Coal Age

MAR 2018

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14 March 2018 elk creek prep plant Ramaco Resources Commissions Elk Creek An Appalachian operator launches a new complex to produce high-quality metallurgical grade coal by steve fiscor, editor The recent market improvement for metal- lurgical grade coal has allowed coal oper- ators to breathe new life into some Appa- lachian operations. One of those, Ramaco Resources, has invested more than $75 mil- lion to open four new mines and build the Elk Creek prep plant during the last year. The company produces high-quality, low- cost met coal from its Elk Creek and Ber- wind operations in West Virginia, and it also owns the Knox Creek prep plant in Virginia as well as the RAM reserve in Pennsylvania. While each of these properties have differ- ent geological and logistical advantages, Elk Creek is the flagship operation. The Elk Creek prep plant, America's newest prep plant and loadout facility, currently serves three deep mines and one surface/highwall operation. The plant was constructed and commissioned in about 18 months, becoming fully operational in February. Coupling Elk Creek's high-vola- tile met production with the low-volatile coal at the Berwind mine, Ramaco Re- sources expects to produce between 2 mil- lion and 2.2 million tons of high-quality, low-cost coal in 2018. This tonnage represents a significant amount of year-on-year growth. Ramaco Resources sold 608,000 tons of met coal in 2017. They produced 372,000 tons and purchased 236,000 tons. The Elk Creek op- erations produced 546,000 tons. For 2018, the company already has committed sales of 1,528,000 tons. More than 1,151,000 will be sold into the domestic market at $77/ ton and 211,000 will be exported at $110/ ton. Another 166,000 tons will be exported and priced against the index. Essentially, 73% of the company's 2018 mined production is committed. This year, the company is projecting sales volumes of 2.4 million to 2.95 million tons. Of that total, 2 million to 2.2 million tons will be produced by the company and it will likely purchase 400,000-750,000 tons. As expected, the commissioning of the Elk Creek plant lowered the company's cost of production. Ramaco Resources' average cash mining costs fell to approxi- mately $58/ton in the fourth quarter of 2017 from $84/ton for the first three quar- ters of 2017. Once the Elk Creek prep plant became operational, the company was able to eliminate costs related to the off- site trucking and third-party processing of its coal. They now expect further incre- mental improvements in costs. Establishing a Met Position When Ramaco Resources bought Elk Creek in southern West Virginia in 2012, it also acquired rail access, a permitted impoundment and coal refuse disposal facilities, as well as a few reclaimed, but permitted, deep mines. The company also acquired a significant amount of existing surface contour benches. Elk Creek began production in the fourth quarter of 2016. The property con- sists of more than 17,000 acres with 24 seams of high-quality metallurgical coal, which are accessible above drainage. "We are mining from multiple seams," said Chris Blanchard, COO, Ramaco Resources. "The underground mines are mining coal from the Eagle, No. 2 Gas and the Alma seams. The surface operations mine coal from the Cedar Grove horizon upward, which is a total of 13 seams and splits." Long term, Ramaco expects Elk Creek to produce 2.7 million tons per year (tpy) of clean coal from a combination of under- ground, room-and-pillar mines and contour surface operations using a highwall miner. "There are plans to potentially grow that to a total of five underground mines and two surface mines in the future," Blanchard said. The deep mines are expected to gen- erate higher clean tons per foot of advance and, when combined with expected lower ratios for the surface mines and the produc- tivity of the highwall miner, Blanchard be- lieves Elk Creek will have lower mining costs than many of the local competitors. In July 2016, Ramaco Resources ac- quired the Knox Creek property from Al- pha Natural Resources, which includes a prep plant and a coal-loading facility along with a refuse impoundment and an idle mine. While the company is current- ly exploring plans for potential mining at Knox Creek, it will also wash and load coal The Elk Creek prep plant has a 700-tph raw feed capacity and the ability to load unit trains on the CSX line.

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