Cabell coal firm says two companies owe at least $150,000

By Drew Smith | Jan 11, 2006

HUNTINGTON -- A Cabell County coal company claims it is owed at least $150,000 from two mining operations for breach of contract.

In a suit filed Dec. 29, Gray Hawk Coal Company says Tri-County Mining of Cabell County and Appalachian Fuels, LLC, of Ashland, KY, are jointly liable for unpaid mining royalties.

Gray Hawk entered into a 12-year lease and sublease on September 18, 1992 with East Kentucky Energy Corporation to mine 1300 acres of land located in the Harvey District of Mingo County, WV.

The lease stipulated that Gray Hawk would pay a royalty on each ton of coal mined along with a minimum annual royalty of $25,000.

In February 1999, Gray Hawk assigned its right to mine 500 acres to Pen Coal Company, a Tennessee corporation, who then assigned the rights to Tri-County Mining. The assignment stated that Tri-County would pay the tonnage royalties and the annual royalty.

It also specified that Tri-County would pay Gray Hawk an extra 50 cents for each ton of coal mined.

In September 2001, after more than two years of mining the land, Tri-County assigned its rights to Appalachian Fuels under the same terms. The agreement, which didn?t expire until September 2004, called for the Ashland company to pay the 50 cent tonnage royalty to Gray Hawk and the royalties to East Kentucky Energy until that time.

Appalachian Fuels then mined the land from September 2001 until October 2002 when it ceased all operations.

In the suit, Gray Hawk claims Appalachian Fuels failed to pay the royalties from October 2002 until September 2004. The suit also claims there were 300,000 tons of mineable coal in the area at the time Appalachian Fuels halted mining.

As a result of the unpaid royalties to East Kentucky Energy, the suit claims Gray Hawk was unable to renew its lease.

Gray Hawk is suing for breach of contract for failure to pay the 50 cent tonnage royalty on 300,000 tons of coal.

The case has been assigned to Judge John L. Cummings.

Cabell Circuit Court case number: 05-C-1114

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