MCoal Corporation, founded in 2008 to reopen and mine metallurgical coal at the Rosa Mine location in central Blount County, idled its operation at the site in May this year.
It has not resumed mining since, and as far as can be determined from calls to the parent company, Novadx of Vancouver, British Columbia, has no definite plans to reopen at a date certain in the future.
According to Arlen Hansen of Kin Communications, the Vancouver firm that handles press inquiries for MCoal and Novadx “it’s going to take several months” for the company to raise the capital needed to upgrade mining equipment and resume mining operations. The delay apparently affects plans to add a third auger and an ultra fines recovery circuit to the Rosa wash plant.
Below is information gleaned from company news releases and from information posted on its website.
From notes to Novadx’s Condensed Consolidated Interim Financial Statements for the period ended March 31, 2012:
“The company has incurred significant operating losses and negative cash flows from operations in recent years and has a working capital deficiency. Due to insufficient working capital, MCoal idled its mining operations in May 2012…Whether and when the company can attain profitability and positive cash flows is uncertain and these material uncertainties may cast significant doubt upon the company’s ability to continue as a going concern.” From Novadx’s news release of May 10, 2012: Novadx provides update on Rosa Mine
“The company has all of the necessary permits in place to complete the mining of all five increments under its phase 1 mine plan at the Rosa Mine. The Company is currently nearing the completion of mining the second increment, and will need to post additional reclamation bonding fees and incur infrastructure costs, including road building and settlement pond construction costs, in order to commence mining on the next increments.”
The release did not refer to the idling of operations at the mine.
Excepts of news release from Novadx on May 16, 2012: Novadx Announces Key Initiatives
“Novadx Ventures Corporation is pleased to announce that it has initiated a strategic plan, with the support of Sandstorm Metals & Energy Ltd. that is focussed on the following key initiatives:
1. Preserving the value of the Rex No. 1 coal mine in Campbell County, Tennessee by financing and posting the reclamation bond that is required to receive the final permits for the coal washing facility;
2. Temporary idling of the Rosa coal mine in Blount County, Alabama until capital can be raised to increase production through the purchase of an additional auger and adding an ultra fines circuit on the mine’s coal washing facility to further increase coal recovery;
3. Maintaining a positive working capital balance; and
4. Augmenting the company’s executive team to move forward with future growth.
The strategic plan is expected to take several months to implement and in the meantime, the company will be pursuing a plan to raise up to $20 million in additional capital. Once the plan has been fully implemented, Novadx will be on a solid financial footing and in a better position to build shareholder value…
Neil MacDonald, president and CEO of Novadx commented on the new plan: “The goal of these strategic initiatives is to see both Rosa and Rex in production and generating significant cash flow for the company and its shareholders. We need to improve our financial position and with the support of Sandstorm, we believe we will accomplish.”
From the Management Discussion and Analysis Overview of the March 31 financial report, prepared May 30, 2012:
“In January, 2012, a second highercapacity auger machine was delivered to the Rosa Mine. The combination of the second auger machine and newly commissioned wash plant increased the production capacity of the Rosa Mine to approximately 120 tons per year. Management plans to optimize the Rosa Mine operations by investing in a third auger machine and adding an ultra fines coal recovery circuit to the Rosa wash plant. Due to the company not being able to fund these improvements and a reclamation bond needed to be posted to continue the next mining increment, operations at the Rosa Mine have been temporarily idled.”
Attempts to reach MacDonald at Novadx’s Vancouver headquarters for an update on matters affecting Rosa Mine since May 30 were unsuccessful.