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Armstrong reconsiders Lewis Creek.

Illinois Basin thermal coal producer Armstrong Energy said new drilling results have caused it to reconsider the premature closing in 2015 of its Lewis Creek underground mine in Ohio County, Kentucky, one of the company's newest mining operations.

Lewis Creek, which produces high-sulfur coal from the No. 9 seam prevalent in western Kentucky, has experienced significant operating efficiencies since July 2013 because of geological conditions of the portion of the reserve being mined. The mine is operated by Armstrong Coal, a wholly owned subsidiary of Armstrong Energy.

As a result of the ongoing mining difficulties, St. Louis-based Armstrong decided at the end of the first quarter of 2014 not to continue advancing under the current mine plan, but rather to retreat and mine only in the eastern portion of the reserve. That part of the reserve is expected to be completed in the first half of 2015.

The mine plan was initially changed to abandon the existing portal to Lewis Creek and relocate all of the equipment to the company's other mining operations in western Kentucky.

However, Armstrong Energy said it began obtaining drill samples during the second quarter of 2014 and performed analysis of the western Kentucky No. 8 seam, which lies beneath the currently mined seam at Lewis Creek.

Armstrong Energy officials said during the company's July earnings conference with analysts that they continue to analyze the information "and are considering a further change in the mine plan to drive an additional slope deeper to the western Kentucky No. 8 seam."

Because of the new information, the company has delayed the decision to abandon the Lewis Creek portal until it has completed an assessment on the feasibility of mining the lower seam. A final decision is expected before the end of September.

Lewis Creek produced 469,705 tons of coal in the first six months of 2014, placing it on track to surpass last year's total output of 618,495 tons. The mine has about 130 employees.

Altogether, Armstrong Coal is targeting 2014 coal sales of about 9.8 million tons at an average price of $46.81/ton. The company said it has committed sales of 9.8 million tons in 2014 and 8.2 million tons in 2015 at an average price of $48.19/ton.

Armstrong Energy trimmed its net loss to 4.1 million in the three months ending June 30, down from a net loss of $4.5 million a year earlier. In the first six months of 2014, its net loss was $9.4 million, compared with a net loss of $11 million in the first half of 2013.

The company operates seven surface and underground mines in western Kentucky and controls 570 million tons of proven and probable reserves.

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Publication:Coal Age (1996)
Geographic Code:1U6KY
Date:Sep 1, 2014
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