 Recoverable Reserves
We determined in 2004 that coal would be a profitable commodity in the energy sector in future years because of the increased prices and demand resulting from public and private utilities modifying their power plants from natural gas to coal. The United States Produces in excess of 50% of its electricity from coal and will continue to do so as will Coal continued to be used for furnace heating in the manufacture of cement and other products. We are negotiating a number of coal acquisitions and projects and have determined that the most profitable segment of the industry is the reclamation of coal fines that are estimated at over 2 Billion tons.
In 2004, Kore Holdings' wholly owned subsidiary, Sunvolt Inc., acquired Coal Tract #4 of the Fiatt Coal Mine in Fulton County, Illinois, with options to acquire additional sites in the historically coal-rich area. Coal Tract #4 consists of approx. 100 acres bearing 4,356,000 tons of coal fines, which were mined in the area in the 1920s through the 1940s and deposited aboveground as a 50-foot layer. Coal fines are defined as pieces of mined coal less than 2 inches in diameter. Commercialization of the coal fines requires no new mining. We are working with a subcontractor that plans to use proprietary centrifuge technology to increase the heat-generating value of the coal fines with minimal environmental impact.
The real property and coal sits in the heart of the Western Illinois coal fields, commonly known as the " Western Coal District" including all of Knox, Stark, Peoria, and Fulton Counties. These fields have been recognized as the earliest and largest known coal-bearing regions in the United States. They were part of the once active Truax-Traer Mining Company lands, when during the active mining period from 1920 to the middle 1940's, all coal materials mined that were less than two inches in size were considered coal fines and were then deposited on the site. The Truax company also brought in coal fines from other remote mining activities in a ten mile radius of the Fiatt site and deposited them in the "coal" piles on the Fiatt acreage. This method of coal fines disposal accounts for the massive deposits of recoverable coal reserves on the property. We will market the coal through our wholly owned subsidiary SunVolt and are currently in negotiations with two nearby power plants and also have a large export order. The current market price for this grade of coal is approximately $26 per ton F.O.B. The acquisition was financed by a royalty agreement from SunVolt of $4 per delivered ton and VOLT Series B Preferred Restricted shares. There are a number of environmental issues that need to be cleared before coal can be shipped from the site. These issues are currently being addressed but no definitive timetable for clearance has yet been released by the State of Illinois. Our company is currently updating an engineering study which will enable the issuance of site permits and reclamation bond in order to start shipments and processing of the on site coal.
Kore Holdings currently is updating our engineering reports in order to expedite issuance of site permits and establishment of the required exclamation bond. The current market price for this grade of coal is approx. $30 or more per ton, and the total cost of production (including royalties and processing) is less than $18 per ton. We are in negotiations to sell the coal to nearby power plants and have a large export order. We anticipate that the necessary clearances from the State of Illinois can be obtained in the coming months so that the coal fines can be processed and sold perhaps by year-end 2005. Conservatively estimating the selling price at $20 per short ton of coal, our holdings on Coal Tract #4 have been certified and appraised at $69,969,000. In addition, the we are seeking other tracts of coal fines for commercial exploitation. |
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