Arch Coal, Inc. Reports Substantial Progress in Efforts to Reopen West Elk Mine; Temporary Idling will Adversely Affect First Quarter Results
St. Louis, Missouri – On March 14, 2000, – Arch Coal, Inc. (NYSE:ACI) announced today that it has made substantial progress in isolating the source of combustion gases at its West Elk mine in Gunnison County, Colorado, which was idled on January 28, 2000, following the initial detection of such gases. The company recently initiated an effort to seal off the source of the gases from the active mine area.
"We have made excellent progress in defining the area in the mine that is the source of the carbon monoxide, and we are optimistic that we will be able to resolve the problem and restart the mine in the near future," said Steven F. Leer, Arch Coal’s president and chief executive officer.
Leer stated that combustion is occurring in a sealed area of the mine, and that the company believes carbon monoxide is entering the active mine workings through cracks that have developed above a seal. "We are beginning to construct new seals and will also be installing a water line to inject water into the area in order to extinguish the combustion that is generating the carbon monoxide," Leer said. "Unfortunately, the temporary idling of the mine will adversely affect our results for the first quarter and probably the second quarter as well."
The mine’s temporary idling will likely reduce first quarter earnings by $0.25 to $0.35 per share, according to Leer. The mine is expected to incur after-tax losses of between $4 million and $6 million per month until normal operations can be resumed.
Leer indicated that the company has business interruption coverage that management currently believes should cover a substantial portion of the loss. If that is the case, the mine’s losses in the first and second quarters should be substantially offset by an insurance settlement later in the year.
"We do not believe the idling of the West Elk mine will have a material long-term impact on Arch’s financial condition," Leer said. "We will continue to work around-the-clock in an effort to resume operations at the mine at the earliest possible date."
The company is working closely and cooperatively with the Mine Safety and Health Administration, which has officials on the site.
West Elk produced 7.3 million tons of coal last year and employs approximately 300 people. The mine generated approximately $13.1 million of the company’s total operating income in 1999. Most of the mine’s output is sold to electric generating stations in the western and midwestern United States.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including Arch Coal’s expectations with respect to the impact of certain operating events on future financial results. Although Arch Coal, Inc. believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from expectations include changes in local or national economic conditions; changes in mining rates and costs for a variety of operational, geologic, permitting, labor and weather-related reasons, including equipment availability; and other risks detailed from time to time in the company’s reports filed with the Securities and Exchange Commission, including quarterly reports on Form 10-Q, reports on Form 8-K, and annual reports on Form 10-K.
Arch Coal is the nation’s second largest coal producer, with subsidiary operations in West Virginia, Kentucky, Virginia, Wyoming, Colorado and Utah. Through these operations, Arch Coal provides the fuel for approximately 6% of the electricity generated in the United States.