friday, July 2nd, 2010
National Coal Corp. (Nasdaq: NCOCD), a Central and Southern Appalachian coal producer, today announces the beginning of construction on its new Mine 12, which when fully operational is anticipated to add about 40,000 tons per month, or 480,000 tons per year to the Company’s production. Given the high quality coal of this block of reserves, sales will be targeted to the specialty coal market.
“With the beginning of construction on Mine 12, the Company reaffirms its focus on lower costs, higher selling prices, and improved margins. This mine should help us achieve one of our key goals – generating free cash flow,” says Daniel A. Roling, President and CEO at National Coal. “I am also pleased to announce that a contract for the initial production has been signed, which will result in the Company’s average selling price increasing by about 10% during 2011. Even though we are eager to participate in this kind of organic growth, it should not go unsaid that we are also focused on the challenge to refinance our debt.”
After receiving the final permit, construction of Mine 12 has begun. Production at Mine 12 will be ramped-up over a period of 18 months, with first production planned in the fourth quarter of 2010. The Company has sufficient funds available to complete construction and to begin operation of this new mine from a recent sale of surplus equipment that generated about $4.0 million in cash.
Mr. Roling went on to say, “A number of key indicators for our end markets appear to be showing improvement. Year-to-date electricity generation has increased 3.8%, utility coal stockpiles have declined an estimated 8.5% versus the year ago level, and coal production in Central Appalachia has declined about 7% year-to-date. These key indicators, along with an improving economy, point toward a better balance between coal supply and demand.”
National Coal’s operations in Tennessee include the coal mineral and mining rights to approximately 79,000 acres of land, along with mining complexes that currently include one active underground mine and one active surface mine. In addition, National Coal continues to own and operate one preparation plant and one unit train loading facility served by the Norfolk Southern Railroad.