Shares in hard coal miner Atlantic Coal (ATC:AIM) surged 132% today to 0.185p as production tonnage increased and the Durham-headquartered outfit swung back to profit.
Production was boosted by mining a previously untouched section of a 30 foot open-cast anthracite seam at its Stockton, Pennsylvania site. The seam, called Mammoth, has been mined on-and-off over the last 150 years and is Atlantic’s only current operational site.
Recovery rates across the seam were between 80% to 90%, according to product development manager Barny Corrigan, compared to a 40% average in areas which have previously been mined.
Corrigan says Atlantic is looking at acquiring more mines in the surrounding Eastern Middle Anthracite coalfield.
‘We only have the one Stockton mine so we want that to be reporting consistent profitability,’ says Corrigan.
‘Like all mines, they have a finite life and we are also looking to consolidate a position in the Pennsylvania industry through acquisition.
'There are issues of scale involved in that. We are already operating one mine, so adding to it would involve a smaller start-up cost as well as spreading a single set of overheads across two sites.
‘We’re looking to acquire operational mines or those that can be brought back into production quickly. We believe we operate better than many of the other mines in the area in terms of our methodology and performance and we’ve brought some quite innovative techniques to access the coal we already have.’
A range of financing options are being considered including 'outside sources' of capital.
Prices of anthracite, a coal with very high carbon content, have held up better than many commodities over the last 12 months.
Anthracite is attractive as it is 'cleaner' than standard coal, burns smoke-free and is the highest quality metallurgical coal available.
Conflict in eastern Ukraine, a big producer of anthracite, may also have boosted prices in the US as Asian and European buyers look to source the product elsewhere.
Prices in the US are around $120 (£78) per ton versus $140 per ton a year ago, Corrigan adds.
Profit was $3.7 million for the period, helped by 'other income' of $1.9 million. Net debt including finance leases increased from $13.3 million to $23.4 million as Atlantic invested in new equipment and built a railway siding to reduce shipping costs.