Westchester Expansion
The Westchester Expansion project is a coal lease, which is contiguous to Cobalt’s Westchester Coal Mine. The same 'Sewell' coal seam that is being mined at Westchester continues on this property. This coal lease, was acquired on Wednesday, January 19, 2011.
The signing of this lease has added new coal reserves immediately adjacent to Cobalt’s underground Westchester Metallurgical Coal Mine (the ‘Westchester Mine’) in McDowell County, West Virginia USA and which can be accessed from Cobalt’s existing underground infrastructure.
This Phase 1 Westchester Expansion comprises approximately 121 acres and contains high grade low volatile metallurgical Sewell Seam Coal. Isopach maps, which are supported by historic core drill data on the lands, indicate that the seam thickness increases by as much as 15 inches on the Westchester Expansion such that seam heights greater than 47 inches are to be expected as mining progresses to the southwest compared to seam heights of approximately 32 inches on Cobalt’s existing Westchester Mine lease. Cobalt understands that the Phase 1 Westchester Expansion represents approximately 10% of the In-Place Coal owned by the Lessor at this location and believes that with performance on Phase 1 may be able to obtain further leases from the Lessor.
The Phase 1 Expansion alone added approximately 600,000 tons of In-Place Coal Resources to the 1,200,000 tons of In-Place Coal Resources held under lease prior to the expansion for a total of approximately 1,800,000 tons of In-Place Coal Resources. Cobalt expects that an additional 330,000 to 450,000 tons of metallurgical coal is potentially recoverable from the Phase 1 Expansion using both the room-and-pillar and the retreat mining techniques.
Cobalt has commenced the mapping and engineering work necessary to complete permitting of the Westchester Expansion. Hydrology, which includes surface and groundwater inventories of the new mining acreage, has already been completed by Cobalt. Obtaining regulatory approval and expansion for revision to an existing permit has historically taken from 30 to 120 days when no additional surface areas are disturbed, which is a significant advantage to Cobalt in this instance.
Based on a targeted production rate of 7,000 clean tons per month, the Westchester Expansion should add 4 to 5 years of mineable reserves to Westchester Mine’s existing mine life of 6 to 10 years. It is anticipated that the Westchester Expansion may allow a doubling of targeted production if both leases are produced concurrently. In order for this to occur, Cobalt’s mining equipment fleet would need to almost double in size. Management of Cobalt will be addressing this capital requirement in the near future.