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Atlantic Coal looks to increase production at Stockton mine as new excavator arrives

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Atlantic Coal (AIM: ATC) expects its new US$3.5 million Liebherr R9250 21-yard bucket hydraulic excavator to help increase production capacity and reduce costs at the Stockton coal mine in Pennsylvania following its recent arrival at the site.

The company’s key focus is boosting capacity at Stockton Colliery, which it said had “an abundance of high quality anthracite in close proximity to the surface” to make it “ideal” for the excavator to increase production. The equipment was ordered following the implementation of a new mine plan to develop the current reserves of 4.2 Mt (million tons) run-of-mine (ROM) coal, with the intention of raising production levels to 400,000 ROM tons per annum.

“(We) anticipate that (the excavator) will have a positive impact on our production capacity and help reduce our cost base going forward.  This is a significant step for the company especially when viewed in conjunction with our recently announced agreement with US coal marketing company Xcoal, which provides a potential buyer for up to half of our annual output, opening up international markets for our anthracite,” said Managing Director of Atlantic Coal Steve Best.

Earlier this month, the company signed a strategic agreement with a private US coal marketing company Xcoal Energy & Resources to supply premium anthracite from Atlantic's Stockton mine. Xcoal agreed to purchase up to the greater of 150,000 tons per year and 50% of Stockton's annual anthracite coal production and could participate in the funding for the expansion of both the Stockton mine and other mining opportunities with Atlantic.

In January this year, Atlantic Coal agreed the termination of a legacy supply agreement with Pagnotti Enterprises. Previously under the terms of the Pagnotti supply deal, Atlantic was obligated to sell 100,000 tons of coal annually, at a price linked to changes in the producer price index which consequently priced the produced coal below market levels. It was estimated that the termination would save the company US$10 million during the life of mine.

In February, the company raised £0.4 million via a share placing to fund the completion of its capital reinvestment plans at Stockton Colliery.

Quick facts: Atlantic Carbon Group

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