The Kentucky-based miner said in its annual report released this week that it still maintains the mineral rights and surface property for the planned mine in Loma, near Grand Junction, but will record a $22 million loss for its decision to abandon the project.
Rhino had invested a total of $29 million in the project for mine, land and mineral rights development; company Vice President Scott Morris added that it may still retain a portion of Red Cliff’s water rights and rights of way for railroad access.
“Up to the fourth quarter of 2014, we had decided to continue with the EIS (Environmental Impact Statement) report despite the prolonged weakness in the coal markets,” officials said in the report. “However, the decision was made by our executive management to limit capital spending on all projects due to the weak coal market conditions that had adversely affected our financial results during 2014.
“Thus, due to the lack of progress in getting the EIS report finalized, the amount of money spent on the project to date, the impending higher costs to be incurred on the next phase of the EIS report, and the desire to limit capital spending on certain projects due to the ongoing weakness in the coal markets, we decided to suspend the EIS report process in November.”
Based in part on the series of delays from the U.S. Bureau of Land Management in getting the needed permits for the property, the final decision to discontinue its pursuit of the mine’s development was made December 31.
Rhino noted that the $22 million written for the Red Cliff assets on its balance sheet for FY14 was due to “lack of marketability.” In all, the miner recorded a $61 million net loss for the final financial quarter.