APRIL 27, 2015

NASIR ALI
MATTHEW MORGANTE
WALTER PRICE
ADAM RODRIGUEZ

The Pennsylvania State University

Table of Contents
Introduction..2
Background..2
Market Study6
Geology7
Reserves & Quality (Grade).9
Mine Degasification...13
Production..14
Environmental Considerations...16
Gantt chart..17

INTRODUCTION
Noice Mining Enterprises (NME) is an investment firm based out of State College, Pennsylvania. NME is
interested in the steam coal market. NME foresees the future of coal to be in better financial conditions
than the current status of the steam coal market.
NMEs assets will be based out of Greene County Pennsylvania. NME will acquire mineral rights and
will apply for state and federal permits. NMEs proposed mine, the Muddy Creek mine, will be a
prospective underground continuous mining super section which will be supplying high quality steam
coal to the Horseshoe Power Plant in Pittsburgh. NME will utilize truck to barge transportation on the
Monongahela River. This provides a low cost transportation which will keep NME competitive in the
steam coal market.
Before mining production will begin at the Muddy Creek Mine, NME plans to enter the natural gas
market, by degassing the proven reserves and selling the coalbed methane gas to local utilities. This will
create a diverse energy portfolio which will make NME a player in the dynamic energy industry.

BACKGROUND
HISTORY
The area has been used for various farming activities for approximately 150 years. The Johnson family,
the current land owners, are one of the early settlers in the region, and have maintained the land for
agriculture use throughout the generations. This area has been mined heavily, in the eastern end of Greene
County, Pennsylvania, where the Pittsburgh #8 outcropped at the Monongahela River.

LOCATION
The proposed mine works will be located in Greene County, Pennsylvania. The mine is about an hour
south of Pittsburgh.
Figure 1

CLIMATE
The average temperature is 70 Fahrenheit during the summer months. During the winter months, the
mean temperature is approximately 30 Fahrenheit. Annual total precipitation is 16.1 inches of rain, and
the annual average snowfall is 76 inches.

OWNERSHIP
The Johnson family have owned the land for more than 150 years, the land has been passed down for
generations. Mr. Franklin Johnson has the full right to sell and/ or lease, the full acreage or any partial
part of the land.

LAND STATUS
The property is under negotiation by NME. If proven reserves are 80 million ton, NME will buy the land
with full ownership from Mr. Franklin Johnson at current cost per acre of $5,000, or $ 32.5 million for the
entire property.

ROAD ACCESS
NME property will be accessible from Pennsylvania Route 21, a paved all weather road that connects the
Property to the borough of Masontown, PA, located approximately 3 miles to the east.

POWER AND UTILITY

The substation and power distribution system will be built to accommodate the power needed to meet the
requirements of the underground mine and preparation plant, in order to comply with current regulations
and future production goals.

FRESH WATER
The property is surrounded by small ponds, and to the East is the Monongahela River, which can
potentially be a source of fresh water. *This section will be revised in the future once more information is
available.

DISPOSAL SITES
Refuse disposal is accomplished by sending the tailings to the treatment pond on the eastern border of the
property. The treatment pond will be built near the process plant, and the tailings will be hauled using
pumps in slurry form or by conveyor belt in solid form. A new refuse area will be required and price
estimates will be complied once more information is available.

STAFFING
NME is expecting an economic growth in the region. Staffing will begin with planning and development
such as permitting, construction of facilities and shafts, etc. Production sections will beginning
development of mains, sub-mains, and panels once all infrastructure is safely developed. As Muddy
Creek Mine progresses into the future, further staffing of out by workers and maintenance will be crucial.

TRANSPORTATION
NME is responsible for the cost of transporting the coal to the Horseshoe power plant. The sale is
consider completed when the barge reaches Horseshoe power plants unloading dock. NME will own and
operate the trucks and barges used to transport the coal.
Figure 2

Muddy Creek Mine

Barge Load Out

The coal will be trucked 3.5 miles from the Muddy Creek mine via Pennsylvania Route 21 to the
Monongahela River near Masontown, Pennsylvania. It will then be barged approximately 50 miles to the
Horseshoe power plant in Clairton, Pennsylvania. Clairton is approximately 12 miles from downtown
Pittsburgh.
Figure 3

Muddy Creek Mine

Horseshoe Power Plant

MARKET RISKS
The coal market is depressed right now. This can be attributed to competition from inexpensive natural
gas and current Environmental Protection Agency (EPA) regulations. Coal fired power plants have been
closed for not meeting mercury and sulfur emission standards.
We expect liquid natural gas (LNG) export facilities to be built within the next five years. These facilities
will allow for natural gas to be exported. This will increase the selling price of natural gas and will allow
domestic steam coal to compete.
We expect to be insulated from competition from the coal from the Illinois basin because of more
expensive transportation costs those mines will incur.

MARKET STUDY
NOICE MINING ENTERPRISE plans to sell 2.5 million tons of clean coal per year to the Horseshoe Power
Plant. The coal will be delivered from NMEs Muddy Creek mine. NME also plans to sell methane gas
from its degassing operations to the local interstate pipeline.

