Bowie mine secures loan of $1 million
Seattle-based firm may lend another $2 million to mine
A Seattle-based company with links to China has loaned Bowie Resources $1 million, the first installment of as much as $3 million to the Paonia coal mine, which has resumed operations that were suspended in October.
L&L Energy Inc. (Nasdaq: LLEN) said the loan will give the company a valuable foothold in the international energy market.
“Our partnership in a U.S. mine of Bowie’s caliber will be an important first step in becoming a global coal mining player,” Dickson Lee, chairman and CEO of L&L Energy, said in a statement.
Delta County, in which Bowie Resources Mine No. 2 is the largest taxpayer, would like to see some of that money come its way.
Bowie owes Delta County about $1 million in property taxes, and county Treasurer Jim Ventrello said he’s waiting to hear about the delinquent tax bill.
“A check would be nice,” Ventrello said.
A tax sale this fall raised about 30 percent of Bowie’s taxes, Ventrello said.
“It’s hardest on the school district, and the county is working with reserves,” Ventrello said.
Delta County got checks of $550,000 each in March and April for taxes due in 2009, and Ventrello said he expects something similar this time around.
Bowie Mine No. 2, meanwhile, has reopened and is producing coal, Ventrello said.
A call to the company office wasn’t returned Monday.
L&L Energy’s loans will earn 9 percent per year, and L&L has an option to acquire up to a 9 percent equity interest in Bowie. The loan is equal to Bowie’s other secured creditor, GE Energy Financial Services.
Bowie has contracted to deliver 3 million tons of coal to the Tennessee Valley Authority, but the longwall mine has the capacity to produce 4 million to 5.5 million tons per year of high-quality coal, producing more than 12,000 Btu per pound with minimal sulfur and ash.
The mine offers an “excellent opportunity to acquire a portion of a high-quality, U.S.-based coal-mining operation with an experienced management team at an attractive price,” Lee said. “We look forward to working with the Bowie team to expand.”
The mine has proven reserves of about 25 million tons with the possibility of an additional 15 million tons after permitting is completed.