Headlining today's coal industry news, State figures reveal that West Virginia - one of the nation's top coal producing regions - has added approximately 1,000 more workers than were employed this time last year.

According to an article posted in the Charleston Daily Mail today:

-- The region's coal industry employs nearly 3,000 more workers than it did in '08;

-- 18,240 surface and underground miners were employed in June '08 vs. 17,520 in June '07; and

-- Surging demand and prices may be driving increased workforce growth going forward.

The piece goes on to note that Massey Energy

(NYSE: MEE) - the #4 coal producer in the U.S. - which places a large operational focus on Kentucky, West Virginia and Virginia and also owns properties right next to our portfolio favorite Quest Minerals & Mining Corp. (OTCBB: QMNM), held a job fair in Boone County (WV) last week.

With the nation's unemployment rate hitting a 5-year high of 6.1% in August, the coal industry appears to be a hotbed for growth going forward.

Commenting on the remarkable growth potential of the coal industry in years to come, West Virginia Coal Association President Bill Raney was recently quoted as saying: "Everyone's confident this market will sustain over the next several years and well into the next 20 years." and "Generally speaking, it's evident that supply and demand has kept the market very strong." "There doesn't seem to be enough coal in the world. That's the benefit of being in an energy-producing state."

Quest Makes Additional Improvements

In other coal-related news, Quest Minerals & Mining Corp. (OTCBB: QMNM) announced this morning that it has taken every measure possible to produce a sustained level high coal volume going forward. The company anticipates updating investors on its mining progress over the next few weeks, a move

that should have a positive impact on the current pps as long as the tonnage reports look promising.

Commenting on the recent infrastructure overhaul at Quest's Pond Creek, KY coal mine, Everett Hampton, President of Whitestar Mining, LLC, commented, ``For the past 10 days, we have refurbished and modified all of the key inner workings essential to our operations. Splitting the beltline to add another head drive; and replacing 1,200 feet of used conveyor belt that was more than ten years old was just one of the major improvements. We also added four feet to the belt feeder along with its own motor so that it will run independent of the beltline and therefore, cause fewer delays. Lastly, we focused on the

machinery by installing new hydraulic jacks to the roof bolter and refurbishing the under carriage on our joy 14-10a miner to give it better output efficiency. Ultimately, we have taken every measure possible to ensure that we will not only produce high coal volume, but to have this mine in the shape needed to sustain consistent production levels.''

More on the Small Cap Coal Sector

America West Resources, Inc. (OTCBB: AWSR) announced a $6.6M dollar supply contract this morning with a major U.S. energy company that could grow by another $4.75M in ‘09 if the company can stay on tract with production goals.

According to today’s release, the contract announced today coupled with a contract announced back in June could result in ap

proximately $32M in revenues for AWSR over the next 16 months if all goes well. For a company that logged just over $6.6M in 2007 revenues, the recent inflow of contracts could transform America West into a viable, lower-tiered domestic coal supplier

Now trading at $.28 with about 110 million shares outstanding, the stock is up approximately 11% on volume of 38,000 as of 1:31 EST today. If the news keeps rolling here, things could get interesting.

Labels: America West Resources, AWSR, Coal, OTCBB: AWSR, QMNM.ob, Quest Minerals and Mining Corp

I had the chance to speak with Quest Minerals & Mining Corporation (OTCBB: QMNM) CEO Eugene Chiaramonte, Jr. last week and the conversation was quite productive. Mr. Chiaramonte was able to shine some light on what has been transpiring at the company's Eastern Kentucky coal mines as well as with its ongoing bankruptcy proceedings. Here's a look at some of the highlights from our conversation:

1. Pond Creek Mine:

• Production was halted on Wednesday 8/20 due to a belt problem and is expected to commence early this week;
• Quest has been producing and shipping coal to fulfill its $8M contract with Logan & Kanawa for over two months;
• The mine currently employs two mining shifts and a maintenance shift. The second mining shift is a half shift, for now;
  
• The company will likely update investors with Pond Creek sales data within the next 2-4 weeks;
  
• Because the mine required such intensive rehab and invasive drilling (i.e, ripping out the pre-existing roof), Quest's equipment took a serious beating in the process of achieving full production status. In order to ensure future efficiencies, Quest has been re-building and replacing worn down equipment. This process is believed to be just about over with;
  

2. Gwenco Bankruptcy Proceedings:

• Quest plans on presenting its re-organization plan to the bankruptcy judge this Friday (9/5) and expects to receive a "yes or no" reply within about a week;
• Management has prepared the plan using "low-ball" figures in effort not to handicap itself going forward;

3. Cedar Grove Mine:

• Initial rehabilitation has commenced at the mine. This includes light excavation of paths and access roads leading up to the property. Eugene noted that a bulldozer was currently on-site and being used to clear the face of the mine as well as provide easier access to the property.
  
