Cline moves toward coal production at New Elk

Now with a coal preparation plant, silos and mining equipment in the hands of Cline Mining (CMK-T), the company is one step closer to bringing the New Elk mine in Colorado back into production.

The New Elk surface assets, which also include buildings, railway right of way, surface real estate, conveyor systems, electrics and a coal waste dump, cost Cline US$1.6 million, plus the assumption of an existing reclamation bond from the state government for US$967,000.

An agreement signed last November also entitled Cline to acquire a total of 74 sq. km that make up the New Elk coal properties and a resource of 315 million tons of in-place coal. The resource has been verified in a National Instrument 43-101 technical report that was just published.

The price tag for the rest of the acquisition is US$13.8 million, plus an existing US$2.8 million reclamation bond and a US$1 per ton royalty on coal sales for which Cline has the right to buy out for US$15 million.

Cline says it hopes to start production “as soon as possible” at the plant, which operates at 550 tons per hour.

But first the company will need to complete a financing, which is currently being arranged.

The New Elk mine first opened in 1951 to provide metallurgical coking coal for the blast iron furnace of a steel company. In 1981 the steel plant was converted to direct electrolytic reduction steel, eliminating the need for coking coal. The mine was sold but continued operations until 1989, though the coal preparation plant, built in 1984, was operated until 1996.

Cline shares gained 23%, or 10, to 54 each by mid-day Friday on a trading volume of 4.3 million shares.