Coal Age

FEB 2016

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Bankruptcy Court for the Eastern District of Missouri. As it wades through reorganization, officials said mining operations and customer shipments will continue uninterrupted. "After carefully evaluating our options, we determined that implementing these agreements through a court-supervised process represents the best way to solidify our financial posi- tion and strengthen our balance sheet," said John Eaves, chair- man and CEO, Arch Coal. Eaves pointed out that the company has taken several steps to enhance operational efficiency and bolster its asset base in the time since the market downturn began. While it confirmed cash holdings and short-term invest- ments of more than $600 million as of January 11, it received $275 million in debtor-in-possession (DIP) financing. "Upon approval by the bankruptcy court and satisfaction of customary conditions, these financings, as well as the compa- ny's existing liquidity and cash generated from ongoing opera- t i o n s , w i l l b e u s e d t o s u p p o r t t h e b u s i n e s s d u r i n g t h e restructuring process," the company said. Arch has set up a website for documents and scheduled hearings related to its case at www.archcoal.com/restructur- ing. Davis Polk & Wardwell is serving as the company's legal advisor, and PJT Partners is serving as financial advisor. OSM Grants Wyoming More Time on Bonding Reviews Officials with the U.S. Office of Surface Mining Reclamation and Enforcement (OSM) have extended the time for Wyoming envi- ronmental officials have to complete reviews into two coal oper- ators that allegedly have violated reclamation standards. According to the Casper Star Tribune, the Wyoming Department of Environmental Quality (DEQ) was given until February 12 and February 22 to complete its investigations into Alpha Natural Resources and Arch Coal, respectively, regarding their reclamation status. The initial deadline was February 1, but DEQ officials responded that they needed more time due to the evaluations' complexities. They requested March 1 because of the "factual and legal issues raised in the letters and the multi- ple other demands on DEQ as it prepares for the upcoming leg- islative session," but its date proposal was rejected. The probe as a whole first emerged in mid-January, when the OSM said Alpha and Arch, both in the midst of Chapter 11 bankruptcy proceedings, may be holding insufficient insur- ance for its permits. Both companies utilized self-bonding for its properties; however, the DEQ said last year that Alpha no longer qualified for the status and ordered it to put up collater- al. In the case of Arch, which filed for bankruptcy last month, it h a s r e m a i n e d q u a l i f i e d f o r s e l f - b o n d i n g u n d e r i t s A r c h Western Resources division. When it filed for bankruptcy last year, Alpha agreed to a $61 million "super-priority" claim for Wyoming on its obligation of $411 million. The combined tab for Alpha and Arch's reclama- tion obligations total about $900 million, according to the Star Tribune. Can Alliance Keep Its Record Pace in 2016? Alliance Resource Partners turned in another record year for coal production and sales in 2015. But that glittery perfor- mance is likely to be dimmed somewhat in 2016 as the major n e w s c o n t i n u e d Richards Bay Terminal Hits Record The Richards Bay Coal Terminal (RBCT) in South Africa shipped a record 75.4 million metric tons (mt), beating its 74-million-mt target and increasing its year-on-year throughput by 5.7%. Company CEO Nosipho Siwisa-Damasane said the record was "a very difficult one to b reak" and said the whole-year outlook for 2016 should be in line with 2015. She also said that the facility reviewed its business model in the face of the global coal market downturn and is working to ensure higher productivity and efficiencies, reduction in downtimes, opera- tional and support cost reductions and faster turnaround times for vessels and trains. RBCT achieved 4 million man-hours without a lost-time accident as of January 10. Rio Tinto Sells Mount Pleasant to MACH Energy Rio Tinto has agreed to sell its Mount Pleasant thermal coal assets to MACH Energy Australia Pty Ltd. for $224 million plus royalties. With the recently announced binding agreement for the sale of Rio Tinto's interest in the neighboring Bengalla coal joint venture, this amounts to $830 million of agreed sales. "These agreements for more than $800 million in asset sales deliver significant value for our shareholders, with the potential for future royalties from Mount Pleasant," said Jean-Sébastien Jacques, chief executive for copper and coal at Rio Tinto. "We believe Mount Pleasant can have a very positive future under its new owners with different priorities for development and capital allocation." Rio Tinto has now announced or completed US$4.7 billion of divestments since January 2013. Mount Pleasant is a large-scale, thermal coal asset in the Hunter Valley of New South Wales with total marketable reserves of 474 mil- lion metric tons. The sale is subject to certain conditions precedent being met, including completion of the restructure of Coal & Allied and regulatory approvals, and is expected to close in the second quar- ter of 2016. Australian Authorities Investigating Mine Dam Collapse The New South Wales Environment Protection Authority (EPA) is cur- rently overseeing an investigation into a sedimentation dam wall that collapsed at a coal operation in the Hunter Valley. EPA officials said a partial collapse at the Warkworth mine occurred January 6, which was reported to the agency by mine offi- cials. While at the time, the company reported that the environment was not in danger and had not caused the event, the EPA still ordered an incident report. It also has directed the mine's owner, Rio Tinto, to commence cleanup to prevent further sediment leakage. The spill is reportedly the third in the region in recent weeks; the EPA is also investigating a partial dam wall collapse at Peabody Energy's Wambo operation following a mine collapse. Regional media has also reported on a mine dam overflow at Rio Tinto's Bengalla mine, though the EPA has not yet confirmed the nature of that incident. Continued from p. 5... 6 www.coalage.com Februaruy 2016 ˛

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