Bens Creek Group PLC (AIM:BEN, OTC:BENCF) is anticipating monthly production from its metallurgical coal mine in North America to hit 40,000 clean tons from August 2022 onwards.
The production will be generated using a single highwall miner operated by the company’s highwall mining contractor, Mega Highwall Mining LLC (MHW), working a double shift along with underground mining.
An application for a permit to mine a much larger area than is currently being mined by the first highwall miner is in the final stages of being approved by the Department of Environmental Protection in West Virginia.
This will allow a second highwall miner, to be supplied by MHW, to commence work.
Once mobilised and operational, both highwall miners will be able to operate simultaneously. This will allow production to increase steadily, reaching up to 80,000 clean tons per month.
This is expected to occur between September and December 2022.
Underground mining, which commenced recently, required considerable capital expenditure both prior to and post the admission of the company's shares to trading on Aim.
The company is currently analysing the feasibility of deploying its own highwall miner onto the newly to be permitted site to allow all three highwall miners to operate simultaneously, once the necessary repairs have been completed.
Estimated production from April to July 2022 is likely to be approximately 80,000 clean tons of metallurgical coal.
Following the commencement of production since December 2021, the company sold 44,000 raw tons in the period to 31 March 2022 to Integrity Coal Sales Inc. ("Integrity"), the company's offtake partner.
The last two months has seen considerable market price volatility of High Vol A and High Vol B coal, the products sold to Integrity.
In order to minimise any future adverse impact on the selling prices achieved by the company for eight of its 10 domestic sales shipments, it has agreed with Integrity a fixed sales price per ton for these consignments. The agreed price per ton of clean coal is higher than the current market price, thereby insulating the company's earnings on these consignments from any future falls in the price of met coal.
"We are delighted that the company remains on track with its operational plans and targets,” said Adam Wilson, chief executive of Bens Creek.
“Since the company's shares were admitted to trading on Aim in October 2021, and prior to coal production commencing, we have substantially invested in the company's operations which has included the remediation of the railway line and the wash plant and undertaking the necessary repairs to the underground mining infrastructure. This investment and the efforts of the team on the ground in West Virginia, has enabled us to be in a position to meet our production targets and at a run rate of around 40,000 clean tonnes per month.”