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Arch Coal Inc. Message Board

  • thethirdchimp thethirdchimp Jun 30, 2013 5:29 AM Flag

    Canyon Fuel Utah Sale Was Smart

    Those mines sell strictly domestic thermal coal to Nev, Utah, California. Those states, in particular, are moving quickly into natural gas and alternate fuels, for instance, they are well positioned for solar energy and wind. The Los Angeles area has vowed recently to quit using coal altogether as a power source in coming years. Moreover, the Canyon Fuel coal is not of the low sulfur variety that Arch favors (questionable but got that impression from readings on website). Arch also looking to develop higher margin met coal. Arch is looking to expand export of coal and the Canyon Fuel does not fit, strictly domestic and strictly thermal. This is a good move. They are cutting huge labor and admin costs and those mines, operating since 1998 or se, probably due for infrastructure upgrading. ARch now has incredible financial flexibility and no liquidity concerns for nearly five years. Powder basin, met coal and exports are where the serious money will come... good move, great long term play

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    • Not saying the sale wasn't a good idea (I think it was) but they are not selling from a position of strength and it was a "core" asset.

      Based on a quick review of the 10-K and 10-Q they do have debt covenants that begin to kick in in 2016. If things aren't improving by then they do face some bankruptcy risks. That is still a way off but they don't have five years.

    • Good post,TTC..IMO, your statement "Arch now has incredible financial flexibility and no liquidity concerns for nearly five years" hit the mark dead center..I think institutions now have one less concern about investing in least in the short and intermediate term..And don't forget that a successful Leer project could substantially "sweeten the pot." I tend to believe that barring a complete and utter disaster from China's final PMI number tonight, this should be a good week for ACI..Good luck to all,HOG

    • company press release stated that they were "non-core" assets. Good job explaining. Thanks.

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