• Eugene also noted that Quest is already in early-stage negotiations for future sale of the coal housed in Cedar Grove and is pleased with the direction in which talks are progressing.

4. The Potential Mountain Ridge Acquisition:

• At this point it does not look like management will pursue the deal. According to my conversation with Quest's CEO, due diligence was conducted on behalf of the company and the deals was not seen as being beneficial.

I hope this helps paint a better picture of what is going on with Quest, currently. Feel free to post any questions that you might have on the blog and I'll be happy to reply.

Labels: QMNM, QMNM.ob, Quest and Coal, Quest Coal, Quest Minerals and Mining Corp

Quest Minerals & Mining Corp. (OTCBB: QMNM) continues to hit the wire with news regarding positive developments at its Pond Creek, Ky coal mine.

The stock closed up more than 15% Tuesday at $.0134 on nearly 35,000,000 shares traded for one of its best days in quite some time. In my opinion, QMNM holds a deal of upside potential for a number of reasons. I'll touch on a few of them in a moment, but first, let's take a look at the two most recent developments at Quest's initial mine.

Striving for Increased Production at Mine #1

On 8/1 management noted that the property had recently achieved full production status and subsequently increased daily output expectations.

Today (8/12), Quest announced the addition of a "JOY (64'' Bed) 21SC shuttle car to its underground operations". According to the release, the new piece of equipment holds up to 5 tons of coal and works side by side with Quest's existing 4 ton shuttle car.

Now, let's get back to some of the reasons that have me convinced that Quest is indeed a compelling and timely low-cost play on the booming coal industry.

QMNM: A Low-Cost, High Potential Coal Play

1. Quest is a coal producing company: Gwenco, QMNM's wholly-owned subsidiary currently leases more than 700 acres of coal mines believed to hold approximately 12,999,000 tons of coal. Furthermore, Gwenco is already extracting enough coal to require the installation of a larger conveyor system that will facilitate the company's production of between 1,000 - 1,300 raw tons of coal per shift or 2,000 - 2,600 per day at Pond Creek.

2. Quest plans to monetize a portfolio of coal properties, not just one mine: QMNM has publicly stated plans to bring a second mine - Cedar Grove, KY - online by the end of 2008. Cedar Grove is located in very close proximity to Pond Creek and is expected to produce roughly identical output upon achieving full production status. In addition, initial engineering reports indicate that the coal located in Quest's second mine is of higher quality than that of Pond Creek.

3. Quest Represents a Low-Cost, High Potential Play on the Ongoing Coal Boom: As more established competitors including Arch Coal (NYSE: ACI) and Massey Energy (NYSE: MEE) continue to demand a premium from a stock price perspective, Quest represents a very compelling low cost opportunity to capitalize on the ongoing coal boom. Despite the obvious dangers of investing in companies currently in bankruptcy and trading in the penny range, the potential rewards are monumental.

4. QMNM Made a 4,000% Advance from 6/18 to 6/23: Quest recently advanced more than 4,000% in 3 days on total volume of 643,000,000 shares traded. QMNM closed at $.0016 on 6/18 and hit the high point of its recent run at $.075 on 6/23.

5. $8+ million contract in hand: Quest has a $8M contract in hand with Logan & Kanawha Co., LLC., and recently noted that it had verbally accepted a 10% higher strike price per ton on coal delivered through December of 2008

Quest Undervalued?

Since $.075, QMNM's trading behavior has been erratic at best. Despite tremendously high average daily trading volume for a penny stock trading in the sub $.10 range coupled with a number of stellar corporate announcements, the stock is parked below two cents. In my opinion, if Quest stays on track with recently stated production and rehab goals and quarterly financial reports become available, the stock will begin to receive a more favorable valuation in comparison to its peers. Here's a quick look at some of them.

Massey Energy Co. (NYSE: MEE)

The Central Appalachian-based coal provider recently reported a stellar second quarter aside from a $245.3 million pre-tax charge related to ongoing litigation with Wheeling-Pittsburgh Steel Company.

