America West Resources Issues Formal Corporate Update
23 April 2009 - 4:41PM
PR Newswire (US)
Expands Recoverable Coal Reserves at Horizon Mine to 12.4 Million
Tons Through Lease Modification and Revised Estimates at Existing
Leasehold SALT LAKE CITY, April 23 /PRNewswire-FirstCall/ -- Dan
Baker, Chief Executive Officer of America West Resources, Inc.
(OTC:AWSR) (BULLETIN BOARD: AWSR) , a domestic compliant coal
producer with mining operations in Central Utah, today issued a
formal corporate update to provide its stakeholders with greater
insight into the Company's current operations and planned growth
strategies. He stated: "Since successfully emerging from bankruptcy
in December and completing a $5.2 million equity financing in
January, America West has been squarely focused on executing a
series of planned strategies designed to: -- overcome historical
equipment challenges; -- materially increase monthly coal
production from our Horizon Mine; -- continue to expand our base of
recoverable coal reserves; and -- strengthen our operating platform
through pronounced revenue growth, strong positive cash flow and
sustainable profitability. "Despite our efforts to boost monthly
production at Horizon in the Spring of 2009 we have encountered a
series of unforeseen challenges, including artesian water in one
section of the mine, unusual MSHA mandates, and equipment
breakdowns. These challenges have compromised our ability to scale
production on any consistent or meaningful basis. Over the last
several months, we have averaged approximately 10,000 tons per
month. However, it is our goal to ramp up to 40,000 tons by late
2009. We have ordered new equipment, which is expected to be
delivered in May. Upon receipt of our new equipment, we plan to
actively mine two sections simultaneously. Moreover, we also plan
to lease and deploy a third continuous miner and other related
equipment to allow us to operate as a three section mine - a key
objective we plan to achieve yet this year. "In March 2009, we
received an estimate from a third party engineering firm confirming
that there were approximately 5.6 million tons of recoverable
reserves in our Horizon Mine as of the end of 2008. This is up from
an original estimate of 4.8 million tons, which was indicated in an
earlier study conducted in 2007. The increase was largely due to an
assumption in the prior year's engineering report that the main
entry pillars would not be recovered. However, based on our current
mining plan, these pillars are being recovered - a trend that we
expect will continue. "I'm also very pleased to confirm that last
month the Bureau of Land Management (BLM) granted America West a
lease modification to access and lease reserves adjacent to the
Horizon Mine. Based on our third party engineering report, this
lease modification adds another 6.8 million tons in estimated
recoverable reserves, increasing our reserve base to 12.4 million
tons. Although we consider these reserves probable, estimates are
subject to revision as actual mining activity reveals accurate
information about coal seams, thickness, quality of coal and
obstacles to mining, such as faults or rock intrusions into the
seam. "Demand for our compliant steam coal remains at an all-time
high from both existing and prospective customers, both in the U.S.
and abroad. What's more, the current pricing environment favors
revenue growth for our Company in the current year - even if our
production levels remained unchanged. More specifically, in 2008 we
sold our coal at an average price of $33 per ton. Currently, we are
selling our coal at an average contracted price of $51 per ton,
representing a 55% increase year-over-year. As we continue to
increase our production, our costs to produce and deliver our coal
to customers should continue to decline as a percentage of sales.
"With a mission to become one of the nation's most prolific
producers of clean coal, America West is seriously weighing the
pros and cons of expanding our coal supply platform to provide for
our own coal washing plant. We believe there exists an opportunity
for us to acquire, wash and resell coal produced from other area
mines. By blending this lower grade coal with our high quality,
compliant steam coal, we can then command a higher resale value for
the acquired coal. This potential new revenue channel - one that we
are referring to as our "Green Coal" initiative - poses compelling
growth opportunities for our Company and has earned our management
team's interest and attention. As we progress through 2009 and
further assess this opportunity, we look forward to sharing more
details. "I am also very proud of the progress we've made over the
past year in enhancing the safety of our miners. Thankfully, since
2005, our Horizon Mine has never had any mining fatalities and has
had only one injury requiring hospitalization (dislocated
shoulder). Nevertheless, according to the Mine Safety and Health
Administration, our significant and substantial (S&S)
violations incurred at Horizon in 2007 stood at 8.7 incidents per
200,000 hours worked in our mine. By comparison, the industry
average is 4.74 incidents per 200,000 hours. (It is important to
note that the citations we incurred in 2007 were largely
attributable to cited roof falls in dormant excavation areas of our
mine, where we had no active mining activity underway.) Through
modifications to our roof support plan, advanced safety and
emergency rescue training for our miners and improvements to our
general mine development strategy, in 2008 we saw our S&S
violation drop 73% to 2.33 incidents per 200,000 hours worked in
our mine - less than half of the industry average. "2008 proved to
be a year in which we overcame a number of daunting challenges to
our very survival. 2009 will continue to be challenging, but we
plan to stabilize our production and exploit prevailing growth
opportunities. Our corporate goal remains building the Company to
become a noted player in the global coal industry. With total
recoverable reserves of 12.4 million tons of compliant coal at our
Horizon Mine and 50 million tons of raw, recoverable metallurgical
grade coal reserves in place on our Columbia leasehold, we have the
opportunity to exploit strong, profitable growth over the next
several decades - an opportunity we fully intent to optimize,"
concluded Baker. About America West Resources, Inc. Headquartered
in Salt Lake City, Utah, America West Resources, Inc. is an
established domestic coal producer focused on the mining of
compliant (low-sulfur) coal and its sale primarily to U.S. utility
companies for use in generating electricity. Since 2003, the
Company has extracted over 1.4 million tons of coal from its owned
and operated Horizon Coal Mine based in Central Utah. For more
information, please visit http://www.americacoal.com/.
Forward-Looking Statements This news release contains
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Please refer to the
Company's Form 10-K and other filings with the United States
Securities and Exchange Commission (the "SEC") for additional
information regarding risks and uncertainties, including, but not
limited to, the risk factors listed from time to time in such SEC
reports. Copies of these filings are available through the SEC's
electronic data gathering analysis and retrieval system (EDGAR) at
http://www.sec.gov/. FOR ADDITIONAL INFORMATION, PLEASE CONTACT:
ELITE FINANCIAL COMMUNICATIONS GROUP Dodi B. Handy, President &
CEO For Media Inquiries: Tiffany Korkis or Kathy Addison, Managing
Directors of Elite Media Group 407-585-1080 or via email at
DATASOURCE: America West Resources, Inc. CONTACT: Dodi B. Handy,
President & CEO of Elite Financial Communications Group; or
Media, Tiffany Korkis or Kathy Addison, Managing Directors of Elite
Media Group, +1-407-585-1080, Web Site: http://www.americacoal.com/
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