Coal company buys local landMay 1 - McClatchy-Tribune Regional News - C.V. Moore The Register-Herald, Beckley, W.Va.
A coal company has acquired over 10,000 acres of coal seams on the Meadow River in Fayette, Nicholas, and Greenbrier counties, as well as the former site of Songer Whitewater Rafting on U.S. 19 in Fayette County. Xinergy Corp., the publicly-traded company that purchased the property, is so far tight-lipped about their plans to develop what they are calling the Sewell Mountain project. The property acquisition includes: n 425 acres of surface and mineral property on the waters of Glade Creek and Little Glade Creek in Fayette County n 10,899 acres of mineral property on the Meadow River in Fayette, Nicholas, and Greenbrier counties, commonly known as the Foulke Meadow River Lands n 104 acres of surface and mineral rights in Fayette County known by locals as the former site of Songer The company purchased the Sewell Mountain property from Heartwood Forestland Fund IV in October 2012 through a subsidiary, Whitewater Resources. They say the purchase will enable them to expand their high-quality mid-volatility metallurgical Sewell Seam coal reserves "in a highly advantageous region and situation." "Contained within the surface acquisition is the base infrastructure for the construction and long-term operation of a deep mine, preparation plant, and refuse facility. Planning and permitting commenced directly with production anticipated in 2015," states Xinergy's April report to investors. The 10,899-acre parcel was sold expressly for deep mining purposes only. A press release from the company last November said the Sewell project was on an 18-24 month development schedule. "We would expect to be in a position within the next quarter or two to more openly discuss the project's attributes," said Xinergy Corp. CEO Matthew Goldfarb in a conference call on March 22. "Until then, we will affirm our expectation that...we have a tremendous degree of confidence that Sewell Mountain will be value-creative whether we choose to ultimately develop the project or monetize it pre-development." The Songer site was purchased from Miller Ridge Properties for $1,109,756 on April 10. An executive at Xinergy says that their employees who travel quite a lot are staying at cabins on the property. In a conference call to investors, a company executive referred to the property as "the second piece to the Sewell Mountain puzzle." Goldfarb anticipated the total acquisition costs for the entire Sewell Mountain project to be in the range of $10-12 million, perhaps spread over a couple of years. Approximately $5 million of that has been spent to date on acquiring property, signaling that more may be purchased in the future. The company expects to complete a full technical report on the Sewell Mountain project this year. How and whether the property will be developed is still a question, likely settled only after the company acquires its full land package. "I think the way to look at (Sewell Mountain) is we had an opportunity to go and acquire something...at, we think, pennies on the dollar to its intrinsic value going forward," Goldfarb told investors. "I don't think we need to determine now whether this is an asset that we put together and sell or something we develop ourselves and grow into over time. I think we have the luxury, given how small the capital is up front, to make that decision later." Company president Bernie Mason called the minability of the coal "fantastic." And with two railroads and a navigable river, he said the marketability has "a tremendous amount of upside" for the company. In close proximity to the Sewell Mountain project, the company also owns approximately 35,000 acres of coal reserves in northern Greenbrier County, where they have operated the 852-acre Blue Knob surface mine since April 2012, employing 35 people. It is known as the South Fork site and, once in full production, Xinergy expects it to be their "crown jewel" asset. It is their only active mine. Two other facilities--True Energy in Wise County, Va., and Raven Crest Mining in Boone County, WV--have been idled. Late last year, the company began site preparation and construction of a coal prep plant and railroad coal loading facility at South Fork that will tie into CSX New River Coal District. It is expected to be operational in July, permitting the company to increase to their optimum production levels on Blue Knob. Last summer, Fayette and Greenbrier county officials became concerned that a coal company's plans to haul coal by rail could interfere with the development of the Meadow River Rail Trail. This was based on an inquiry from a company employee to a Department of Transportation official working on the project. At that time, an executive at Xinergy told The Register-Herald that he had no knowledge of the company pursuing any mining permits in Fayette County. The state decided to move forward with the rail trail project despite the uncertainty. Xinergy Corp. is based in Knoxville, Tenn., and produces metallurgical and thermal coal with reserves, operations, and properties in Virginia and West Virginia. It was formed in 2007 as a subsidiary of Ontario-based Xinergy Ltd., and produces metallurgical and thermal coal with reserves, operations, and properties in Virginia and West Virginia. Xinergy of West Virginia, its subsidiary, owns several companies in the state--South Fork Coal Company, Sewell Mountain Coal Company, Whitewater Contracting, Whitewater Resources, and Kentucky-based Shenandoah Energy. The Mine Safety and Health Administration (MSHA) cited Xinergy 33 times in 2012 for health or safety violations. The company's website, xinergycorp.com, contains descriptions and maps of each of the company's current operations, as well as investor information. --Email: cmoore@register-herald.com http://www.register-herald.com/ http://www.energycentral.com/functional/news/news_detail.cfm?did=28443323 |