“We’ve been doing some exploratory drilling on several projects,” said Brent Bilsland, president, Sunrise Coal, in August. Hallador disclosed in a Securities and Exchange Commission filing that month it has leased about 16,000 acres in Vermilion County, Ill. “Leasing and exploratory drilling operations are ongoing,” the company said. “We are reviewing coal quality and rock mechanics information at this time and hope to declare the property a mineable reserve before the end of the year. We expect the permitting process in Illinois to take 18 to 24 months.”

No permit applications had been filed by late summer, however, and Bilsland attempted to defuse rampant speculation in the Vermilion County area the proposed mine is a dead certainty. “We are looking and we might come, but we’re not in any way, shape or form ready to commit to that sort of thing,” he said. If Sunrise comes to Vermilion County, it would bring along about 300 jobs for as long as 30 years.

What Sunrise will admit to is keen interest in evaluating a number of sites in the region for its next mine. “We’re always looking at a lot of different counties throughout the Illinois Basin,” Bilsland said. But Sunrise’s only mine right now is in Indiana, and when it comes to permitting and developing new coal operations, “The political environment is easier in Indiana than it is in Illinois.”

Nearly a decade ago, Sunrise operated the Riola underground mine in Vermilion County under the Catlin Coal banner. The mine eventually was sold to Peabody Energy.

Development on Carlisle, in Sullivan County about 30 miles south of Terre Haute, got under way in March 2006, and that December the company hit coal. Originally planned for two continuous miner units, the mine added a third unit in August 2008 and a fourth in February 2009. “The plan was for two units, but the coal market got hot in 2008 and we went to four,” Bilsland said. A room-and-pillar operation, the mine produces coal from the No. 5 seam that is 350- to 440-ft deep and is accessed via a 2,400-ft long slope.

Sunrise and Bilsland have no regrets. “We’re very happy with our results at Carlisle,” he said. “It’s a good mine, we have some good people.”

In the first six months of 2010, Hallador generated about $23.3 million in cash from operations. The company said it sold more than 750,000 tons from Carlisle at an average price of $41.95/ton in the second quarter, up from nearly 600,000 tons at an average price of $43.27/ton a year earlier. Coal sales totaled nearly 1.6 million tons at an average price of $42.68/ton for the first half of this year compared with sales of about 1.3 million tons at an average price of $44.19/ton in the comparable period of 2009.

Hallador said it intends to finance future activity at Carlisle through cash from operations and, if necessary, draws from the remaining $24 million on a revolver loan. “Our capital expenditures budget for the remainder of 2010 is in the $8 to $10 million range,” the company said. “Eventually, if and when we develop a new reserve, we intend to incur additional debt and restructure our existing credit facility.”