May 9, 2019 - CONSOL Energy announced Wednesday it's developing a new low-volume metallurgical coal mining operation in West Virginia’s Wyoming County, Kallanish Energy reports.
The Itmann Mine and preparation plant are expected to be completed in 2021, said the Pennsylvania-based company. It would have a 25-year life and it will produce more than 600,000 tons per year of coking coal at full-run rate. It's expected the coal will sell for $65 to $75 per ton.
It will cost between $65 million and $80 million over the next two years to develop the mine and preparation plant. It's likely the project will be funded by the company’s free cash flow, CONSOL said.
The project is the company’s “first major growth initiative,” said Jimmy Brock, company CEO, in a statement. “The Itmann Mine begins the next phase of our evolution, as we are now focusing on strategic and controlled growth as an additional avenue to increase our per-share value,” he said.
“Consistent with our goal of being a low-cost, high-margin producer of high-quality products, we believe the Itmann Mine will align perfectly with our current asset base. It will further diversify our already robust portfolio by adding a new metallurgical coal product stream to the mix,” Brock added.
The new mine should allow the company to produce more than 2.5 million tons of metallurgical-quality coal annually. Much of that coal will come from the current crossover metallurgical product from the Pennsylvania Mining Complex in southwest Pennsylvania.
Other metallurgical coal mines are expected, but they are mostly focused on high-vol metallurgical products while the Itmann Mine is targeting domestic low-vol production customers, CONSOL said.
The company reported first-quarter 2019 net income of $20.3 million, or 52 cents a share, compared to net income of $70.9 million, or $2.20 per share in Q1 2018.
The Q1 2019 adjusted net income was $39.5 million, or $1.21 per share. Net cash provided by operations in Q1 2019 was $82.2 million, and adjusted Ebitda was $118.5 million. CONSOL said its organic free cash flow in the quarter was $42.4 million.
The company said it reduced its debt by $100 million in 1Q 2019. The company sold 6.7 million tons of coal in Q1 2019, at average revenue per ton of $49.38.
A year ago, the company sold 6.6 million tons at average revenue per ton of $52.98.