Private Investment Private Equity Fund                       

A&S was engaged by partners of a private equity fund to provide basic information about the coal mining business.  A&S was then asked to prepare reports on a specific coal company’s senior management, financial structure and mines.

Private Equity Firm                       

A&S was retained by a mid-sized, private equity firm, to assist it in evaluating a major western coal mining company.  The private equity firm was considering loaning money to the coal company, with an option of converting the loan to equity at a later date. 

A&S used a team of four professionals that spent two days visiting the relevant coal mines to evaluate the reserves, coal quality, mine plans, operating and capital costs, productivity, coal sales and contracts, budgets and environmental compliance.  A&S also assisted the private equity firm personnel in their own, on-site, fact-finding. 

Following the site visit, A&S worked with the private equity firm in modifying the financial model provided by the company and in modeling alternate operating and financial scenarios.  A&S also provided comments on different pricing assumptions to use in the financial models.

Large Coal Company                       

A large steam and met coal company was the subject of a hostile takeover by a group of large investors.  A&S was engaged by the coal company to analyze and determine the value of assets under two varied conditions and ownership structures and then to compare the two valuations.  As part of the client’s defense strategy A&S’ valuation was sent to all of its shareholders.

Investment and Financial Firm                       

A&S was retained by a private equity, investment fund to evaluate the economics and operations of an underground coal mine.  The mine(s), owned by a major mining company, were optioned to an individual who was seeking additional financing from our client in order to acquire the property. 

A&S’ work involved reviewing and assessing the opportunities, risks and prospects of the mines in the context of recent higher coal prices and two tentative multi-year sales agreements that were at, or below, market prices.  Unfortunately, A&S was engaged late in the bid process – well or after the end of the initial option period – and the large coal company owner ultimately terminated the option and retained the properties.

Major International Holding Company                       

Determination of the most desirable candidates for a merger or acquisition of at least 50 percent share of a large North American coal company.  The scope of work included the entire U.S. coal mining industry and involved selected foreign coal mining companies and selected non-coal mining companies.  Each of these companies was reviewed with our client as a suitable merger or acquisition candidate. 

Detailed operations, financial and marketing summaries of eight of the most desirable candidates were provided.  Our work included a determination of the synergies between the subject company and the candidates.  After establishing the most logical candidates, an assessment of each candidate's interest in an acquisition was provided. These assessments were based on inputs from industry sources and high-level confidential inquiries.

Private Equity Firm                       

A&S did a search of available public data and prepared a summary of a specific coal company operation for which our client was considering as a potential investment.  We presented our findings in a telephone conference call.

Major Financial Institution                       

A&S has provided several different types of assistance to a large commercial bank regarding one its client’s coal mine plans and economic forecasts.  A&S advised our client as to the reasonableness of the coal mining company’s new plans and the degree of probability as to whether it would meet its projections. 

A&S assisted in preparing the documentation for loan syndication, participated in meetings with the relevant bankers and assisted in several mine tours for the bank group.  During this work A&S also reviewed the relevant mine plans, budgets and commented on the relevant economic and operating parameters including productivity, cost, and selling price assumptions and expansion plans.

Large Private Equity Firm                       

A&S assisted the private equity firm in a preliminary evaluation of a coal company, located in Kentucky which had approximately 50 million tons of saleable coal in reserves.  The company utilized contract miners to produce raw coal for the coal preparation plant and coal blending yard. 

· The company historically produced 20-30 TPM, but was ramping up to 75,000 -100,000 TPM. 

· Negotiations for the private equity firm to acquire a majority interest were unsuccessful due to differing concepts of value.

Private Equity Firm                       

A&S, through industry contacts, brought a closed coal mine to the attention of a private equity firm.  The coal mine had an estimated 6 to 10 million saleable tons of Pittsburgh seam coal remaining, which was expected to be low enough in sulfur to be sold as metallurgical coal. 

