Carlisle in Sullivan County, operated by Hallador’s Sunrise Coal subsidiary, is experiencing production growth again this year and should wind up with about 3.4 million tons for 2013, according to Brent Bilsland, Hallador’s president. The mine produced about 3 million tons in 2012 when some electric utility customers told the company they did not need all their coal because of several factors, including a mild winter of 2011-12 and historically low natural gas prices.
Bilsland is bullish about the IB and what he sees as Hallador’s expanding role in the high-sulfur basin. Carlisle had 43.5 million tons of reserves as of December 31, 2012. The company recently began blending low-sulfur coal from its new Ace-in-the-Hole surface mine in Clay County, Ind., with Carlisle’s high-sulfur coal to meet the lower-sulfur specifications required by an unidentified customer.
Carlisle has a guaranteed 6-lb SO2 product. But with the addition of Ace-in-the-Hole, the company can guarantee a mid-sulfur product that is expected to command a higher price and increase its customer base. Hallador said few mines in the IB have the ability to offer their customers various ranges of SO2. Carlisle has supplied coal to 11 different power plants.
Ace-in-the-Hole’s maximum capacity is pegged at 500,000 tons annually. The mine currently has 20% of its capacity contracted for 2013 and 2014.
Going forward, the company is eyeing major production growth from its proposed Bulldog mine near Allerton in Vermilion County, Ill., and the Russellville mine proposed for Lawrence County, Ill.
Hallador launched the permitting process for Bulldog in the summer of 2011. It filed the formal permit application with the Illinois Department of Natural Resources and the appropriate federal regulators in June 2012.
The company currently expects to receive an approved mining permit in the first quarter of 2014. Full-scale mine development will not begin, however, until the company has secured a sales commitment for Bulldog.
Hallador has leased roughly 19,300 acres and controls an estimated 35.6 million tons of coal reserves for Bulldog.
The company also has leased about 11,000 acres containing an estimated 29.4 million tons of reserves for Russellville. Bilsland said the permitting process for the new mine is expected to start this fall and Hallador anticipates filing the formal permit application with regulatory agencies during the second quarter of 2014.
The Russellville reserve is located about 20 miles southwest of the Carlisle mine. Initial testing indicates the reserve’s mineability and coal quality is very similar to the Carlisle reserve.
In the first half of 2013, Hallador sold 1.61 million tons at an average price of $42.22/ton. That compared with sales of 1.44 million tons at an average price of $43/ton in the first six months of 2012. The lower average price for the first six months of this year was attributed by the company to the mix of its various contracts.
Operating costs and expenses averaged $28.22/ton in the first half of 2013, versus $26.79/ton in the comparable period of 2012. The increase primarily was due to poor mining conditions in March and May, although these problems since have improved, the company said.