Coal Age

MAR 2017

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March 2017 www.coalage.com 5 news continued secured notes, consisting of $500 million of 6% senior secured notes due in 2022 and $500 million of 6.375% senior secured notes due in 2025. The net proceeds of the offering have been funded into an escrow account pending Peabody's emergence from bankruptcy. The notes were issued by a special purpose wholly owned sub- sidiary of Peabody in connection with the restructuring of Peabody as part of its reorganization plan filed with the U.S. Bankruptcy Court for the Eastern District of Missouri on January 27. If Pea- body's plan of reorganization is confirmed and certain other con- ditions are satisfied on or before August 1, the net proceeds from the offering will be released from escrow to fund a portion of the distributions to creditors provided for under the plan of reorganiza- tion, and Peabody will become the obligor under the notes. Follow- ing Peabody's emergence from bankruptcy, the notes will be jointly and severally, and fully and unconditionally, guaranteed on a senior secured basis by substantially all of Peabody's current and future direct or indirect U.S. subsidiaries (subject to certain exceptions). North American Expects Improvements in 2017 In its most recent quarterly earnings statement, North American Coal said it expects to see a significant increase in tons sold in 2017. This improvement in coal sales stems from the start of pro- duction at Bisti Fuels in early January and to a full year of produc- tion at the Coyote Creek mine. Bisti Fuels is expected to deliver approximately 5 to 6 million tons per year (tpy) of coal when the power plant is operating at anticipated levels. Coyote Creek expects to deliver between 2 mil- lion to 2.5 million tons of coal annually when its power plants are operating at anticipated levels. In July 2016, Liberty Fuels began delivering coal to its customer for facility testing and commissioning. Production levels at Liberty Fuels are expected to increase gradually and to build to full produc- tion of approximately 4.5 million tpy of coal beginning in 2023, al- though the pace of future deliveries will be affected by the timing of the Kemper County Energy Facility reaching full operating capacity. Income before income taxes is also expected to benefit moder- ately from fewer expenses related to the Otter Creek reserves and a lower, more moderate, operating loss at Centennial as the company manages ongoing mine reclamation obligations. w o r l d n e w s Drummond Posts Record Year in Coal Exports With a 10% increase in production and a 16% increase in exports as compared to 2015, reaching 28.4 million and 32.6 million tons, respectively, Drummond Ltd. ended 2016 with record numbers. The company cited its investment in state-of-the-art technology at its operations in Colombia, generating operational efficiencies at its mines and the port, and developing initiatives aimed at mitigating its environmental impact as well promoting "exemplary compen- sation projects." "In a complex international market and with the challenges presented by the local economic environment, it is very gratifying for the company to show record numbers for its exports and to have Colombian coal reach 24 countries in 2016," said José Miguel Linares, president of Drummond Ltd. "This achievement reaffirms our commitment to sustainable, properly performed mining." Other Drummond Ltd. milestones in 2016 include the signing of collective bargaining agreements with four union organizations: Sintramienergética, Sintradrummond, Agretritrenes and Sintra- mineros. These agreements included improvements in wage condi- tions and labor benefits for a three-year term. "On social matters, we reaffirmed our commitment to sup- porting the peace process and, among other initiatives as part of our work to support our neighboring communities and promote human rights, we signed an agreement with the DPS to develop projects focused on the fight against extreme poverty," Linares said. "Drummond Ltd. will continue to work in 2017 to maintain its production … and move forward in developing initiatives that are aligned with its corporate social responsibility policy, for the benefit of the country and its people." Conuma to Restart Willow Creek in Canada Encouraged by its early success in reopening two British Columbia metallurgical/PCI coal mines acquired from bankrupt Walter Can- ada last year, Conuma Coal Resources Ltd. is preparing to restart a third mine, Willow Creek, in July, a move that could boost the com- pany's 2017 output to approximately 4 million tons in the western Canadian province. Conuma, a subsidiary of West Virginia-based ERP Compliant Fuels, resumed surface mining at the Brule mine in the Tumbler Ridge area of British Columbia soon after Brule, along with the Wolverine and Willow Creek surface mines, were acquired from Walter in September 2016. Mark Bartkoski, Conuma's president, said in February that the company is pleased with results so far from Brule and Wolverine, which also resumed producing coal late last year. In particular, he praised the productivity at Brule and Wolverine. Brule and Wolver- ine are targeted to produce about 2.4 million and 1.3 million tons of coal, respectively, in 2017. Conuma always had planned to restart Willow Creek, which has higher production costs, after Brule and Wolverine were back in operation. If Willow Creek resumes production in July as planned, it most likely would turn out about 300,000 tons in the latter half of this year, on its way to an annual run rate of approximately 700,000 tons starting in 2018. Reopening the three former Walter mines has led to a welcomed resurgence in the local economy. Conuma expects to have about 460 full-time employees by early May and almost 700 once Willow Creek is up and running at capacity. Bartkoski said his company is not interested in reopening a mine for a short period of time, but is attempting to construct operations so they can withstand the traditional up-and-down nature of coal markets without having to Continued on p. 6... top 10 coal-producing states (in Thousand Short Tons) Week Ending (2/25/17) YTD '17 YTD '16 % Change Wyoming 48,600 41,709 16.5 West Virginia 14,629 12,282 19.1 Texas 8,734 6,324 38.1 Pennsylvania 8,239 6,589 25.0 Illinois 8,097 7,220 12.1 Kentucky 7,337 7,235 1.4 North Dakota 5,820 4,579 26.6 Indiana 5,325 4,607 15.6 Montana 5,089 4,737 7.4 Utah 2,809 2,144 31.0 U.S. Total 128,306 110,338 16.3

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