Kentucky Energy (fka QMIN)

[kojak79]

Sorry, but you're getting "reject" confused with "recovery" (you're not the only one, either).

I also looked at the contract, and what I read is that "Both parties have determined that the property to be mined...should yield no less than a 30% recovery durring full production."

Recovery is defined as the percentage of the coal taken out of the seam during the normal mining cycle. The type of mining employed here is called "room and pillar", which uses blocks of coal left in place to help secure the roof and overburden. Recovery percentages are used to calculate the tonnage taken out of a reserve block. In other words, if they have, for example, a 30,000,000 block of coal, at 30% recovery, they will be able to take 9,000,000 tons of coal out of the mine.

Reject, as your referred to in your post, is a percentage of the coal mined that does not burn. Rocks, mud, etc. That can range anywhere from 0-25%, depending on how good the miners are at getting only the coal out of the mine. So again, for example, they aren't that good, or can't do it because there's too much mixed in the coal (in-seam dilutions called partings), and they have a reject rate of 20%, then the sellable portion of the 9,000,000 tons (from above example) is 7,200,000 clean tons.

From my experience, they could get up to a 50-60% recovery, so the 30% is probably a worst-case scenario.

This link may help: http://www.uky.edu/KGS/coal/coal_mining.htm

Hope this clears up the recovery vs. reject confusion. GLTA