Hamilton Beach 2010 Annual Report Download - page 12

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although Demery Resources Company is currently in
the permitting stage and expects to commence initial
deliveries in late 2011, unfavorable market conditions
for its customer are expected to delay reaching full
production of approximately 300,000 to 400,000 tons
of coal annually. Lastly, in early 2011, NACoal finalized
a new agreement to provide services to operate a
refined coal processing facility through 2018. This
agreement and the mines in development are expected
to generate modest income during 2011.
NACoal is working on several important new
project opportunities in the United States and Asia
for which it expects to continue to incur additional
expenses in 2011. In the United States, the company
continues to move forward to gain a permit for its
Otter Creek reserve in North Dakota in preparation
for the expected construction of a new mine. The
permit is anticipated to be issued in the second half
of 2011. NACoal is also performing work under certain
mining services agreements in Indonesia and India,
in which NACoal is assisting other companies in
setting up and managing their mines.
Overall, NACoal expects full-year 2011 net income
to decrease compared with 2010 mainly as a result
of the absence of the reimbursement of previously
expensed costs received in 2010 and reduced royalties
in 2011. Cash flow before financing activities in 2011
is expected to be higher than 2010, assuming mine
development activities occur as currently planned.
2011 are expected to be lower than in 2010 as a result
of the expiration and non-renewal of the San Miguel
Mine contract in 2010 and somewhat lower customer
requirements. Royalty income in 2011 is also expected
to be lower than in 2010.
In 2010, NACoal’s limerock customers in the
Florida lake belt region required higher limerock
deliveries as they rebuilt stockpiles that had been
significantly diminished as a result of an unfavorable
legal ruling that set aside their mining permits in 2009.
With this inventory replenishment now complete, 2011
customer requirements are expected to be lower as
market conditions in the southern Florida housing and
construction markets remain weak, which is expected
to result in lower deliveries in 2011 than in 2010.
NACoal’s primary focus in 2011 is the execution
and implementation of the projects it currently has
in development. In addition to the new Liberty Mine,
NACoal has three other mines in development stages
that will not be in full production for several years.
Caddo Creek Resources Company is in the permitting
stage of a project which expects to mine approximately
650,000 tons of coal annually for a customer that
currently purchases its coal from The Sabine Mining
Company. Initial deliveries are expected to commence
in 2013. Camino Real Fuels is in the permitting stage
of a project which expects to mine approximately
2.7 million tons of coal annually. Initial deliveries are
expected to commence in mid- to late 2012. Finally,
Above: Two draglines work through the night at The Sabine Mining Company in Texas.
Right: The dragline at Mississippi Lignite Mining Company’s Red Hills Mine.