Coal Age

FEB 2012

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news Foresight Energy Plans to Launch IPO est cost underground coal producer in the United States at $19.41 per ton in 2010," the company said. Figures for 2011 were not included. According to the filing, the four complexes are designed to support up to eight longwall mining systems, giving them a com- bined production capacity of 65 million tons a year. The company currently operates one longwall at Williamson and plans to start new longwalls at both Sugar Camp and Hillsboro early this year, "having already invested most of the expansion capital necessary to develop these mines." Foresight said Sugar Camp and Hillsboro have the potential for four and three longwalls, respectively. Sugar Camp, located near Akin in Franklin County, also boasts the most prolific pro- duction potential—up to 28 million tons annually, with Hillsboro barely trailing at 27 million tons a year. Williamson's output could hit 7 million tons a year while Macoupin trails at 3 million tons annually. Foresight Energy's Sugar Camp mine (shown here) could eventually operate four longwalls. Rumored as a possibility this year, Foresight Energy Partners, owned by Chris Cline, filed February 2 with the U.S. Securities and Exchange Commission for an initial public offering (IPO) with a maximum offering price of $100 million. In the filing, the company described itself as a low-cost producer of quality ther- mal coal with expertise in developing highly productive under- ground mines in the high-sulfur Illinois Basin. Over the past decade, Foresight said it invested more than $1.5 billion in four mining complexes—Williamson, Sugar Camp, Hillsboro and Macoupin—in Illinois with long reserve lives and related transportation infrastructure that should "provide us with significant sustainable free cash flow." Foresight said its first mining complex—Williamson, or Pond Creek, near Johnston City—was the most productive under- ground mine in the United States in the fourth quarter of 2011 on a clean tons-per-produced-man-hour basis. "Our leading pro- ductivity translates into low costs, and we believe we are the low- ± Sugar Camp also leads in total reserves with an estimated 1.32 billion tons. Next is Hillsboro with 879 million tons and Williamson with 396 million tons. Macoupin has the least, about 360 million tons. Foresight said it sells a significant portion of its coal under long-term agreements with terms of one year or longer. The com- pany markets and sells coal "to a diverse customer base including electric utility and industrial companies in the eastern United States, as well as the seaborne thermal coal market. In 2012, 2013 and 2014, the company said it has secured coal sales commit- ments of approximately 12.8 million tons, 14 million tons and 11.7 million tons, respectively. Cline Group spokeswoman Jennifer Kroen in St. Louis declined comment on the IPO, adding other company officials also did not want to discuss it at this time. Raymond James analyst James Rollyson referred to Foresight as "the CONSOL of the Illinois Basin." Foresight's IPO, he said, has a good chance to be successful. "It has been a little bit of a challenging public market. But they're in the one basin that has seen pricing hold up the best," Rollyson said. B REAKI NG N E W S recently broke the news that the Sierra Club has accept- ed more than $25 million in donations from the gas industry (mostly from Chesapeake Energy) to help fund its Beyond Coal campaign. The envi- ronmental non-governmental organization (NGO) accepted the money over the course of three years (2007-2010), but refused an addition $50 million. The article also sheds light on the relationship between for- mer Sierra Club Executive Director Carl Pope and Chesapeake Energy CEO Aubrey McLendon. A blogger for 6 The revelation is unsettling, but the coal industry was not surprised. It has been dealing with the NGO and fierce competition for many years. "Chesapeake surreptitiously financed opposition to a competing fuel that it couldn't beat in the marketplace, and the club took dictation and money from the nation's largest hydraulic fracker," said Luke Popovich, vice president of communications, National Mining Association (NMA). An NMA report last year estimated the Sierra Club, which takes pride in the fact it has halted the construction of 160 new coal-based pow- er plants, has destroyed 116,872 permanent jobs and an additional 1.12 million construction jobs throughout the country by blocking power plant construction. February 2012 Sierra Club Uses Gas Money to Fight Coal TIME

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