Bens Creek Operations and Mega Highwall mining enter contract mining services agreement

2021-11-03 02:04:42

Bens Creek Group Plc, the owner of a metallurgical coal mine in North America, has announced that its wholly owned subsidiary, Ben’s Creek Operations LLC (BCO), and Mega Highwall Mining LLC (MHW) have entered into a contract mining services agreement (the contract). MHW will be responsible for the production of BCO’s metallurgical coal reserves for an initial 12-month period.

Production capability

The contract allows for a minimum production capability of 40 000 tpm of metallurgical coal, which equates to 480 000 tpy. MHW will deploy a single highwall miner, which is designed to meet the target sales volumes disclosed in the recently signed offtake agreement between the company and Integrity Coal, as announced on 21 October 2021. The surplus production of 18 000 tpm can therefore be sold under any future offtake agreements the company may enter into at prevailing market prices.

Contract details

MHW and BCO have agreed a fixed price per tonne of coal produced for the duration of the 12 month contract period. The contract price negotiated is in line with the company’s working capital projections, despite the uptick in demand for contract mining services and high wall mining equipment in the US. The contract allows MHW to mobilise its equipment and manpower to commence production in December 2021. The fixed price per tonne is designed to cover:

  • The supply and maintenance of high wall mining equipment for the production of metallurgical coal.
  • The supply and payment of the necessary labour costs required to operate the high wall mining equipment supplied.
  • Adherence to state and federal regulations in connection with the operation of the high wall mining equipment.
  • The supply of necessary tools and materials to maintain and repair the equipment provided.
  • The payment of penalties that may arise from the use of the highwall miner whilst equipment is on-site and deployed by MHW.
  • The determination of and advice on whether any particular designated mining areas are considered impractical to mine.
  • Any demobilisation costs/relocation costs associated with moving the highwall mining equipment.
  • Insurances designed to cover comprehensive general liability, automotive liability, workers compensation, and employer’s liability insurances.

MHW, founded in 2015, is a Kentucky based company, which operates a range of industry leading specialist highwall mining systems, comprising of ADDCAR, Superior Highwall Miners and CAT. MHW recruits operators from around the industry, and is dedicated to producing results in a safe and efficient manner. Its sister company, Mega Rebuilders LLC, operates two fabrication shops which allow MHW to produce its own parts and upgrades for the machines it operates. The company’s skill set allows them to operate under various conditions including working in uneven seams and extreme climatic conditions. MHW have a variety of clients based in the mining regions of the US, with a particular focus on West Virginia, the state in which BCO’s operations are conducted, along with states such as Kentucky and Alabama.

Adam Wilson, CEO of Bens Creek Group, commented: “We are delighted to have secured our first highwall miner to meet our expected production target. The agreement with MHW enables us to commission a second highwall miner to enable the company to further expand its metallurgical coal production output. The nature of highwall mining is that the recoverability of metallurgical coal via direct mining into the coal seams is considerable which allows for production to be targeted to seams which have a higher level of recoverability than traditional mining methods.”

Wilson added: “In our recent IPO on AIM, we set out some clear operational benchmarks for the company, including the signing of a mining contract with a third-party contractor. We are delighted to announce this new mining services agreement, following the offtake agreement that we entered into last week. We are now well on our way to commence revenue generation from our significant mining asset. The global scarcity of construction materials reinforces our strategy and role as a supplier of metallurgical coal to the steel industry.

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