Xinergy Ltd. Increases Thermal Coal Reserves Via Lease Agreement of Brier Creek Property in West Virginiaadmin
Xinergy Ltd., a US Central Appalachian producer of high quality coal, today announces the completion of a definitive lease agreement (“the Transaction”) with Penn Virginia Operating Co., LLC. (NYSE:PVG – News) for the tract of land known as Brier Creek (the “Parcel” or the “Property”). The Parcel lies adjacent and to the north of Xinergy’s Raven Crest properties in Boone County, WV.
“We continue to execute our strategy of value accretive acquisitions in Central Appalachia, which includes developing our existing projects. Less than a month ago, we announced the acquisition of a metallurgical coal property, which is expected to prove to be a great addition to our portfolio of assets. It is anticipated that this lease agreement will significantly increase our thermal footprint at our Raven Crest property, allowing us to leverage our fixed costs and lower our overall lifting cost, it also provides us a sustainable, quality, permitted thermal project for the foreseeable future,” said Bernie Mason, Xinergy’s President.
Reserves and Production Estimates
Based on information provided by the Marshall Miller & Associates, Inc. August 17, 2007 report entitled “Reserve, Operations and Financial Evaluation of Coal and Mineral Properties of Raven Crest Mining, LLC in Boone and Kanawha Counties, West Virginia USA,” management believes the 13,000 – 14,000 acre Property contains approximately 11.9 million tons Measured Mineral Resources; 12.5 million tons Indicated Mineral Resources and 10.4 million tons Inferred Mineral Resources. The Company has begun the process to produce a reserve estimate compliant with NI43-101 standards, which it expects to be filed within 45 days.
The Transaction includes surface leases and coal subleases to the thermal coal reserves through two fully permitted deep mine areas, which have already been faced up, as well as active permits for a coal preparation plant and refuse area. The Company expects initial production at a rate of 50,000 tons per month to begin in the first half of 2012, after the completion of the preparation plant. The Company anticipates a production run rate on the Property to reach 1.2 million tons per year, subject to market conditions. The Company further anticipates total capital expenditures related to the Property to be in the range of US$40 million-$US50 million, inclusive of the preparation plant and underground equipment.
Jack Hagewood, PE, Regional Manager for the Company has reviewed and confirmed the scientific and technical information within this news release relating to Brier Creek and serves as the Qualified Person as defined in National Instrument 43-101.
The press release contained above represents forecasts of production, which indicate a range of possible outcomes and are provided to assist investors with the development of future earnings estimates. While Xinergy believes these forecasts represent the best estimate of management as to future events, actual events will differ from these forecasts and such differences could be material.