As consumers are bombarded with the call for alternative energy, the realization that the world needs to keep the lights on and machines running is often lost. Consumers and businesses need electricity, regardless of the environmental consequences, and are ready to pay for it. The “need” for coal could be debated in the dark, but like it or not coal is the leading raw material that enables the power and lights to stay on. Although variables need to be paid attention to, coal is a fairly safe investment bet for the longer term. All that is needed is the right play to be found at the right time.
America West Resources Inc., an established, mid-sized regional coal mining company, works to extract thermal coal for electricity generating plants primarily in the western US. The company currently operates a thermal coal mine in central Utah and has initiated plans for a metallurgical-grade coal mine nearby.
The company’s thermal coal mine has been in operations since 2003 and has proven reserves for the foreseeable future. It continues to add electric utility customers and expects production to be able to fill these contracts for some time to come. Its most recent contract is valued at $6.6 million with a California utility. This same contract calls for options to purchase additional coal at contract rates through the end of 2009. According to the company, all that is needed now for a successful completion of the contract, through the end of 2009, is to keep the mine operating at peak efficiency. If completed to its full potential, the entire contract (including a previous contract with the utility) could see $32 million in revenue for the company by the end of 2009.
America West is not standing on its recent successes. It has acquired rights to a nearby leasehold where testing indicates potential for an estimated 50 million tones of in-ground coal. Obtained from C&P Resources, the lease and option-to-purchase agreement covers 5,200 acres of undeveloped metallurgical coal resources. This higher grade coal meets all environmental requirements and is primarily used in the steel coking process. Pending development, the company has hopes for production at this site beginning in 2011.
The present economy notwithstanding, America West Resources has a solid portfolio of assets to be mined (as it were.) The West’s growing need for reliable sources of electricity does appear to be a need for the longer-term future regardless of calls for alternative sources of energy. America West is in place with the resources and position to capitalize.
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