The Allegiance Coal Ltd (ASX: AHQ) share price is shooting up in early trade today. That's after the company announced production has started at one of its mines, with sales already in the bag.
At the time of writing, shares in the coal miner are trading for 60 cents each – up 8.18%.
Let's take a closer look at today's announcement and what it might mean for the Allegiance Coal share price.
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Allegiance Coal's latest update
In a statement to the ASX, Allegiance Coal advised that production has started at the Blue Seam in the New Elk coal mine in Colorado, United States.
Operations were scheduled to start 3 weeks ago but were delayed due to issues obtaining regulatory approval. The company stressed the delays were a result of COVID impacts on the regulator's office in Colorado and not due to any material issues with the mine.
During this delay, the company was able to secure the sale of 4x 70,000 tonnes of cargo from the site to steel mills in Asia.
Allegiance did not disclose the sale price but did state it was "at fixed price levels providing a margin above free-on-board (FOB) cash costs for New Elk.
The company also said it was in discussions to sell another between 10,000-20,000 tonnes of coal to a steel mill in Europe. These sales may pique the interest of investors and affect the Allegiance share price.
Finally, Allegiance also announced Mike Madden — a longtime executive at Warrior Met Coal — would join its staff as a sales in expert in the global and US coal markets.
Allegiance share price snapshot
Over the past 12 months, the Allegiance share price has increased 54.9%. At the same time, the price of coal is at its highest price in 2 years, trading for US $102.5 a tonne. However, its share price is still 29% lower than the first trading day of 2020, before the onset of the COVID-19 pandemic.
Allegiance Coal has a market capitalisation of $153.4 million.
