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Paringa Resources commences coal sales to second customer

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World Coal,

Paringa Resources Limited has provided an update on activities at the Poplar Grove mine in Western Kentucky.

Paringa Resources commences coal sales to second customer

The company has commenced coal sales to Indiana-Kentucky Electric Corporation, a wholly owned subsidiary of Ohio Valley Electric Corporation (OVEC-IKEC). Coal is procured by American Electric Power (AEP) on behalf of OVEC-IKEC. AEP is OVEC-IKEC's major shareholder and one of the largest electric energy companies in the US with a market capitalisation of around US$46 billion.

The company continues to ramp up sales to its cornerstone customer Louisville Gas and Electric Company and Kentucky Utilities Company (LG&E and KU), with August shipping rates to LG&E and KU of approximately 700 000 tpy on an annualised basis.

Paringa maintains a strong pipeline of forward sales, with around 100% of 2019, around 75% of 2020 and around 50% of the next 5 years' production pre-sold. Paringa is making progress with a wide range of customers for additional coal sales contracts for deliveries from 2020 onwards.

Additionally, Paringa has received regulatory approval to alter the underground cable bolting pattern required for roof control activities, reducing the amount of supplemental support (cable bolts) required when mining in the Mains. This is anticipated to have a positive impact on both tonnes mined and cost by reducing roof bolting times and cable bolt spend.

Approximately 5.8 million t of supply capacity has recently been taken out of Paringa's target market in Western Kentucky. Alliance Resource Partners acquired and then shut down the Pennyrile mine (around 1.3 million tpy capacity) in September and closed the high-cost Dotiki mine (around 4.5 millon tpy capacity) in August.

Consolidation in the Western Kentucky market is positive for Paringa, which is now the only significant independent supplier of coal outside of Alliance Resource Partners and Murray Energy Corporation.

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