Pennyrile, also known as Riveredge, opened in 2014 and is poised to become a major producer and financial contributor for the company. The mine has long-term sales contracts with Louisville Gas & Electric, a PPL Corp. subsidiary and one of Kentucky’s largest electric utilities along with sister Kentucky Utilities, and Big Rivers Electric Corp.

Thanks to the higher productivity and improved coal recovery rates, Pennyrile became “cash flow positive” in the first quarter, according to Joe Funk, Rhino president and CEO. “We are fully contracted for 2016 at Pennyrile with 1.2 million tons forecast to be produced and sold this year. We believe Pennyrile will be a positive cash flow provider for [Rhino] for the remainder of 2016 at these production and sales levels. Pennyrile gives us additional diversification as we expect it to be a significant generator of stable cash flow as it ramps up to its full potential run rate of 2 million tons per year.”

In the first quarter, Pennyrile produced and sold 327,000 and 316,000 tons, respectively. That was more than a third of Rhino’s total quarterly production and sales of 790,000 and 873,000 tons, respectively. Rhino’s first quarter coal revenue averaged $46.42/ton, versus $52.18/ton in the year-ago quarter.

Rhino’s Castle Valley underground mine in Emery County, Utah, also enjoyed a good first quarter, as coal revenue per ton increased to $38.09 compared to $36.90 in the year-ago period. Higher contracted prices accounted for the higher revenue. Sales volumes increased to 252,000 in the quarter, from 229,000 tons in the prior year. Rhino said Castle Valley’s sales remain fully contracted through 2016.

But it was a different story for the company’s mines in Central Appalachia (CAPP) and Northern Appalachia (NAPP). Sales fell by more than half in CAPP to 100,000 tons from 237,000 tons a year earlier, and coal revenue per ton dipped to $56 from $64.22 in the first quarter of 2015. Rhino’s CAPP operations were idle in the fourth quarter of 2015 to reduce excess inventory stockpiles, which caused an increase in cost of operations per ton in the fourth quarter compared to the current quarter, the company said. Rhino resumed mining operations at a majority of its CAPP operations in early 2016 to fulfill customer contracts for this year.

Meanwhile, in NAPP, Rhino experienced delays from customers accepting shipments from its Hopedale underground mine in Harrison County, Ohio, “that adversely affected our NAPP results in the quarter,” Funk said. Rhino sold 122,000 tons in NAPP in the first quarter, down from 251,000 in the previous year. The company said sales at its Sands Hill surface operations in Jackson County, Ohio, are fully contracted through 2016. Royal Energy Resources of Charleston, South Carolina, became Rhino’s new owner earlier this year.