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America West Heats Up Growth

July 16, 2008

By Mike Gorrell, The Salt Lake Tribune

Jul. 16–After several years of quietly mining coal at one of Utah’s smaller coal mines, America West Resources Inc. is expanding aggressively in a time of rising coal prices.

The Salt Lake City-based company recently opened a second section at its Horizon mine, northwest of Price in the Wasatch Plateau. It announced an agreement to sell coal worth $8.3 million to an unnamed Western power agency. Then it purchased an estimated 50 million tons of coal reserves in the Book Cliffs, southeast of Sunnyside.

Also this week, America West promoted 39-year industry veteran Dan Baker from chief operating officer to chief executive. “Dan has been the driving force behind turning around our Horizon mining operations, expanding our reserve base and cultivating long-term relationships in the industry,” said Alexander Walker III, who had been chief executive and will remain board chairman and senior adviser to the executive management team.

Just five years ago, production at Horizon was shut down for six months when bankrupt owner Lodestar Resources Inc. sold its Utah assets and lease holdings to Hidden Splendor Resources Inc., an America West subsidiary.

Hidden Splendor revived the operation, excavating 108,000 tons of coal in 2003. Production has been around 250,000 tons in each of the past four years, slipping in 2007 to 233,100 tons, according to Utah Geological Survey geologist Michael Vanden Berg’s reports.

Employment has risen from 29 in 2002 to 60 in 2006. With the second continuous miner section, Baker said Horizon has 100 employees now and could add more.

He said the Book Cliffs mine, known as the Razor mine in Vanden Berg’s recent annual reports, could employ 200 people after its projected 2010 opening.

The coal in the 5,200-acre leasehold, just south of the Columbia mine operated by U.S. Steel Corp. from 1923 to 1966, is metallurgical grade and used mainly in steelmaking. It sells for about $300 per ton, Walker said. “Securing this sizable, high-grade resource base materially strengthens our existing coal reserves and provides a promising growth platform we intend to fully optimize [and] distinguishes our company as a serious, emerging player in what we see as expanding coal markets,” he said.

America West spokesman John Morrison said the rising price of coal attracted “quality investors to participate in bringing the company public and help it diversify its assets to ensure that it is not tied to just one source or grade of coal.”

Horizon’s coal is desirable to utilities because it has low concentrations of sulfur and ash, he noted.

The Book Cliffs reserves are in the lower Sunnyside seam, which is 15 feet thick and conducive to long-wall mining. But it’s also 1,500 to 2,500 feet below the surface, a depth that has caused ground-control problems at nearby mines.

America West said it purchased the reserves from C&P Coal Resources LLC.

To begin operating the contemplated Book Cliffs mine, America West Resources will need a permit from the Utah Division of Oil, Gas and Mining.

The reserves are beneath company-owned land. If developed, the mine could expand into surrounding reserves controlled by the federal Bureau of Land Management. Vanden Berg said potential reserves for the overall area could reach 100 million tons.

mikeg@sltrib.com

–New chief executive Dan Baker started mining in 1969 as a laborer after returning from Army duty in Vietnam.

–Experience as a longwall foreman and superintendent, senior mining engineer, manager of underground operations.

–Joined PacifiCorp’s Interwest Mining Co. in 1987 as vice president of operations. Became its president and CEO in 1998.

–Became Consol Energy’s executive vice president in 1999.

–Joined America West in September 2006 after four years of consulting.

At the helm of America West

New chief executive Dan Baker started mining in 1969 as a laborer after returning from Army duty in Vietnam.

–Has experience as long-wall foreman and superintendent, senior mining engineer, manager of underground operations.

–Joined PacifiCorp’s Interwest Mining Co. in 1987 as vice president of operations. Became its president and CEO in 1998.

–Became Consol Energy’s executive vice president in 1999.

–Joined America West in September 2006 after four years of consulting.

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Copyright (c) 2008, The Salt Lake Tribune

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