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Amid improved safety and operational performance, Westmoreland Coal Co. reported record 2013 revenues ($675 million) in wake of its recent Sherritt acquisition. The company expects to produce 28 million tons in 2014. Moreover, as reportable incidents fell from 78.1% to 56.4% year-on- year, representatives voiced enthusiasm over balance sheet prospects. "Our strong operating cash flows set the stage for the transaction," said Executive Chairman Keith E. Alessi, referring to the Colorado miner's Sherritt purchase for $465 million. CEO Robert P. King attributed 2013 growth to strong power demand, low hydro generation and favorable weather conditions. "We are also very pleased that the Kemmerer mine," acquired in Q1 2012, "continued to perform beyond expectations;" in safety terms, while Westmoreland's incidence rate remained significantly lower than the national average for surface mines, he added. A new customer and Sherco Unit 3 resuming operations at the Absaloka mine further enhanced revenues. North Carolina's ROVA power plant also experienced improved performance with fewer out- ages. Both factors overrode impacts of significant unplanned customer outages last year. Production Shortfalls Impact Arch Coal's Q4 Performance Officials at Arch Coal have announced that lower-than-planned ship- ment levels in Wyoming's Powder River Basin coupled with reduced production at their Mountain Laurel complex in Appalachia will impact the company's Q4 2013 results. In the Powder River Basin, Arch's Q4 shipment levels fell by more than 15% from Q3 owing to rail service issues on the Joint Line. Q4 ship- ments were impacted as Arch's current mix of sales contracts skews more heavily toward customers using the rail operator with the majority of the shortfall. Arch officials said the shipment shortfall had a predictable increase in Q4 unit costs in the region, while lower-than-expected Q4 shipments pushed 2013 thermal volumes below previous expectations. However, "we would expect to make up a majority of those ship- ments during 2014 as rail service improves," CEO John Eaves said. Arch encountered challenging geologic conditions in the current longwall panel at the Mountain Laurel complex in Appalachia as company officials previously announced. Consequently, the mine's 2013 production decreased by 40% from Q3 levels, leaving Arch's full-year 2013 metallurgical coal sales volumes slightly below previ- ous expectations. WVDEP Investigates Kanawha Eagle Spill West Virginia Department of Environmental Protection (DEP) officials have said they are continuing their investigation into the February 11 coal slurry spill at Patriot Coal's Kanawha Eagle prep plant near Winifrede, south of Charleston. Kanawha Eagle is now under a DEP-issued Imminent Harm Cessation Order (IHCO) issued soon after the spill, the agency said, for n e w s 4 www.coalage.com March 2014 Westmoreland plans to mine 28 million tons in 2014. Westmoreland Coal Demonstrates Improved Performance B R E A K I N G N E W S Arch Sells Hazard Division to Blackhawk Hot on the heels of its sale of the Addcar subsidiary (see Suppliers News, p. 48), St. Louis-based producer Arch Coal confirmed March 5 that it has sold its Hazard subsidiary to Kentucky operator Blackhawk Mining in a $26.3 million cash deal. The sale includes the Hazard thermal coal mining complex and relat- ed infrastructure as well as approximately 38 million tons of thermal coal reserves in eastern Kentucky. The Hazard complex includes four active surface mines: East-Mac & Nellie, Rowdy Gap, Bearville and Thunder Ridge, as well as the Teton prepa- ration plant and Kentucky River loading facility. Arch also divested $15.6 million of reclamation liabilities to Blackhawk as part of the sale, and expects to be released from $43.8 million of reclamation surety bonding. The producer has the potential to receive future royalty payments of up to $35 million (aggregate) over the next five years resulting from its retention of select coal reserves at Hazard. "The sale of our Hazard subsidiary demonstrates that we are continuing to streamline our mining portfolio and monetize assets that are not essential to our future growth plans," President and CEO John W. Eaves said. "This transaction allows us to further sharpen our focus on strategic assets that have the highest return potential, such as our growing Appalachian metallurgical coal franchise and our low-cost Western thermal coal platform. At the same time, the proceeds from the sale further strengthen our already substantial cash and liquidity position." In 2013, Hazard sold 1.7 million tons of thermal coal and generated $4.8 million in earnings before interest, taxes, depreciation and amortization. Blackhawk Mining, which was formed in 2010, was advised in the transac- tion by Deutsche Bank. CA_pg04-23_V2_CA_pg06-23 3/12/14 12:24 PM Page 4