Hamilton Beach 2009 Annual Report Download - page 8

5
North American Coal
2009 Results
NACoal has had strong, stable
performance over the years and 2009 was
no exception. The long-term nature of
NACoal’s coal supply agreements and the
low cost of power provided by the power
plants it serves resulted in minimal effect
from the recession on the company’s coal
mining operations. Positive financial
developments in 2009 included the sale of
the Red River Mining Company for cash
proceeds of $41.4 million and an after-tax
gain of $22.3 million, the receipt of lease
bonus payments of $7.1 million pre-tax for
leasing certain oil and gas mineral rights
controlled by NACoal to a third party
and significantly improved deliveries and
operations at the Mississippi Lignite Mining
Company compared with 2008. As a result
of the favorable events of 2009, NACoal
generated cash flow before financing
activities of $76.5 million compared with
cash flow before financing activities of
$7.3 million in 2008.
Nevertheless, 2009 did have challenges.
Minimal limerock was mined as a result of
the downturn in the Florida housing and
construction markets and an unfavorable
legal ruling for the Florida lake belt region
that terminated NACoal’s customers’, as
well as others’, existing mining permits at
most of the limerock dragline mining
operations. The nature of the company’s
limerock mining services agreements did,
however, limit the financial impact on
NACoal. In addition, inclement weather in
Mississippi in the fourth quarter reduced
efficiency at that mine and unscheduled
outages throughout the year at the Sabine
Mining Company’s customer’s power plant
resulted in fewer deliveries at that mine.
NACoal entered into a number of
new coal mining contracts in 2009. These
projects are in development phases and
will not be fully operational for several
years. NACoal’s new subsidiary, Camino
Real Fuels, entered into a contract mining
services agreement to mine approximately
2.7 million tons of coal annually with initial
deliveries expected to commence in 2012.
NACoal’s new subsidiary, the Demery
Resources Company, entered into a
contract mining services agreement to
Above: One of the draglines
at The Falkirk Mining Company
in North Dakota.
Right: At the Falkirk Mine in
North Dakota, an electric shovel
loads overburden into a fleet of
Caterpillar end dump trucks
to expose the coal for extraction.