American Resources Corp. announced an organic metallurgical coal production expansion project that is expected to increase the miner's metallurgical coal output from its McCoy Elkhorn Coal complex in Kentucky.
The Indiana-based company plans to upgrade equipment at its mines and processing facility to improve efficiency and boost production, according to a Sept. 3 company release. It will finish converting Mine No. 15's two operating single sections to a full super section and use equipment purchased earlier this year to incrementally increase output by about 12,000 salable tons per month to a total of 30,000 tons per month during the fourth quarter.
The company recently closed on about $3.8 million in equity financing that will primarily be used for organic expansion.
American Resources will continue to implement its production expansion plan at the Carnegie 1 mine, a development that is expected to yield 16,000 salable tons per month this fall, after restarting production at the mine in May. The project would have the potential to expand to 30,000 tons per month in the first quarter 2020.
The company has also been developing the Carnegie 2 mine over the past year and anticipates that production will begin in the fourth quarter, supplementing the Carnegie 1 mine by an estimated 8,000 to 10,000 additional salable tons per month. Carnegie 2 allows the company to access the same block of coking coal within the Lower Alma coal seam as the Carnegie 1 mine.
Several coal producers announced capacity expansion projects earlier this year, but global metallurgical coal prices declined more recently.
Mark Jensen, chairman and CEO of American Resources, said the miner is excited to reinvest in its core operations, given that coking coal demand is forecast to exceed production over the next five years.
"While it's evident that coal producers have encountered some recent turbulence this summer, as evidenced by the recent bankruptcies and highly levered mines being shut down, we are committed to investing the capital into our operations to ensure our company remains competitive and efficient," Jensen said. "With this additional capital, we expect to see an exceptional return on our investment into our operations for our shareholders and stakeholders."