PRICE
The price of coal will be tied to spot market prices. NME expects to realize an average price of $50 per
ton for the next five years with the price of coal increasing afterwards. Table 1 compares the expected
maximum, minimum and average price of the coal. These numbers are based on the historical, current and
projected spot prices of Northern Appalachia coal from the U.S. Energy Information Administration
website.
Table 1

Coal Prices
Maximum
$65
Average
$50
Minimum
$35
The price for natural gas will be tied to spot market prices.
Table 2

Natural Gas Prices

Maximum
$13.5
Average
$5
Minimum
$2

QUALITY SPECIFICATIONS
Table 2 shows the minimum coal quality standards required by the Horseshoe power plant. A fine will be
levied if these specifications are not met.
Table 3

Quality Specifications
BTU
13,000
Sulfur
< 3%
Ash
< 8%

GEOLOGY
NME will be operating in the Pittsburgh No. 8 coal seam in Greene County, Pennsylvania. 134 cores
were drilled to map the reserves. The spacing is close enough to properly evaluate the reserve.
The Pittsburgh No.8 is relatively flat dipping no more than three degrees. Figure 4 is a bottom of coal
contour map.
Figure 4

NORTH

The green indicates a lower elevation on the east side of the property. The coal is deeper on the east side
of the property. On the west side of the property, the coal is shallower.
The immediate roof material consists of shale, bone and siltstone. The bottom is composed of gray shale
and limestone. The weak roof will pose ground support control issues. Extra roof and ground support may
be needed in order to operate safely. However, the shale roof will be ideal for retreat mining. The shale
will allow the roof to collapse completely which will improve the safety considerations.

The average thickness of the coal seam is 7.5 feet. Some areas of the property consist of multiple layers of
interbedded shale and coal. Table 3 represents the range of coal thickness on the property.
Table 4

Seam Thickness (ft.)

Average
7.21

Maximum
7.99

Minimum
6.42

Figure 5 is a seam thickness map of the property. This figure indicates a fairly consistent
thickness throughout the property. One particular region in the center towards the south is
relatively thin at 6 feet but as it is a fairly small section of the property it is of little concern.
Aside from that area the ore body is exceptionally thick, typically seven to eight feet thick with a
series of six to seven foot sections running north to south through the center in combination with
a few small interspersed pockets of coal thicker than eight feet.
Figure 5

NORTH

RESOURCES AND RESERVES

The NME property, Muddy Creek, contains 84.4 million tons of resources. The resources were calculated
from the 134 cores that were drilled. Carlson, a mining software, was used to interpolate the drill holes to
calculate the properties resources. We compared three resource estimation techniques--triangulation,
polygon, inverse squared distance and ABOSto calculate the resources. The ABOS technique gave the
least error compared to the other techniques.
The reserves are estimated to be approximately 55 million tons. NME assumed the average extraction
ratio utilizing continuous miner super sections would be 65%.
The expected mine life is 19 years. We assume that NME will sell 2.5 million tons of clean coal a year.
This means we will mine 3 million ROM tons of coal a year. 55 million tons of reserves divided by 2.8
million tons a year is approximately 19 years.
NME will realize 4.85 tons per clean foot mined. We based this number based off of a 7.5 ft. seam height,
an 18 ft. entry width, 80 lbs/ft coal density and 17.4 percent average ROM ash content.
NME will use 9 entry mains and 7 entry panels. The extraction ratio in the panels during development
will be 40.8 percent. During retreat, the extraction ratio will be 72.1 percent. We used ARMPS, a NIOSH
software, to design the panels.
Table 4 the quality of the reserves on the property. In the near future, NME will have the quality data for
each year of the mine life.
Table 5

Seam Thickness (ft.)

BTU
Sulfur (%)
Ash (%)
Moisture (%)

Average
7.5
12100
4.5
17.4
1.9

Maximum
8.9
13500
8.3
35.4
3.6

Minimum
6.5
9000
1.8
9.0
1.0

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The average BTU values are represented by figure 6, below. The majority of NMEs resources are
exceptionally high in BTUs, primarily located in a strip running north to south through the center of the
property. This region, as indicated by figure 5, is typically 6 to seven feet thick. A region of considerably
weaker BTU coal lies on the eastern edge of NMEs property and there are significantly low pockets of
coal comprised of 8000 to 10000 BTU deposits but these regions account for less than thirty percent of
the total resources.
Figure 6

NORTH

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The average sulfur values are represented by figure 7. As indicated by the figure the most valuable
portions of the ore body, the regions higher in BTUs, have about two to six percent sulfur.
Figure 7

NORT
H

The average ash values are represented by figure 8. The majority of the property has about fourteen to
thirty percent ash. Slightly to the west of the center of the property a chain of fairly large and fairly high
ash regions runs north to south. These regions have approximately thirty five to forty five percent ash.
This will require special attention and advanced planning in the future.

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Figure 8

NORTH

The average moisture values are represented by figure 9.