A&S visited (1) the mine, (2) the abandoned preparation plant, and (3) the river barge loading facility.  We met with the current owner and his attorney to (a) review the reasons for closing in 2002, (b) discuss the current permit status and the expected schedule to reopen the mine and(c) discuss the current bankruptcy status.  We made a report of our findings to our client. 

Subsequent to that, we were engaged to begin due diligence for a contemplated acquisition.  Our due diligence revealed substantial operational and legal issues, and the due diligence work was terminated.

Major Private Equity Fund                      

A&S was retained to undertake an operational due diligence of two large surface coal mines located in the Powder River Basin in Wyoming.  The work involved a visit to the company’s data room, extensive site visits and interviews with mine operating personnel, as well as analysis of current long-range plans. 

Using our detailed knowledge of the Powder River Basin’s mines, and prior senior operating experience by our staff, adjustments were made to the company projections to present a more accurate picture of the expected results.  Recommendations were also made for operational changes that could be implemented to reduce costs. 

We were also asked to review the work of the approximately twenty other consultants hired by the client and to prepare a final report covering the work of all the consultants.

Private Equity Firm                       

A&S introduced a coal company to a private equity fund.  The coal company operates in the Eastern U.S. and its owners wished to sell it.  They (the target coal company) lease, mine, wash and size coal for sale to the industrial and steam coal markets.  They use contract miners exclusively, have a large coal preparation plant, load out facilities on a regional, national rail carrier as well as load and truck coal for river transport. 

A&S did an initial due diligence to determine the coal company’s ability to increase coal production.  The project ended when we determined that the coal company would only reach approximately 50% of their projected tonnage level.  The coal company agreed with our assessment, but did not wish to spend the capital to increase production and was unwilling to reduce the selling price of the coal mining company.

Major Japanese Trading Firm                       

Due diligence assignment of a major Western coal company. 

·            Our client was a major Japanese trading firm considering acquiring a U.S., 20-million-ton-per-year coal company located in the western part of the U.S. 

·            Our role was to review data provided to us on the company’s operations and make on site visits to the company’s mines and preparation plants and interview key members of management. 

In our visit to the company’s various coal operations we reviewed:

·            The geology and reserves to assure that they contained the tonnage and quality needed to fill contractual requirements and sales projections. 

·            The technical and operational aspects of mine plans and mine planning, both for the present mines and preparation plants and those mines and plants planned for the future.

·            The mining equipment to form a judgment as to its capabilities and condition.

·            Preparation plants, tipples and other coal processing, handling and transportation investments to determine their operating and economic effectiveness, competitiveness and age.

·            The coal sales contracts.

Major Public Accounting Firm                     

This assignment done on behalf of a major Japanese trading company was to provide information focused on a forecast of western U.S. utilities’ coal requirements through the year 2015.  The research identified and evaluated various data sources to determine the appropriate database and then A&S interpreted the material.

Western U.S. Coal Company                       

The study focused on optimizing our client’s warehouse operations. 

·      The objective of this work was to develop programs to provide improved warehouse services to the coal mining operations at a lower cost. 

·      Our work program involved visiting the major coal mines to develop information on the capabilities of the current systems and the desires for services by the operating people. 

We analyzed present warehouse operations and identified various approaches for improvement, analyzed each, selected the best one and reviewed it with the appropriate company and operating warehouse people.  As part of this work we reviewed the company's strategies, supplier relationships, inventory policies, data processing methods, customer measurement and reporting.  We also assessed workload.  Our recommendations covered each of these areas.

Multi Client Coal Purchasing and Materials Management Study                        

This assignment involved a survey of purchasing and materials management in the U.S. coal mining business. 

·                Fourteen major coal mining companies participated in the study. 

·                The assignment was completed within four months time and was presented to representatives of the coal mining companies.

The focus of the survey was to identify, review and document present purchasing and materials management practices in the U.S. coal business.  The data base that we developed flowed from our interviews with:

·                Each of the survey participants;

·                Ten major suppliers, plus our going-in knowledge of purchasing and material management in a wide variety of manufacturing businesses.  Subjects covered in the interviews included:

–            Strategic partnerships between coal producers and supplier/equipment manufacturers;

–            Technical development (paperless procurement);

–            Development of out-sourcing (vendor managed inventory, integrated suppliers);

–            Evaluation of the impact of vendor/coal company relationships.

