Coal Age

JUL 2013

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news continued refinanced its credit facilities in late June, a move designed to place Oxford on stronger financial footing to participate in the coal market and stem any talk of the company being forced to file bankruptcy. Oxford spent nearly the first half of 2013 negotiating new credit facilities with lenders to replace a $115-million revolving credit line scheduled to mature in July and another $60-million term loan that m PEOPLE IN THE NEWS Cloud Peak Energy Inc. recently promoted current Spring Creek Mine General Manager Bruce Jones to the position of senior vice president, technical services. Nick Taylor, who has served as senior vice president, technical services since October 2009, will assist with the transition. The Bruce Jones company also announced that David Schwend, Spring Creek mine's maintenance manager, has been promoted to general manager of the mine. Cliffs Natural Resources Inc. announced that Dana Byrne, vice president of government and public affairs, is retiring. He will assume a one-year consultancy role with Cliffs after his retirement. Raga Elim, former director of global government relations, will succeed Byrne as vice president of global corporate and government affairs. Elim will also assume responsibility for the company's global communications and public affairs functions. Austmine Chairman Alan Broome was recently awarded the Austmine Life Membership Award in recognition of his outstanding contribution to the Mining Equipment, Technology and Services (METS) sector and for his longstanding leadership of Austmine as chair for the last 22 years. Broome is a Alan Broome metallurgist with more than 40 years of experience in the metals, mining and energy industries. He is a director and chair of a number of Australian mining technology companies. He also sits on the Minerals Sector Advisory Council of the CSIRO and is a director of the New Zealand Coal Association. In 1999, Broome was awarded the Westpac/Institute of Export award for contributions to mining and mining services; in 2000 the Order of Australia for services to mining and in 2005 he was awarded the AusIMM President's Award for contributions to the development of the Australian mining supply sector. Skelly and Loy has appointed Gerald C. (Bud) Grove senior civil engineer. ESCO Corp. has appointed Jon Owens executive vice president, overseeing the mining and construction and industrial divisions. Gerald Grove Jon Owens Philippi-Hagenbuch Inc. recently promoted Danette Hagenbuch Swank to president from her current position as vice president of internal operations. Volvo Penta has appointed Dee Wise industrial regional sales Danette manager, North America, and Billy Pacey distribution develop- Hagenbuch Swank ment account manager. CDE Mining has appointed Stephen McCartney business development manager. 14 www.coalage.com was to mature in July 2014. Oxford had a total of $147.5 million in borrowings outstanding as of March 31, limiting its financial flexibility to be more active in the market. Now, Oxford has secured $175 million of new credit facilities that consist of the following: a first lien $75-million term loan and $25-million revolving credit facility arranged by Cerberus Capital Management LP and a second lien $75-million term loan arranged by Tennebaum Capital Partners LLC. The new first lien facility matures in August 2015 with an optional extension to May 2016 if certain unspecified conditions are met. The second lien facility matures in December 2015 and can be extended until September 2016 once certain conditions are met. Both new financing agreements contain "customary covenants," Oxford said in a U.S. Securities and Exchange Commission filing that precludes the company from making any unitholder distributions during the term of the new facilities. Evercore Partners served as sole financial adviser and placement agent to Oxford for the new facilities. By extending the maturity profile of Oxford's debt and increasing availability under its revolving loan, "We have significantly enhanced our liquidity as we continue to focus on increasing productivity across our operations," said Charles Ungurean, Oxford president and CEO. Oxford said it had failed, as of May 15, to comply with certain financial covenants in the former credit agreement that triggered a default by the company. That meant its lenders could have demanded that Oxford repay all outstanding amounts under the accord. Instead, however, Oxford and its lenders worked out a "forbearance agreement" that gave the parties more time to reach a new financial arrangement. Oxford plans to produce 6 million to 6.5 million tons of high-sulfur coal this year. If the market warrants, the company has the ability to ramp up output rather quickly and inexpensively by another 10% or so, according to Ungurean. Rhino Begins Pennyrile Development Rhino Resource Partners started on-site development this summer of its newest operation, the Pennyrile underground steam coal mine along the Green River in western Kentucky's McLean County. David Zatezalo, Rhino president and CEO, said the company remains on target to commence production at Pennyrile in mid-2014. Rhino is spending $17 million this year and $22 million in 2014 to develop the mine, which has an initial, multi-year contract to supply 800,000 tons of high-sulfur coal to an unidentified regional utility customer. Additional capital expenditures of $23 million are expected to increase Pennyrile's production to 2 million tons a year by 2017. When in operation, Pennyrile will be able to draw upon a large contiguous reserve base of 32.5 million tons of fully permitted proven and probable reserves under lease, with an opportunity to add another 15 million tons. Rhino said Pennyrile's location on navigable Green River provides the mine with low-cost access to a large customer base, including export markets. Rhino is counting on Pennyrile to help return it to profitability. The company posted a small, $200,000 loss in the first quarter of 2013, more than reversing a net profit of $9 million in the first three months of 2012. Zatezalo said the quarterly results reflected reductions in volumes and prices from contract expirations. In northern Appalachia, unit prices improved and costs declined as the company's Hopedale mine in Ohio remains fully contracted through 2014, while volumes declined at the Sands Hill operation, also in Ohio. July 2013

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