(Sharecast News) - North American metallurgical coal miner Bens Creek updated the market on production and deliveries on Monday, confirming completion of the first purchase order from Integrity Coal Sales of 17,000 raw tonnes - equivalent to around 9,000 clean tonnes.
The AIM-traded firm said a second purchase order for a further 23,000 raw tonnes, equivalent to about 12,000 clean tonnes, was completed on 10 March.
Both of those deliveries fulfilled the company's initial arrangement with Integrity to deliver raw tonnes, and were in line with the delivery dates set out in its agreement with Integrity, announced in October and running to the end of December this year.
The board said that, having supplied raw coal to Integrity since the start of production, it now intended to supply them with 264,000 tonnes with a minimum monthly consignment of 22,000 clean tonnes, beginning with a first clean coal delivery in April.
It said the expected selling price of that consignment and monthly thereafter would be "closely linked" to the S&P Global Platts price of the Hi Vol B coal product at the time of assignment, as set out in its agreement with Integrity.
The price on 11 March for Hi Vol B coal product was $450 per metric tonne, with the equivalent price for a short tonne being $409.
Bens Creek said the increase in the price of all types of metallurgical coal since its October update, when the price of Hi Vol B was $305 per metric tonne, reinforced a lack of supply in the market and, in the view of the board, strengthened demand for its product.
As the firm moved into the delivery of clean tonnes to Integrity, it said it was intending to operate a second shift using its existing highwall miner to further increase the production and sale of additional HVB metallurgical coal.
The company also announced that its recently-refurbished preparation and wash plant had successfully completed its final tests, and was now fully operational.
Following its announcements in January and February of the purchase of a second highwall miner, Bens Creek confirmed on Monday that the miner was en route to its site, and was expected to be delivered by the end of March.
Looking at its underground operations, the firm said it expected that, during April, underground mining would commence at Bens Creek.
The board said that was expected to allow access to a "higher quality" of metallurgical coal, classified as Hi Vol A.
It said that, while expected volumes would be lower than extracting metallurgical coal using a highwall miner, the higher-grade quality coal would command a premium price to HVB.
The metric price per tonne of Hi Vol A on 11 March was $510 per ton, with the equivalent price for a short tonne being $464.
"We are pleased with our delivery programme so far - we anticipate moving smoothly into delivery of clean coal and are on course to deliver fully on our commitments to Integrity," said chief executive officer Adam Wilson.
"Our development as a business is on track and we are confident that we will continue this early progress and at the same time capitalise on the supply side constraints being experienced by users of both HVA and HVB coal.
"We are also excited by the addition of a second highwall miner which, along with the anticipated second shift operating the existing highwall miner and the proposed commencement of underground mining, will enhance our output to meet the global demand for high quality metallurgical coal."
At 1351 GMT, shares in Bens Creek Group were up 10.33% at 82.75p.
Bens Creek (BEN)