Question-and-Answer Session
Operator
Your first question comes from John Bridges - J.P. Morgan.
John Bridges - J.P. Morgan
Could you give us a little bit more detail on what’s going on with the West Elk? I saw that piece of machinery, it’s very impressive at the equipment show in the fall, but what’s the problem there?
John W. Eaves
As we transition in the E same with the new long wall, we started to encounter some problems in December and as we’ve progressed into January it got a little bit worse, basically driven by a sandstone channel that was a little bit thicker than our drilling showed. So we’re working through that. It’s causing a little bit higher ash. It’s impacted our production volume. We had an outage of about ten days here recently, but if you look at our future drilling on our development panels it really doesn’t show the problem in those future panels.
So I think it’s something that we’re managing through. We’ve got a couple more weeks in this thinner coal and then we get out of it. And then we touch on it a little bit again in the late March timeframe and then it should be progressively better. We actually move in the next panel, the E-2 panel sometime in the third quarter. So we think things are progressively going to get better. We’ve worked shipping plans out with our customers, but it certainly is going to have an impact on quality, cost, and our financial results for the first quarter.
John Bridges - J.P. Morgan
And the $24, $27 a ton is that an average for the year or is that going to be [queued]?
John W. Eaves
That’s a range for the year and I would hope that we would see the higher end of that early and then as we progress through the year those costs would get better. But clearly while we’re in this problem in the E seam our costs are going to be up. And then you know we had the addition of the Elk Mountain Mine which we’re actually mining to satisfy some diligence that allows us to maintain a lease. And that’s a little bit higher cost production, but we are developing a new customer base there. Those are development tons.
But longer term, if we found some customers I think we could bring those costs down over time. So those two factors are really going to drive up the costs earlier in the year in Western Bit and hopefully will improve on that as we move out.
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