Seeking Alpha

Alliance Resource's Pontiki mine in Kentucky set to close

  • Alliance Resource Partners (ARLP -2.4%) says its Pontiki mine in Kentucky is expected to close by year end, and its Excel Mining subsidiary issued Worker Adjustment and Retraining Notification notices to all employees at the complex.
  • ARLP does not expect the mine closure to have a material impact on 2013 financial results.
Comments (1)
  • dy2
    , contributor
    Comments (32) | Send Message
     
    Not a cost cutting measure. Pontiki had a mechanical failure last year, and after debating whether the mine should be shut down or repairs should be invested in, mgmt. decided to make the necessary investment. It seemed to be a close call at the time. Management didn't seem all that confident in the mine's future, but they thought it was worth a shot. Co. took a writedown last year, and in today's notice made clear that it wouldn't have a material effect on 2013 financial results.
    It is a small mine-142 miners and 600k tons of coal mined. This is approx. 1/10th of their prodution from the new Tunnel Ridge mine opened May 2012-rated capacity over 6mln tons, and very cheap to mine at that. Tunnel Ridge mine is just about completing its full ramp-up.

     

    Effect of closing mine is trivial in overall scheme of things. May be further reaction anyway, ....or not.
    Any further downside reaction to this news will make the stock price too cheap. Investments in new mines at Gibson South Complex and White Oak coming on in next two years will have a substantial effect on production and profitability. This is the only profitable Coal mining Co. in the United States, and is beginning to eat into the more expensive coal producers in Central App.
    27 Sep 2013, 07:13 PM Reply Like
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