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Pleasant Valley Coal Mines

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The Kinney Project (Kinney No. 2)

This page was last updated on March 29, 2012.

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(This is a work in progress; research continues.)

Overview

In December 2005, Carbon Resources, LLC, was granted permission to begin exploring for coal in the area near Scofield. The permitting process was begun in February 2008 to develop the resources of what was known as the Kinney No. 2 mine, located on 448 acres either at the same location, or immediately adjacent to the location of the original UP Mine. Known as Utah Oil Gas & Mining permit area no. C0070047. The development was proceeding by Carbon Resources LLC of New Mexico.

(Read more about the original Union Pacific mine, first developed in the 1880s)

Known as the Kinney No. 2 mine, the site is just north and east of the town of Scofield, Utah, immediately adjacent to UP's Scofield Branch, also known as the Pleasant Valley Subdivision. It is the site of the old Jones mine, originally known as the UP Mine, and in later years as the Columbine Mine, the Kinney Mine, the Jones Mine, and the Monay Mine, depending of the name of the persons holding the lease. The land itself is owned by Carbon County, which had taken ownership of the land in the mid 1930s due to non-payment of back taxes. The original owner, Union Pacific Coal Company, a subsidiary of Union Pacific Railroad, abandoned the property at some time after 1932, stating that the taxes owed far exceeded any potential income from rental fees or royalties. Union Pacific had used the coal solely as locomotive fuel for steam locomotives operating across its entire rail system.

The initial permit for the new mine, known as Kinney No. 2, C0070047, was submitted in February 2008 by Carbon Resources, LLC, of New Mexico. The application was found to be incomplete and was returned. Several items were addressed in the application and it was resubmitted. The final permiting and approval process by numerous state and federal agencies was completed in June 2011.

In October 2010, Carbon Resources was forced into bankruptcy due to the collapse of its funding. A purchase agreement was made to sell all assets, including the (pending) permit to the Kinney No. 2 mine, to a new company named Wasatch Natural Resources, LLC, controlled by Delta Coal Fund PTY Ltd, an Austrailian mining company. The purchase price was reported as being $25 million, and the sale became final in September 2011.

In September 2011, Delta Coal Fund PTY and its Wasatch Natural Resources, LLC subsidiary, was acquired by New Horizon Minerals, Ltd, and the new company was renamed to New Horizon Coal, Ltd.

On February 2, 2012, New Horizon Coal announced that they had an underground mineable resource of 26.1 million tonnes, with a potential for a coal operation that can produce up to 2 million tonnes per annum. The permit application itself shows that the company plans on a maximum production of approximately 800,000 tons per year. The zoning change request from 2007 showed a projected annual production of about 2 to 3 million tons per year.

"The permit process was successfully completed in June 2011 and targets initial production to commence in 2013. The project plan includes underground mining of two major coal seams using conventional, continuous miner sections. Entry will be via an exposed coal seam outcrop within the permitted area."

The following comes from Platts news service, February 20, 2012:

New Horizon Coal is targeting first production from its recently acquired Kinney coal project in the US state of Utah in late 2013 and is planning further mine acquisitions with the stated aim of becoming a "mid-tier coal producer with multiple mines in America."

New Horizon Coal's Kinney project lies in a mature coal producing region, the Uinta Basin in Utah, and has a JORC-compliant coal resource of 26 million mt which the company has the opportunity to increase by acquiring nearby leases. (JORC is the Austrailian government's Joint Ore Reserves Committee)

Kinney thermal coal has a relatively high calorific value of 6,500-6,780 kcal/kg on a net as-received basis, ash of 7-9.5% and sulfur of 0.5-0.9%, according to New Horizon's presentation.

The Kinney project lies 500 meters from the Union Pacific transcontinental railway.

Two US coal producers, Arch Coal with its 3 million mt/year Skyline mine and America West Resources' mine producing 250,000 mt/year are located within 10 km of the Kinney project.

"The Union Pacific spur line provides rail access to most existing and proposed ports throughout North America, and also interchanges traffic with the Canadian rail systems," said the company.

Union Pacific has recently completed a feasibility study on expanding coal train traffic on its Utah railway.

The Perth-headquartered company outlined the potential for its Utah thermal coal to be railed to US or Canadian ports for shipment to Asian customers, or for its coal to be railed to ports in Mexico and Texas for dispatch to Europe or South America.

March 28, 2012
New Horizon announced the launch of a prefeasibility study for the Kinney project, with the study to be completed by third quarter 2012. The study will look at mine planning and scheduling, infrastructure and transport logistics, capital and operating cost assessments, projected capacity, and transportation and market price forecasts. The mine "has the potential to develop a high quality thermal coal suitable for both domestic and export markets." (Mining Weekly.com, March 28, 2012; link) (Proactive Investors, Australia, March March 28, 2012; link)

More Information

Sun-Advocate, August 5, 2010 (approval by Carbon County Planning Commission)

Sun-Advocate, September 7, 2010 (approval by full Carbon County Commission)

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