Some of the highlights include: Record coal revenues of $710.3 for a 38% year-over-year gain; EBITDA increased 65 percent to $199.0 million excluding ongoing litigation-related charges; Avg. revenue per produced ton of coal increased 28% y-o-y to $65.78; Average produced coal revenue per ton increased 28% to $65.78; Q2 operating cash margin per ton increased 83% to $15.94; 28% increase in avg. realized prices on coal shipped in Q2 of $65.78 per ton vs. $51.40 per ton in Q2 2007; 1st half coal revenue of $1.25 billion; and a net loss of $51.4 million or $0.64 per share.

Massey also accompanied its commentary on second quarter operating results with forward looking guidance into the remainder of '09 and 2010. Important highlights include: Building out another 3 to 6 preparation plants and shipping load-outs over the next 2 years; Expects produced coal shipments of between 46.0 and 48.0 million tons in '09; Anticipated met coal output of between 13.0 to 14.0 million tons; Currently in possession of approximately 6 million tons of unsold or un-priced metallurgical quality coal for 2009; and 2009 cash costs anticipated in the $52.00 to $60.00 per ton range.

With close to 81 million shares outstanding and a P/E of 51.33, MEE closed 8/4/08 at $65.91. The stock has recently been upgraded by both Davenport and Standard & Poor's and continues to attract investor interest as energy demand surges.

Peabody Energy (NYSE: BTU)

Based in St. Louis Missouri, Peabody fuels approximately 2% of worldwide electricity generation and sold 248 million tons of coal in 2007 for total revenues of $4.6 billion. With 9.3 billion tons of proven and probable coal reserves as of 12/31/07 Peabody has a vested interest in 31 coal operations located in the U.S. and Australia, as well as joint venture rights to a Venezuelan mine.

Q2 Highlights include: $1.53 billion in revenue vs. $.107 billion in Q2 2007 (43% increase); Net income of $233.4 or $.86 per share beat analyst estimates on average of $1.5 billion in revenues and earnings per share of $.54; Expects '08 income from continuing operations between $2.50 and $3 per share; Sold 59.8 tons of coal during Q2 versus 57 during Q2 2007; 1st half earnings of $290.6 or $1.07 per share on revenues of $2.81; and Sold 121 million tons of coal in the 1st half of 2008 vs. 112.7 in '07.

BTU closed on 8/5/08 at $59.47; right in the middle of its 52-week range. With 272 million shares outstanding and a P/E of 44.95, analysts appear to be quite bullish on Peabody. John Kang (RBC Capital Markets) rates the stock "outperform" and recently raised his price target from $60 to $90.

Arch Coal, Inc. (NYSE: ACI)
The St. Louis Missouri-based company operates 18 mines in 7 states, owns or controls approximately 2.9 billion tons of proven and probable recoverable coal reserves and contributes approximately 12% of America's coal supply. With properties in states including Colorado, New Mexico, Kentucky, West Virginia, Illinois, Wyoming, and Utah; Arch saw second quarter profits double and now believes that 2008 will be a record year.

Here are some of the company's second quarter highlights: Total sales of 34.4 million tons of coal during Q2 vs. 33.3 in Q2 '07; Revenue increase of nearly 30% from $598.7 million in Q2 '07 to $785.1 million; Net income of $113 million, or 78 cents per share vs. $37.6 million, or 26 cents per share; Operating margin increase from $3.51 to $20.16; Operating margin per ton averaged $4.21 vs. $1.75; Average sale per ton of $21.04, vs. $16.42 during Q2 '07 and $18.49 in Q1 '08; First half earnings of $194.1M, or $1.34 per share, $66.3M, or 46 cents per share during the 1st half of 2007; and First half revenues of $1.48B vs. $1.17B during the 1st half of 2007.

With just over 144 million shares outstanding and a P/E of 23.17, ACI closed 8/4/08 at a price of $48.51. The company currently provides the fuel for about 6 percent of the electricity generated in the United States and hopes to see that number increase over the next two years.

Bullish Outlook on Both Sides of the Fence: With both corporate executives and independent industry analysts alike bullish on the company's future potential, Arch Coal appears to be extremely well positioned to capitalize on the continued growth of the coal market. In a recent investor conference call, Arch chairman and CEO Steven Leer, was quoted as saying "We expect 2008 to be a record year for Arch"; and "Our tighter and stronger guidance is indicative of our confidence in the coal market fundamentals and in our ability to capitalize on these strong market trends".

