Alliance Resource Partners, L.P. (NASDAQ: ARLP) today updated the status of production operations at the Pontiki mining complex in Martin County, Kentucky, which has been idled since August 29, 2012. The Mine Safety and Health Administration ("MSHA") ordered the closure of the coal preparation plant and associated surface facilities at the Pontiki complex due to the failure on August 23, 2012 of a belt line between two clean coal stacking tubes. In issuing its closure order, MSHA required a comprehensive structural inspection of all surface facilities by an independent bridge engineering firm before the surface facilities could be reopened.
On September 18, 2012, the independent engineers issued their initial report. Since receiving the report, mine personnel have been analyzing the findings and working to determine the expense and capital investment necessary to meet MSHA’s requirements to lift the closure order of the surface facilities at Pontiki.
"ARLP will make every reasonable effort to keep the mine open so that Pontiki can continue safely producing coal and providing quality jobs to our hardworking employees," said Joseph W. Craft III, President and Chief Executive Officer. "We are working diligently with all parties with a vested interest in Pontiki’s future and expect to complete our evaluations within the next two weeks."
As a result of idling production operations at Pontiki, ARLP is evaluating the potential impact to its 2012 third quarter financial results including a possible one-time, non-cash charge to reflect an impairment of part or all of the approximately $34.0 million of assets related to the mining complex. As part of this evaluation, management is developing contingency plans to indefinitely suspend operations at the mine and in such event deploy equipment currently in use at Pontiki to other ARLP operations so that capital savings will mitigate the potential loss of future operating cash flow. Regardless of the decision to resume or indefinitely suspend production at Pontiki, ARLP currently anticipates the impact to future distributable cash flow will be negligible. Additional details regarding the operating and financial impact of idling operations at the Pontiki complex will be provided in ARLP’s upcoming earnings release on October 26, 2012.