Productivity was lower and costs were higher than anticipated at Pennyrile, also known as Riveredge, late last year, officials with the Lexington, Kentucky-based company told analysts during a March conference call.
The second miner section is expected to increase production capacity at Pennyrile to fulfill a base 800,000-tons-per-year sales contract with Louisville Gas & Electric Co. (LG&E). The agreement runs for five years. Meanwhile, Rhino has received approval from the federal Mine Safety and Health Administration for a deep-cut mining plan designed to lower the mine’s costs.
“We expect [Pennyrile] will be a stable generator as it ramps up to the full runrate of 2 million tons a year,” said Joe Funk, the company’s president and CEO. Rhino is in the final stages of completing a long-term deal with another, unidentified utility customer for Pennyrile, located near the Green River in McLean County, to supply 120,000 tons in 2015, 400,000 tons in 2016 and 550,000 tons in 2017.
Along with the existing LG&E contract, the additional long-term arrangement will extend the mine’s committed sales to 1.2 million tons in 2016 and 1.35 million tons in 2017.