Overview of the Company
EastCoal Inc. is a mineral development company registered in British Columbia and engaged in the acquisition and development of mineral resource properties. Since 2009, the Company has been focused on the development of coal mining interests in Ukraine.
East Coal Company LLC, a 100%-owned subsidiary of EastCoal Inc., obtained the rights to the Verticalnaya Mine and is currently advancing the development of this anthracite mine, targeting production in the first quarter of 2013. In addition, following the Company's acquisition of Inter-Invest Coal LLC ("Inter-Invest") in the second quarter of 2012, EastCoal is developing and increasing production from the Menzhinsky Mine. This is an operating underground metallurgical coal mine also located on the Eastern side of Ukraine. With the addition of the New Wash Plant at the Menzhinsky Mine, production is expected to increase from approximately 6,000 tonnes per month currently, to 26,000 tonnes per month during 2013.
The Company's objective is to increase total production from the current level to approximately three million saleable coal tonnes per annum.
The Company's principal assets include the Verticalnaya and Menzhinsky Mines:
EastCoal obtained the rights to the Verticalnaya Mine in 2009 from the Ukrainian Government. It had been an operating coal mine until 1998 when production ceased and the mine was placed in care and maintenance. The quality of its coal seams is well defined by the results of various drilling programmes and previous extraction work. EastCoal's development strategy is to develop two seams, H11 and H11B from two new surface drifts at Verticalnaya North Project ("VNP"), which will provide the mine with its early production and cash flow. At the same time the Company will rehabilitate the existing mine infrastructure to provide access to the H8 seam. The rehabilitation process will include dewatering and recovery of certain roadways in the mine and investment in certain infrastructure upgrades.
In October 2010, following a period of planning, permitting, and detailed improvements, the Company commenced construction of the VNP, developing the main access drifts and initial gate road access for coal production from the first longwall panel, East 1. East 1 will be 150 metres in length and will be extracted at a working height of 1.1 metres. It is planned to commence production from East 1 in the first quarter of 2013. To date, more than 2,000 meters of drift and roadway development has been completed at VNP.
Production from the H8 seam via the existing mine is scheduled to commence in 2018. The Verticalnaya mine and VNP is projected to produce in aggregate approximately 2.3 million tonnes per annum of saleable high quality anthracite for local and export markets when fully ramped up by 2019 continuing at approximately that level until 2023, and thereafter reducing over time until the end of the current mine plan in 2029.
Since 1998, the Menzhinsky Mine has been in limited operation and currently produces approximately 6,000 tonnes per month of coking coal.
The Company acquired Inter-Invest, the company leasing the Menzhinsky Mine, on 31 May 2012 following a private placement in the UK and Canada which raised aggregate gross proceeds of approximately CAD$17.01 million. Net proceeds from the private placing have been used, inter alia, to complete construction of the 350 tonne per hour New Wash Plant which commenced commissioning and production in October 2012.
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