The company produced approximately 3.1 million tons in 2013, with all but some 120,000 tons coming from Carlisle, Hallador/Sunrise’s flagship operation in Sullivan County for the past half-dozen years or so.
Although it will never be a major producer — its ceiling is around 500,000 tons annually — Ace, which began production in Clay County in mid-2013, is regarded as an important addition to Hallador’s coal sales offerings. Increasingly, customers in the southeastern U.S. are turning to Illinois Basin (IB) coal, but in some cases desire a lower-sulfur product than is common in the Midwestern region, according to Hallador CEO Brent Bilsland.
As of March, Hallador had contracts for more than 3.5 million tons of production in 2014 at an average price of $42.72/ton; 1.65 million tons in 2015 at an average price of $41.99/ton. The company said it is possible that production could near 4 million tons this year, depending on sales.
Last year, Hallador accommodated one of its major customers — it did not identify which one — by entering into three separate agreements that allowed for the deferral until sometime in 2016 of 338,000 tons originally scheduled for delivery in 2013. Under the arrangement, Hallador is paid an average of $5.36/ton over the life of the deferral periods. As a result, the company recognized $251,000 in the fourth quarter of 2013 and expects to realize $781,000 in both 2014 and 2015.
Hallador plans to spend the remainder of 2014 advancing plans for two new thermal coal underground mines in Illinois, Bulldog in Vermillion County and War Eagle in Lawrence County. Both mines would produce about 3 million tons of coal annually, though neither will be in operation this year. Hallador hopes to be issued a state mining permit for Bulldog late this year and will apply for a permit for War Eagle in the fourth quarter of 2014.