Coal Market Trends

For those of you interested in the plethora of trends currently impacting Quest's business model, here are a few of the major ones:

1. Sustainable Demand

2. Emerging Nations: China and India account for nearly 50% of world coal use and are expected to lead a 73% leap in world coal demand to 2030 to 4,994 million tons of oil equivalent (mtoe) from 2,892 in 2005 (EIA Data)

3. Soaring worldwide steel demand - The price of U.S. steel-sheet reached a record price of $,1052 per ton in June up from $532 one year prior. Moreover, The International Iron and Steel Institute predicts overall industry growth of 6% during 2008.

4. Electricity demand - According to the World Coal Institute, Coal generates 40% of the world's electricity. The institute also states that: "At current production levels, proven coal reserves are estimated to last 147 years. In contrast, proven oil and gas reserves are equivalent to around 41 and 63 years at current production levels respectively

5. Burgeoning U.S. export market - A number of factors in addition to those listed above are currently sparking the rebirth of the U.S. coal export market. Some of the most significant growth drivers include:

A weak U.S. dollar; Exorbitant ocean shipping costs ( this is forcing customers to absorb shipping costs entirely in many instances); Massive demand in emerging nations including China and India that are not capable of fueling their growth internally; China recently announcing plans to lower or eliminate coal import tariffs; and India will need 78,000 megawatts of new coal-fueled generation by 2012, requiring an additional 265 million tons of coal use in that country (Peabody Energy)

QMNM recently gained more than 4,000%, moving from $.0016 (6/19) to a high of $.075 (6/23). After a very positive day in the market today, all eyes will be on Quest again on Wednesday.

Labels: Arch, Arch Coal, Massey, Massey Energy, OTC: QMNM, OTCBB: QMNM, Peabody, Peabody Energy, QMNM, QMNM.ob, Quest and Coal, Quest Coal, Quest Minerals and Mining Corp

Quest Minerals & Mining Inc. (OTCBB: QMNM) just announced that its Pond Creek coal mine, which was expected to reach full production mode of 1,500 - 2,500 raw tons per day within the next month, has done so today and now expects to mine between 1,000 - 1,300 raw tons per shift (two shifts will soon be working).

Since there has been so much speculation surrounding Quest's ability to mine coal, today we'll let you hear it straight from the horses mouth:

Everett Hampton, President of Whitestar Mining, LLC., commented, "We have turned the corner and have run the last three shifts with great success. Until yesterday, we had limited places to cut coal as we were only mining three (3) headings wide. Now that the engineers have finally calculated the proper directional coordinates, we are able to spread our working section out across the full seven (7) headings. Yesterday, we brought our operational status into full production and cut coal for a full eight hours. Having access to the full seven (7) headings allows us to meet our necessary tonnage requirements. The coal yard was so full yesterday, that we almost ran out of room to store it. Running coal is easy, compared to the rehab work we just completed. We are proud of where we are now and the amount of volume we can produce. Our production goals have since been raised up to 1,000 to 1,300 raw tons per shift. Any coal miner would tell you that this is a very good mine now."

Eugene J. Chiaramonte, Jr., President of Quest Minerals and Mining Corp., stated, "It appears that Whitestar is more capable than ever. They have managed to break all previous single day production records in just their first day of full production! We are very excited for what the future has in store for this company."

Simply put, this is a major step in the right direction for Quest. Now in full production mode, the company can begin fulfilling purchase orders and taking advantage of the red hot coal market. Management appears to be executing on outlined initiatives even fast than publicly stated. If that's not a bullish sign of what's to come than I don't know what is. Who knows? Maybe we will see production numbers sooner than the end of the quarter.

Labels: QMNM, QMNM.ob, Quest and Coal, Quest Minerals and Mining Corp

After much hype and anticipation, Quest Minerals & Mining Inc. (OTCBB: QMNM) conducted their investor update teleconference this past Tuesday. All in all, I think the general consensus is that Quest's CEO was quite sincere in his dialogue. For those of you that missed the call, here are some highlights from my perspective:

The Pond Creek mine will soon (next 30 days) be into full production mode (1,500 - 2,500 raw tons per day) and updates will come next quarter. Please keep in mind that, at least to my knowledge, raw tons do not always translate into "marketable" tons. My guess is that 60%-70% of the raw tonnage will be used to fulfill contracts. I will check my estimate with Quest and get back to you all on that.

