National Coal Corp., a Central Appalachian coal producer, announces the purchase, by its wholly-owned subsidiary, NC Railroad, Inc., of 42 miles of railroad track between Oneida and Devonia, Tenn., from Norfolk-Southern Railroad for $1.96 million.
The rail line gives National Coal unprecedented access to its largest reserve location, the New River Tract, located between its Smoky Junction preparation plant in Oneida and the Baldwin Facility, a 750 ton per-hour heavy media cyclone preparation plant and load-out facility in Devonia, Tenn.
National Coal COO, Ken Hodak, explains why greater access to this area is a key step in the Company's expansion plans this year. "The addition of this railroad provides rail access to proven reserves that were previously uneconomical to mine due to high trucking costs and road limitations. We currently own the mineral rights on approximately 65,000 acres of the Tract including four permitted and five soon-to-be permitted mining sites. Increased access to this area by rail will eliminate present obstacles resulting in production improvements. We are already seeing strong interest by new and existing customers from the Southeast who can count on us to provide a steady source of energy for many years."
The Company will invest approximately $2 million dollars restoring the rail line making it available by third quarter 2006, and, at the same time, will spend approximately $3 million dollars updating the Baldwin preparation plant to prepare its load-out facility for a significant increase in production. National Coal established a subsidiary, NC Rail, Inc., to manage the operation and maintenance of the rail line.
Jon Nix, President, CEO and Chairman of the Board at National Coal, adds: "This last piece of the puzzle solidifies the strategy that we have envisioned from day one, that we needed to be able to develop and nurture these New River reserves. This rail addition, as well as the Baldwin reopening, will allow us to start opening planned mines in this area starting as early as third quarter 2006. Streamlining and growing production from this resource is going to solidify our position as one of the leading suppliers in the Southeast."
