Cline gets approval to start New Elk

True to its word Cline Mining (CMK-T) is set to put the New Elk Coal Mine into full production before the year’s end.

The company received a key approval of its mine plan from the United States Mine Safety and Health Administration (MSHA) allowing underground miners to drive into and mine coal from two seams at New Elk.

Word of the approval had Cline’s shares shooting up 21% or 60¢ to finish the day at $3.52 on 6.6 million shares traded.

The company says coal miners have already begun coal production in one seam, known as Apache, and that the material will be travelling along its conveyor system up to the surface stock pile shortly.

From the stockpile the coal will be fed into Cline’s recently finished metallurgical coal processing plant which was built to process 3 million tonnes per year.

The company says production will increase steadily over the next year, as it tries to hit 3 million tonnes mark by the end of 2011.

The in-seam coal qualities at both the Apache and the Allen seams are considered high quality metallurgical steel-making coking coal and will be mined over the next twenty years.

New Elk currently has 79.5 million tonnes of measured resources and another 206.3 million tonnes in the indicated category.

The mine – which sits in southern Colorado’s Los Animas County – was first opened in 1951 and wasn’t shut down until 1989. A coal preparation plant, which was built in 1984, stayed in operation until 1996 using coal from other mines.

Cline bought the project in the second quarter of 2008 for $19 million and began a dewatering and rehabilitation program shortly thereafter.