Chapter 11 - Quest aspires to move out of Chapter 11 in the next 90 days. The CEO seems to be pretty confident that between cash flow from mining operations and money from investors, bankruptcy will soon be a thing of the past. On another note, Management believes that its strategic decision to enter into bankruptcy proceedings for its Gwenco subsidiary essentially kept the company alive and strengthened its position by protecting it from lenders for a period of time and allowing it to begin generating cash flow to help pay back loans.

The Cedar Grove mine will be in full-production mode by the end of 2008. To the best of my knowledge, management expects almost identical output here as at Pond Creek.

Quest expects to be profitable from an operational perspective by the end of the 3rd quarter and also noted a massive increase in interest from private/public investors.

The Stock (Not From Teleconference)

With four consecutive red closes under our belt this week, today is looking like a 5th with the stock down about 11% as of 1PM ET. With no hard financial data to review, maybe investors are still taking profits off the table or just simply protecting themselves from the downturn now that they know production numbers - which should move the stock in my opinion - are still aways off. Remember, many got in below a penny, thus making even $.014 a fairly attractive exit point. Particularly as the stock continues to drop presenting the opportunity for investors to potentially buy back in low before production data is released.

In my opinion, the move upwards just prior to the call may have been some investors anticipating tangible production figures, which will come next quarter as stated above. In the meantime, any positive developments could indeed breathe life back into the stock. Besides production numbers, news on Quest's progress in getting out of Chap 11., hiring on additional workers, reaching full production at Pond Creek, and receiving additional financing should all be forthcoming.

Labels: QMNM.ob, Quest and Coal, Quest Coal, Quest Minerals and Mining Corp

Quest Minerals and Mining Corp. (OTCBB: QMNM) is again showing promise in the market in addition to the field. The stock closed up nearly 9% today at $.0203 on volume of more than 46 million today.

With coal now being produced and a conference call scheduled for next week to update investors on the company's progress. Quest appears to be the real deal.

After being battered for nearly a week straight on one positive corporate announcement after another, the stock appears to be bouncing back.

Labels: QMNM, QMNM.ob, Quest and Coal, Quest Minerals and Mining Corp

Quest Minerals & Mining Corp. (OTC BB:QMNM.OB - News) (Frankfurt:QMNB.F - News), announced that it is finally producing coal, and the market is loving it. Shares are already up nearly 70% since the announcement about an hour ago.

QMNM shares recently gained more than 4,000% , moving from $.0016 to a high of $.0725 before settling back into the $.02 - $.03 while the market anxiously awaited news of production.

I'll bring you much more in-depth coverage on the company shortly, folks, but for now I URGE YOU ALL TO CONTEMPLATE GAINING AN OWNERSHIP POSITION IN THE STOCK RIGHT NOW!

Labels: OTCBB: QMNM, QMNM.ob, Quest Minerals and Mining Corp

Quest Minerals and Mining Corp. (OTCBB: QMNM) has gained 4431.25% since the market closed last Wednesday on roughly 643,000,000 shares traded.

Quest Minerals has simply been one of the best micro-cap profit gainers this year and has made some very happy subscribers over the past few days. On Thursday, QMNM announced that it is diligently working to conclude their final stages of rehabilitation so that they can move into full production at their Pond Creek location.

Initial coal production would be a major development for Quest Minerals & Mining especially as coal prices increase and the world suffers from sky high oil prices. After the stock's performance over the past few days, the world certainly has its eyes on Quest Minerals. The question, is, how high can the stock go?

QMNM gained nearly $.06 today or about 425% on close to 277,000,000 shares traded. With investors willing to pay more than $.07 per share for a stock that traded at a fraction of a penny just last week, who's to say that Quest can't advance yet again tomorrow.

I'll be curious to see what the "smart money" knows about Quest. Is their a major QMNM announcement up around the next corner, or was Quest Minerals and Mining just another flash in the pan?

If QMNM can bring its coal facility online and begin producing in the very near term, we could see this stock mature further. Either way, Quest Minerals and Mining has provided some much needed profits for investors willing to gain an ownership position at a fraction of a penny in tough economic times.

Labels: OTC: QMNM, QMNM, QMNM and stock, QMNM.ob, Quest and Coal, Quest Minerals and Mining Corp, QuestMinerals