Today’s Bold Stock is Kentucky Energy, Inc. (Symbol: QMIN)
Dear Members,
Be sure to take a close look at KENTUCKY ENERGY, INC. (SYMBOL: QMIN), our Newest Bold Stock.
Kentucky Energy (OTC: QMIN) is a fully reporting Pink Sheet Company with an incredible story and opportunity. While StockGuru does not typically take sub-penny stocks, QMIN represents a beaten down Company with strong potential.
QMIN acquires and operates energy and mineral related properties in the southeastern part of the United States. Kentucky Energy is a holding company for Quest Energy, Ltd., and Gwenco, Inc.
Gwenco leases over 700 acres of coal mines, with approximately 12,999,000 tons of coal in place. In 2007, Gwenco had reopened Gwenco’s two former drift mines at Pond Creek and Lower Cedar Grove, and had begun production at the Pond Creek seam. This seam of high quality compliance coal is located at Slater’s Branch, South Williamson, Kentucky.
Reorganization Creates Strong Entry Point for QMIN
It is the fact that this Company is emerging from bankruptcy that creates this opportunity for potential shareholders. The United States Bankruptcy Court for the Eastern District of Kentucky confirmed Gwenco’s Plan of Reorganization (the “Plan”) pursuant to Chapter 11 of the U.S. Bankruptcy Code with the United States Bankruptcy Court for the Eastern District of Kentucky. The Plan became effective on October 12, 2009. See the Annual Report on Form 10-K for the year ended December 31, 2009, for a description of the Plan and its effect on the Company’s financial statements.
Customers
Kentucky Energy intends to sell all of its coal on the spot market to coal brokers. The Company enters into long-term contracts (exceeding one year in duration) with many of its customers. These arrangements allow customers to secure a supply for their future needs and provide Kentucky Energy with greater predictability of sales volume and sales prices.
Coal Reserves
Kentucky Energy estimates that, as of December 31, 2009, it has total recoverable reserves of approximately 11.2 million tons, of which 8.5 million tons constitute prove/probable reserves. “Reserves” is that part of a mineral deposit, which could be economically and legally extracted or produced at the time of the reserve determination. “Recoverable” reserves mean coal that is economically recoverable using existing equipment and methods under federal and state laws currently in effect. Approximately nine million tons of Kentucky Energy’s reserves are classified as proven reserves. [See Above] None of Kentucky Energy’s reserves are classified as probable reserves. The degree of assurance, although lower than that for proven (measured) reserves, is high enough to assume continuity between points of observation.
First Quarter 2010 Kentucky Energy (”QMIN”)Create Stronger Ongoing Operation
QMIN has taken steps to create a strong foundation for future operations which it believes will translate into revenue production.
QMIN Operations Overview
In the first quarter of 2010, QMIN continued to conduct mining operations without having to shut down operations for the second consecutive quarter. As a result, coal revenues were generated in the amount of $683,000 for the first quarter of 2010, compared to $330,000 for the first quarter of 2009. That is a 107% gain year-to-year when comparing 1Q 2009 to 1Q 2010.
Temporary delays and stoppages due to either breakdowns in equipment, a lack of necessary supplies, weather-related production issues, or regulatory inspections were a detriment. The Company continues to encounter thicker coal seams with further advancement into the mine.
Worldwide demand for coal has been adversely impacted by the global recession, but the steel industry and the global metallurgical coal markets have shown signs of improvement. If this trend continues, coal demand should increase and improve opportunities to sell our coal products at higher prices.
Gwenco Safety Updates Create Foundation for Future Growth
On April 5, 2010, an explosion occurred at the Upper Big Branch mine in Montcoal, West Virginia, operated by Performance Coal Company, a subsidiary of Massey Energy. According to news reports, the explosion resulted in 29 fatalities. In response to this tragedy, the Federal Mine Safety and Health Administration (“MSHA”) conducted inspections of most mines in the region, including Pond Creek.
Gwenco has taken precautionary measures, including upgrades to its ventilation system, CO system, and airlock system. In addition, MSHA conducted simulated evacuations and conducted underground training seminars and believes this positive step creates a solid foundation for Company growth.
Gwenco ceased mining operations during this period in order to allow the inspections, implement the precautionary measures, and conduct the simulations and training. Gwenco reopened the mining operations approximately two weeks after the inspections commenced.
QMIN Expansion Strategy
Kentucky Energy seeks to acquire new mines and contracting to produce and market additional coal in its geographic focus area. Kentucky Energy intends to acquire and operate high quality coal properties with established field personnel, primarily in the eastern Kentucky coalfields, with additional properties in southwestern West Virginia and western Virginia. This region has an excellent infrastructure of workers, truckers, rail sidings on the CSX and N&W rail lines and low cost access to the Big Sandy barge docks near Ashland, KY, for effective coal distribution. Kentucky Energy intends to use its local knowledge to pursue high returns on investment from re-opening profitable properties in this region. It intends to grow by additional accretive acquisitions, contract mining, and internal development of owned properties.
Kentucky Energy is also seeking to diversify its operations into other sectors of the energy industry, including the oil and gas sector. Kentucky Energy management believes that a successful diversification into the oil and gas field would provide Kentucky Energy with an opportunity to improve its results of operations while hedging on coal production and prices.
QMIN Management
Eugene Chiaramonte, Jr. is Kentucky Energy’s Chairman of the Board and President. He was formally Vice President from 2004 thru April of 2006, and took over the presidency in May of 2006. From 1995 to 2003, he was Chairman of Board, president and CEO of the Auxer Group.
Mr. Chiaramonte was a founder and served as director and secretary of the Auxer Subsidiaries, Industries from June 1994 through 2003. Additionally, he serves as director and secretary of the Harvey Westbury Corp.
Kentucky Energy Inc.
18B East 5th Street
Paterson, NJ 07524
Phone: 973-684-0075
Safe Harbor Statement: This profile release contains forward-looking statements that involve risks and uncertainties. The statements of this Summary Overview are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results, events and performances could vary materially from those contemplated by these forward-looking statements. These statements involve known and unknown risks and uncertainties, which may cause the Company’s actual results, expressed or implied, to differ materially from expected results. These risks and uncertainties include, among other things, product demand and market competition. You should independently investigate and fully understand all risks before making an investment decision including the fact that QMIN is in Bankruptcy Reorganization.
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