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period last year. That mainly was the result of lower average coal sales prices, which declined 4.7% to $53.18/ton. The company attributed the average lower prices to shipments on the Hamilton No. 1 longwall mine's lower-priced legacy contracts and the i mpact of market conditions on realized prices. D uring the summer, Alliance gained complete operational and marketing control of Hamilton No. 1, formerly known as White Oak No. 1, from privately owned White Oak Resources. The mine near McLeansboro in Hamilton County, Illinois, has been a drag on Alliance's earnings so far, but Craft expects Hamilton to become marginally accretive by the end of the year. Gas prices, the bane of domestic coal producers in the past few years as some electric utilities have switched plants from coal to g as to reduce fuel costs, most likely will not change much in 2016, according to Craft. "As we look at coal demand versus gas, we don't see gas prices being too dissimilar in 2016" compared with 2015, he said. "When you think in terms of the Illinois Basin and Northern Appalachia, we believe demand will be similar as more coal is taken out of Central Appalachia. Our goal is to maintain our market share as we had in 2015." Because of increased production at several mines, including Hamilton 1 and the new Gibson South continuous miner operation near Princeton in Gibson County, Indiana, Alliance now expects to turn out between 41.1 and 41.7 million tons this year, slightly more than the 40.2 to 41.2 million tons previously forecast. Sales for this year are expected to be 40.9 million to 41.5 million tons. Production levels for next year remain uncertain, however. "Coal volumes for 2016 could be as low as 40 million tons and as high as 45 million tons," depending on the outcome of ongoing coal contract negotiations, Craft said. To counter intense market p ressures, "we will continue to do what's best for the company, i ncluding shipping more coal from our lowest-cost mines," he said. In the third quarter, Craft disclosed, Alliance essentially reduced all contractors who had been hired to assist the compa- ny's operations "and have run reduced unit shifts at most of our operations to manage inventories. We expect this to continue for the rest of the year." Alliance already has secured coal sales and price commitments f or approximately 31.9 million tons, 16.8 million tons and 12.5 mil- lion tons in 2016, 2017 and 2018, respectively. In the third quarter, the company booked 8.7 million tons of term coal sales for an aggregate price in excess of $50/ton, Craft said. In all of the country's major coal basins, he estimated, at least 20% of the coal being produced and sold is selling for less than what it costs to mine. That apparently is not the case at Alliance. "To my knowledge, we haven't entered into any contract where we're losing money," Craft said. Production Expected to Begin at Golden Eagle Mine Southern Illinois steam coal producer Knight Hawk Coal LLC expects to start production soon at its new Golden Eagle surface mine, even as the company pivots toward deep-mined coal in an effort to cut costs in a brutal market. The initial high-sulfur coal should be extracted from Golden Eagle in early 2016, probably in January, according to Knight Hawk President Steve Carter. "We're in development, we've got a sedimentation pond dug," Carter said in late October. "We'll be starting development of the box cut." However, "with the markets like they are, we're not in any big hurry." Even by Knight Hawk's standards, Golden Eagle will be a rela- tively small mine. While it potentially could produce more, the company intends to keep the mine's annual output at about 300,000 to 350,000 tons, and it will be used to supplement existing regional coal supply contracts. To access Golden Eagle's roughly 240 acres of privately owned coal reserves, Knight Hawk will be allowed to use a portion of the 19,701-acre Pyramid State Park near Pinckneyville in Perry County as a staging area. Once mining is completed, the company plans to donate the land, valued in excess of $1 million, to the state. Aside from Golden Eagle, though, Knight Hawk is looking to become more of an underground coal producer in the years ahead. "We're cutting back our surface-mined coal with the market the way it is and lengthening the life and focus of our underground coal," Carter said. "Everything for us is about limiting expenditures." Even so, Knight Hawk is forecasting similar coal production in 2016 — about 5 million tons, as in 2015. This year, production should be just under 5 million tons, he said. Knight Hawk expects to receive a bit less on its coal sales next year. "Prices, where we've had [contract] reopeners, will be down," Carter said, although he did not elaborate. "It's going to cut our revenue and overall margins, but we'll be looking to lower costs. n e w s c o n t i n u e d C A L E N D A R O F E V E N T S January 27-29, 2016: WVCA Mining Symposium, Charleston Civic Center, Charleston, West Virginia. Contact: Web: www.wvcoal.com. January 28-29, 2016: 16 th Coaltrans USA, The Four Seasons Miami, Miami, Florida. Contact: Web: www.coaltrans.com. January 31-February 3, 2016: 41 st Annual Conference on Explosives and Blasting Technique, Las Vegas, Nevada. Contact: ISEE; Email: meetings@isee.org; Web: www.isee.org. February 21-24, 2016: SME Annual Conference and Expo, Phoenix Convention Center, Phoenix, Arizona. Contact: Web: www.smenet.org. March 6-9, 2016: Prospectors and Developer Annual Conference, Toronto, Ontario, Canada. Contact: Web: www.pdac.ca/convention. March 21-24, 2016: National Western Mining Conference and Expo, Colorado Convention Center, Denver, Colorado. Contact: Web: www.coloradomining.org. April 11-17, 2016: bauma, Messe Munchen, Munich, Germany. Contact: Web: www.bauma.de. April 25-27, 2016: Coal Prep 2016, Kentucky Exposition Center, Louisville, Kentucky. Contact: Web: www.coalprepshow.com. May 1-4, 2016: Canadian Institute of Mining, Vancouver, British Columbia, Canada. Contact: Web: www.cim.org. September 26-28, 2016: MINExpo INTERNATIONAL 2016, Las Vegas Convention Center, Las Vegas, Nevada. Contact: Web: www.minexpo.com. 14 www.coalage.com November 2015