In the filing, the company described itself as a low-cost producer of quality thermal coal with expertise in developing highly productive underground mines in the high-sulfur Illinois Basin.
Over the past decade, Foresight said it invested more than $1.5 billion in four mining complexes—Williamson, Sugar Camp, Hillsboro and Macoupin—in Illinois with long reserve lives and related transportation infrastructure that should “provide us with significant sustainable free cash flow.”
Foresight said its first mining complex—Williamson, or Pond Creek, near Johnston City—was the most productive underground mine in the United States in the fourth quarter of 2011 on a clean tons-per-produced-man-hour basis. “Our leading productivity translates into low costs, and we believe we are the lowest cost underground coal producer in the United States at $19.41/ton in 2010,” the company said. Figures for 2011 were not included.
According to the filing, the four complexes are designed to support up to eight longwall mining systems, giving them a combined production capacity of 65 million tons a year. The company currently operates one longwall at Williamson and plans to start up new longwalls at both Sugar Camp and Hillsboro early this year, “having already invested most of the expansion capital necessary to develop these mines.”
Foresight said Sugar Camp and Hillsboro have the potential for four and three longwalls, respectively. Sugar Camp, located near Akin in Franklin County, also boasts the most prolific production potential—up to 28 million tons annually, with Hillsboro barely trailing at 27 million tons a year. Williamson’s output could hit 7 million tons a year while Macoupin trails at 3 million tons annually.
Sugar Camp also leads in total reserves with an estimated 1.32 billion tons. Next is Hillsboro with 879 million tons and Williamson with 396 million tons. Macoupin has the least, about 360 million tons.
Foresight said it sells a significant portion of its coal under long-term agreements with terms of one year or longer. The company markets and sells coal “to a diverse customer base including electric utility and industrial companies in the eastern United States, as well as the seaborne thermal coal market. In 2012, 2013 and 2014, the company said it has secured coal sales commitments of approximately 12.8 million tons, 14 million tons and 11.7 million tons, respectively.
Cline Group spokeswoman Jennifer Kroen in St. Louis declined comment on the IPO, adding other company officials also did not want to discuss it at this time.
Raymond James analyst James Rollyson referred to Foresight as “the CONSOL of the Illinois Basin.” Foresight’s IPO, he said, has a good chance to be successful. “It has been a little bit of a challenging public market, but they’re in the one basin that has seen pricing hold up the best,” said Rollyson.