The study reported both the facts of the survey, as well as providing opportunities that we perceived existed for the coal mining industry to attain improvements.  The general opportunities for improved procurement strategy and practices can, in our judgment, result in as much as a two to five percent cost improvement of current expenditures in the purchasing areas.

Major U.S. Coal Company                       

We were retained by our client to assist it, in a Phase I evaluation of a major coal producer in the Powder River Basin when it was put on the auction block.  This work was to conclude when the data room was opened. 

The actual work done by A&S consisted of our preparing and presenting nine memos, each ranging from a few to twenty pages long.  Our team provided our client with our knowledge of issues relevant to a number of U.S. coal mines and, more importantly, provided updates on the sales process and our client’s expectations. 

Mid-Sized Industrial Company                      

A&S was retained by a large coal mining company to perform an independent coal reserve estimate. 

·            The company had four contiguous underground mines. 

·            Using geologic data provided to us by our client, A&S constructed seam-thickness isopach maps and calculated, in place, tons. 

Coal mined prior to the study was deducted and judgments were made as to recoverability and expected mining losses.  Numerous faults, the depth of the coal seams and large quantities of methane gas in the coal seams made the recoverable reserve calculations more complex.

Environmental Impact Study (EIS) Strategic Assessment                                                                                                                         

This was a multiclient study whose sponsors included ten major private and public companies with direct interests and/or involvement in the coal mining industry in eastern U.S.  The study was done on a joint venture basis with a law firm and A&S each taking on 50% of the assignment. 

The objective of the consultant’s work was to provide a strategic framework for the coal industry and its allies to deal with the forthcoming U. S. Government sponsored environmental impact statement (EIS) which flowed from the West Virginia Mountain Top Mining litigation. 

A presentation was made by A&S and the law firm that summarized the meeting of the study sponsors in Washington with the agenda being the consultant’s final report on a recommended strategic action plan as regards the coal industry’s position towards the forthcoming EIS.

Major Coal Mining Company                       

A major North American based coal company requested A&S to value four western underground coal mines.  This was at the time a confidential assignment requiring A&S to use industry knowledge and contacts to develop information. 

A&S prepared mine plans and built economic models that showed revenues, costs, EBITDA, capex and pretax cash flows.  These were life-of-mine projections.

Major Coal Mining & Service Company                      

Cost analysis of a rebuild shop owned by a coal mining company.  Here we:

·         Analyzed the costs related to this coal producer’s rebuild shop with a view towards improving utilization and layout. 

·         Analyzed cost accounting techniques, scheduling and shipping operations generally. 

·         Developed relevant cost data, analyzed same, and determined ways of improving work throughput by improved scheduling and cost analysis. 

Law Firm                                                                               

A&S was hired by a law firm representing the interests of a large coal reserve owner to value a coal reserve property.  The law firm represented family trusts that owned the following assets:

·            A large tract of land or approximately 10,000 acres of land;

·            30,000 annual acre-feet of consumable water rights; and

·            At least one billion tons of lignite owned in fee.

A sale of all the assets had been negotiated and the law firm asked A&S for an independent valuation to confirm whether the sale should proceed.

Using a four-person consulting team, A&S constructed an economic model of a mine and a net 550mW power plant.  Capital and operating costs as well as a schedule covering the expected ten year project were created.  The public Integrated Resource Plan of the purchaser, an electric utility, was reviewed extensively to insure our model represented reality.  We also analyzed independent land and water rights appraisals.  We recommended that the sale proceed.  Due to objections from some members of the trust, we also assisted the law firm justifying the sale to a local court.

International Power Plant Developer                       

This assignment involved a preliminary analysis of coal mines to supply a power plant to be built in Luann County, near Tangshan City, Hibei Province, People’s Republic of China (PRC). 

