Vectren 2012 Annual Report Download - page 21

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Prosperity Mine
Prosperity is an underground mine located on 1,100 surface acres outside of Petersburg in Pike County, Indiana. Prosperity is
also a room and pillar mine where coal removal is accomplished with continuous mining machines. The mine entrance slopes
gradually for 500 ft on a 9 degree grade and is more than 250 feet below ground level. The coal seam varies in thickness from
4-1/2 to 8 feet. The mine has a wash plant sized to process 1,000 tons per hour. The mine is connected to a railway and can
handle 110 to 120 car unit trains. Coal is also transported via truck to its customers, which include the Company's power supply
operations and other third party utilities. The mine opened in 2001, and the total plant and development costs to date are $200
million. Through December 31, 2012, approximately 7,500 acres of coal have been mined with approximately 12,500 acres
remaining. Reserves at December 31, 2012 approximate 28 million tons, not including possible nearby expansion
opportunities. The remaining unamortized plant balance as of December 31, 2012 approximates $77 million, inclusive of $7
million of land and buildings and $70 million of mine development and equipment. Reserves, absent expansion, are expected to
be exhausted by 2025.
Cypress Creek
Cypress Creek was an above-ground, or surface mine, located on 155 acres about 4 miles north of Boonville in Warrick County,
Indiana. Cypress Creek was a combination truck/shovel, dozer push and high wall mining operation, meaning large shovels or
front-end loaders removed earth and rock covering a coal seam and loading equipment placed the coal into trucks for
transportation to a blending and loading area. The mine opened in 1998 and as of December 31, 2012, no significant reserves
remain, the mine is substantially reclaimed, and the remaining carrying amount is not significant.
Following is summarized data regarding coal mining operations:
Prosperity
Oaktown
Mine 1
Oaktown
Mine 2
Cypress
Creek Totals
Type of Mining Underground Underground Underground Surface
Mining Technology Room & Pillar Room & Pillar Room & Pillar Truck & Shovel
Tons Mined (in thousands)
2012 2,072 2,755 — — 4,827
2011 2,457 2,668 —— 5,125
2010 2,685 995 —91 3,771
County Located in Indiana Pike Knox Knox Warrick
Coal Reserves (thousands of tons) 28,343 60,109 38,795 — 127,247
Average Heat Content (BTU/lb.) 11,300 11,100 11,300 10,500
Average Sulfur Content (lbs./ton) 4.0 5.6 4.8 8.0
Mine Safety Information
The Company has retained independent third party contract mining companies to operate its coal mines. Five Star Mining LLC
("Five Star") is the contract mining company at the Prosperity underground mine and Black Panther Mining LLC ("Black
Panther") is the contract mining company at the Oaktown underground mines. The contract mining companies are the mine
“operator”, as that term is used in both the Federal Mine Safety and Health Act of 1977 (the “Mine Act”) and the Dodd-Frank Wall
Street Reform and Consumer Protection Act of 2010. All employees at the coal mines are hired, supervised, and paid by the
contract mining companies. As the mine operator, the contract mining companies make all regulatory filings required by the
MSHA. In most circumstances, however, the cost of fines and penalties assessed by MSHA are contractually passed through
from the contract mining company to Vectren Fuels. The process of settling such claims can take years in certain
circumstances. During the year ended December 31, 2012, the Company paid approximately $0.7 million related to
assessments issued to the mine operators.
On April 30, 2012, Five Star received a citation referred to as an “imminent danger” citation for high levels of methane near one
of the roof bolting machines operating in the Prosperity Mine. The machine was idled for approximately two hours while the