Cline Mining Corporation has provided an update on its current activities at its New Elk mine, including an update on the temporary mine stoppage and mine plan review.
Ken Bates, CEO and Director of Cline Mining, commented: "The global coal market, in which metallurgical coal prices have decreased sharply over the last two quarters, is incredibly challenging for coal companies at the present moment and is a direct reflection on excess inventories and current soft demand. We are focused on, and committed to, navigating this challenging environment. We have taken all the necessary actions so that we preserve our capital position and conserve our working capital. The implementation of the marketing strategy is also key and we are firmly committed to this process and to achieving a financially viable and economic rate of return for our coal product. The New Elk mine is an asset with long-term potential as markets recover."
Temporary Production Suspension at New Elk Mine
As announced in the Company's July 11, 2012 news release, the Company temporarily suspended production at its New Elk mine in order to manage costs and preserve the Company's financial condition. While the duration of the suspension was expected to be approximately sixty (60) days, the Company, due to current market forces, will continue the suspension of operations at New Elk pending improved market conditions.
The Company is implementing a long term marketing strategy to sell its current stockpile and future production at a rate that is financially viable. Though the Company anticipates that production will resume, variability of market conditions and other economic factors continue to make it impossible to project an exact personnel return date with certainty.
New Elk Mine Plan Review
The technical mine planning review process for operations of the New Elk mine, conducted by the recently-appointed New Elk Coal Company LLC Chief Operating Officer, David Stone, has been completed on schedule. The primary focus has been on the development of the Central Zone of the mining lease which provides optimum utilization of the already present infrastructure coupled with the highest short-term production output. The technical mine plan review now demonstrates the optimal resource and recovery coupled with the overall focus on increasing the Net Present Value ("NPV") of the asset. The Northern and Southern areas of the lease provide an exceptional upside case and will be developed once the action plan for the Central Zone is complete. These areas in supplement to the Central Zone facilitate the ability to perform low capital brownfields expansion.
The Company continues to build appropriate Life Of Mine operating schedules and new financial and cost analysis for the project, and expects to formalize this review and production plan at the time that it resumes production.
David Stone, Chief Operating Officer of New Elk, commented: "The results of the review have clearly demonstrated that the resource can be transformed into a world class mining complex. The entire plan has been built from first principles taking into account geology, equipment and infrastructure. A detailed implementation action plan inclusive of all required factors including safety, human resources, financials, logistics, engineering and maintenance is well underway for the entire operation and we are confident that upon the securing of an off-take agreement the projected plan will be achieved."
Source - Cline Mining Corporation
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