Figure 9

NORTH

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MINE DEGASIFICATION
When looking at operation costs, ventilation costs are amongst the highest. There are a number of factors
involved including high gas emissions, high dust production, geothermal conditions, and inefficient
premining/degasification techniques. Recent studies have showed companies can save money by properly
degasifying the coal seam before development.
Since NME has decided to have a CMSS with a production rate of 9000 T/day, the only changeable
variable is the gas content. Using the Gas emission estimation equation, the emission rate is affected by
the production rate and gas content in the seam. Therefore, to have an optimal ventilation we can either
produce less coal, or control the gas content.
E = R * Gs * 1/3600 = m3/s
R = Production per hour, tons/hr.
Gs = Gas content.
Different scenarios, in table 6, have been conducted using CMSS, with different gas contents, to produce
an optimal methane emission rate. The methane emissions found are reasonable according to MSHA
regulations. Our goal for ventilation is to have an emission rate (35 53) ft3/s for the CMSS, and (18 - 25)
ft3/s for the CM. The data indicates that the gas content during exploitation should be 150-200 scft.
Table 6

FOR CMSS
R = 499 T/hr
R = 499 T/hr
E = 35 ft3/s
E = 53 ft3/s
Gs = 150 scft
Gs = 200 scft

Given the in-situ gas content of 600 scft, Table 7 shows different scenarios for the final gas content of 150
scft, and 200 scft with respective pressure after degasification. The amount of gas liberated can be
determined using the equation below, since NME has estimated its resources to be 80MT.
Liberated methane = V * Resources
Table 7

VL
PL

600 scft
1067 psi
Scenario 1

V
P

150 scft
97 psi
Scenario 2

V
P

200 scft
133 Psi

The estimated liberated methane is in the range of 32-36 billion ft3. The company has decided to sell the
liberated methane as compressed natural gas. To do so, the pressure of the gas has to be high enough to
avoid the costs of pressurizing. Using the current gas costs $5/1000ft3, NME estimates a total mine of life
revenue of $180 million.

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PRODUCTION
NMEs Muddy Creek Mine will consist of two continuous mining super section (CMSS). Each section
will consist of two continuous miners (CM) for a total of four miners. Analysis of the geology and cost
parameters makes a CMSS suitable at NMEs reserves of 55 million tons.
Since NME has agreed to supply Horseshoe Power Plant with 2.5 million clean tons of steam coal.
NMEs annual run-of-mine production at Muddy Creek will be approximately 3 million tons/year. The
following assumptions were made:

Average in situ ash content 17.4%

Horseshoe Power Plants maximum ash content - 8%
Waste liberated after processing- 9.4%, or 300,000 tons of waste

Production Estimates: table 8

Resources
Recovery
Reserves

84,400,000
65%
54,860,000

Mine Life

19

Production
Time
Year
Day
Shift
Hour

1
310
2
9

CMS

Tons
2,784,504
8,982
4,491
499

The 2010 version of ARMPS, a NIOSH ground support soft-ware program, was used to design the mine
pillars to optimize safety and the extraction ratio. The
Table 8 shows Muddy Creeks pillar dimensions for the mains, sub-mains and panels.
Table 9

Pillar Width (ft.)

Pillar Length (ft.)
Entry No.
Entry width (ft.)
Crosscut width (ft.)
Seam Height (ft.)

Mains
60
60
9
17
17
7.5

Sub-mains
60
60
4
18
18
7.5

Panels
60
60
7
18
18
7.5

The following figure is diagram of the proposed panel dimensions. The development extraction ratio for
the panels is 40.8 percent. The estimated retreat extraction ratio for the panels is 72.1 percent. The safety

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factor during development of the panels is 2. A 2 safety factor during development will give a 1.51 safety
factor during retreat mining. The pillars will be mined during retreat using the Christmas tree method.
Two pillars will be mined at a time in a predetermined cut sequence. The cut sequence has not been
determined yet.
A bleeder pillar will be left between entry 6 and 7. This will provide extra support to the barrier pillars
and allow for ventilation of the gob. The total width of the mined out gob will be 408 feet.
Figure 10
Gob
Pillars

NMEs Muddy Creek Mine may encounter some challenges dealing with ground control and roof control.
Immediate roof is predominately shale, bone, siltstone, and black shale. The immediate bottom is
limestone and weak grey shale. Weak rock structure may cause roof and ground control issues, therefore
extra support such as truss and cable bolts, wire mesh, and rib bolting is necessary.

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Environmental Considerations
NMEs Muddy Creek Mine will comply with state and federal environment regulations in order to be
environmentally benign. Permits issued through the Pennsylvania Department of Environmental Protection
and Mine Safety & Health Administration, will oversee methane degasification, infrastructure, and
subsidence, refuse disposal, etc.
Approval for Muddy Creeks mine permit will require 5-10 years of review with gas and dewatering permits
requiring one year. NME will begin operations with land clearing for degassing its reserves before actual
production will begin. Once surface and underground permits are approved, infrastructure will begin
following production.

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Gantt chart (Spring 2015)