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Foresight to Permanently Close Deer Run Longwall Mine in Illinois

Foresight Energy is permanently closing its troubled Deer Run longwall mine in Illinois, a little more than three years after a combustion event dimmed what once was seen as a bright future for the mine near Hillsboro in Montgomery County.

The St. Louis-based subsidiary of Ohio's Murray Energy Corp. told the federal Securities and Exchange Commission in an April 13 filing that Deer Run will be shuttered for good after terminating a lease agreement with WPP LLC. Under that arrangement, Deer Run leased certain mineral rights from WPP for 20 years with a renewal option for five additional terms, with a maximum of six terms.

As a result, Foresight said it expects to record an aggregate impairment charge of $134 million to $172 million in the second quarter of 2018, a move likely to have a major dampening effect on earnings.

The partnership said that, aside from permanently closing Deer Run, certain long-lived assets "including mineral reserves, buildings and structures, machinery and equipment, and other related assets are not expected to generate future positive cash flows."

It was not supposed to be this way. Once one of the most promising of Foresight's assets, Deer Run had just wrapped up its best year in 2014 when it produced 5.5 million tons of steam coal when the mine was ordered closed by the federal Mine Safety and Health Administration on March 26, 2015, after elevated levels of carbon monoxide were detected.

That triggered a multiyear effort by Foresight to find and eliminate the cause of the CO exceedances. Deer Run produced only 1.8 million tons in 2016 and virtually nothing in 2017 and 2018. During that time, Foresight was acquired by Murray Energy, the largest privately owned coal company in the U.S.

Early this year, Foresight received MSHA approval to essentially perform any work it chose in Deer Run, except mining coal.

Gary Broadbent, Murray's senior corporate counsel and director of investor and media relations, said he had no comment beyond the SEC filing.

Peabody's Wild Boar Mine Honored With National Reclamation Award

Peabody's Wild Boar mine recently received the 2018 National Reclamation Award for reclamation work on the Barren Fork Pit. Awarded by the Interstate Mining Compact Commission in the coal category, the award recognizes the company's “dedication to the maintenance of environmental protection through efficient mining and reclamation practices.”

Wild Boar, located near Lynnville, Indiana, utilized innovation, efficiency and care to successfully reclaim the forest and wildlife area at the Barren Fork Pit, Peabody said. Soil replacement has been abundant at Barren Fork and enhancement of forest areas now includes a mix of wildlife habitat including water depressions, small impoundments, and many brush and rock piles. Raptors and other wildlife are already utilizing these reclaimed areas.

“We remain committed to land reclamation as an essential part of the coal mining process,” said Peabody President, Americas, Kemal Williamson. “We are very proud of the recognition for the Wild Boar team as they restore lands for generations that follow."

Wild Boar employs approximately 195 people and provided around $200 million in direct and indirect economic benefits to the region in 2017. The mine sold 2.7 million tons of coal in 2017, serving power customers in southern Indiana, as well as utility customers far beyond the region.

“This recognition and the work at Barren Fork are demonstrations of Peabody's sustainability value in practice,” said Marc Hathhorn, Peabody's group executive, Americas. “In 2017, we restored 40% more land than we disturbed, and Wild Boar's reclamation efforts were a big part of that success.”

Wild Boar was also honored for reclamation work at the Barren Fork Pit in 2017 with an Excellence in Mining and Reclamation Award from the Indiana Department of Natural Resources – Division of Reclamation.

In 2017, across its U.S. and Australian platforms, Peabody restored 5,145 acres of mined lands into wildlife habitat, rangeland, hardwood forests, prime farmland, pastoral land and wetlands. In the U.S., this included 892 acres of forested area, 30 acres of wetlands and approximately eight miles of high-quality streams. In addition, Peabody planted 647,602 trees.

The Interstate Mining Compact Commission is a multistate governmental agency representing the natural resource and related environmental protection interests of its member states.

Peabody is a pure-play coal company, serving power and steel customers in more than 25 countries on six continents.

Siegel Resigns From Bowie Board

Chairman of Bowie Resource Partners John Siegel has resigned. He founded the company in 2013, together with Galena Private Equity Resource Fund (Galena), an affiliate of Trafigura AG, to merge Siegel’s Bowie No. 2 mine in Colorado with the Canyon Fuel assets in Utah he acquired from Arch Coal.

“It is a very bittersweet moment for me because I truly love the Bowie Team I assembled and all who know me understand that I remain resolute in my commitment to see a complete consolidation of the Western Bituminous Region,” Siegel said.

Siegel added, “I want to express my appreciation to Trafigura and Galena for sharing the vision with me and for their role in helping to build a great and unique Utah coal company. However, it has become clear that the most expedient route to achieving our respective goals would be to separate, and in my case, to pursue my vision for coal and coal-related technologies in the Western Bituminous Region from a different platform. I remain absolutely convinced that the proper alignment of all coal assets in Utah can result in significant success and growth; both domestically as well as in the Seaborn Market.”

Siegel said he hopes to work with Galena and Trafigura in the future.

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