·            The initial A&S assignment was to visit and review the coal mines, speak with knowledgeable officers and state officials to assist us in developing our data base which we used to formulate opinions on the coal reserves and quality, the mine production capabilities, and the likelihood of meeting the coal supply requirements of the power plant in terms of quantity, quality (in terms of meeting specifications), the transportation and coal supply agreements.

·            For this work A&S’ provided two coal mining specialists with extensive experience in coal operations and coal property evaluations.  Following our preliminary analysis and findings, our client asked us to follow up our initial study with an update six months later.  Subsequent to this work, our client requested a more detailed study that was included in the Offering Circular of a bond issue.

International Power Plant Developer                      

Here, we provided an opinion on coal supply arrangements to a Chinese power plant venture.  Our client was a U.S., independent, power plant company that had formed a joint venture with a Chinese governmental agency to build and operate a power plant in Luannan County, near Tangshan City, Hebei province, People’s Republic of China (PRC).  The power plant would consist of two 50-megawatt coal fired units, with the coal to be supplied by coal mines operating in the Tangshan Coal Basin. 

The A&S assignment was to:

·            Assess the ability of the existing coal mines to produce sufficient quantities of coal for the expected term of the Power Purchase Agreement;

·            Assess coal transportation availability from the mine to the power plant;

·            Consult on various aspects of the Coal Supply Agreement.

For this work A&S provided two coal mining specialists with extensive experience in coal mining operations and coal property evaluations in an international setting.  The A&S report was included in the Offering Circular of a bond issue.

Major U.S. Coal Company                       

1.         A&S was retained by the business development unit of a large U.S. based coal company to prepare and present a comprehensive study on energy and coal conversion technology, i.e. coal gasification and coal liquefaction. 

·            The study focused on the state of play, and status of the work being done, throughout the world on energy and coal conversion technologies.

·            Our assignment involved, providing to our client, a study focused on the many complex issues that our client should consider regarding its further investments/activities in this sector, while simultaneously not jeopardizing the strength and value of its core, coal mining, business. 

For this study A&S utilized a team of seven consultants comprised of (a) three technology experts experienced in energy and coal conversion technologies, (b) one coal business analyst knowledgeable about the coal industry and coal culture and (c) one analyst knowledgeable about the oil and gas industry and (d) two consultants in economic analysis in the natural resource industry sector.  This team developed our findings, conclusions and recommendations. 

2.         Core to our work was our analysis of three advanced coal conversion technologies including: (1) Integrated Gasification Combined Cycle (or IGCC) for producing power and other products (2) Direct and (3) Indirect Coal Liquefaction (or DCL and ICL) for producing liquid fuels. 

·            While none of these technologies are operating on a commercial scale basis today in North America, high energy prices and technical advances have raised the interest in - and R&D spending - on these technologies.

·            This increased awareness of energy/coal conversion technologies has included a number of key players, including various major technology vendors, utility and energy companies in the U.S., China, Europe, and elsewhere, etc. 

3.         In our study, A&S presented its findings on a broad range of issues that impact the viability and adoption of these new energy and coal conversion technologies.  These areas included (i) R&D initiatives and spending on commercial-scale demonstration projects and the economics of various coal conversion projects vis-à-vis conventional pulverized coal power generation, production of transportation fuels and other relevant competing technologies; (ii) the status, outlook and activities of key players involved in energy and coal conversion technology by region, e.g. in China, South Africa and the USA, and large private sector firms; (iii) the risks associated with adopting and/or investing in this sector; (iv) relevant economic growth forecasts and trends in the global energy and utility markets and other factors driving the interest in coal conversion technology; (v) the impact of Federal, State and local legislative actions on the development and utilization of energy and coal conversion technologies including the U.S. Federal Energy Policy Act of 2005; (vi) programs funded by various governments and private entities to use, and or support, various pilot and demonstration-scale clean-coal projects; (vii) related environmental considerations; and (viii) the impact on the coal mining industry, particularly in the U.S.