Western Bituminous
McClane Canyon Mining Complex:
We currently operate one underground mine in the Western Bituminous region of Colorado. The McClane Canyon mine is located near Loma, Colorado and is on property leased from Bureau of Land Management. As of March 31, 2010, the McClane Canyon complex included an estimated 6.4 million tons of proven and probable coal reserves and an estimated 25.2 million tons of non-reserve coal deposits. We currently produce approximately 0.3 million tons of coal per year from the McClane Canyon mine, all of which is sold to Xcel Energy’s Cameo power plant, located east of Grand Junction, Colorado. The current contract with Xcel will expire on December 31, 2010. At the expiration of this contract, we plan to temporarily idle production at the McClane Canyon mine as we build and permit a rail loadout. We believe access to a rail loadout will enable us to expand our customer base. We are currently planning to restart production at the McClane Canyon mine in late 2011.In addition to the McClane Canyon mine, we currently control three nearby federal leases consisting of approximately 7,566 acres, two of which have the potential to support a future underground coal mining operation with procurement of an adjacent federal leasehold. We began the permitting process and leasehold procurement in 2005 and expect the process to last approximately one to three more years. We are currently in an exploration process to define the volume, quality and mineability of the coal reserves.
In August 2010, we completed the acquisition of certain mining assets of C.W. Mining Company. The assets acquired are located in Emery and Carbon Counties, Utah and include coal reserves and non-reserve coal deposits, underground mining equipment and infrastructure, an overland belt conveyor system, a loading facility and support facilities. We expect to begin production from these assets at one underground mine in late 2010 or early 2011. The coal we expect to produce and sell from these mining assets will be sold as steam coal in the Western Bituminous region.