Wolf Run shuts Sago for good

International Coal Group Inc. a leading coal producer in central and northern Appalachia, has announced that its Wolf Run Mining Company subsidiary will permanently close Sago coal mine in Buckhannon, West Virginia. The project was mothballed in March 2007 and has been maintained in idle status for the past 21 months.

Coal production at Sago mine was suspended in order to allow WV mine safety regulators and researchers to study the effects of lightning on underground mining. This is thought to have been the cause of the January 2, 2006 coal burst incident at the mine which claimed the lives of 12 miners and encouraged MSHA (Mine Safety and Health Association) to introduce the 2006 MINER act.

Upon completion of the on-site research, Wolf Run Mining has evaluated the mine infrastructure and remaining reserves and determined that the operation is no longer economically viable. The company claims that current maintenance costs, and the substantial expenditures required to restore mine infrastructure and allow restart of production, significantly exceeds the value of the remaining coal in the current market.

The mine will be permanently sealed in the first quarter of 2009, and the three employees will be reassigned to other Wolf Run Mining operations. Although the company plans to recover its equipment assets prior to mine closure, it anticipates recording a fourth quarter non-cash asset impairment charge of approximately US$7.2m related to non-recoverable mine development costs.