Arch Coal Inc. (NYSE:ACI) Rallies Upwards In Spite of Weak Operating Conditions


Dallas, Texas 11/12/2013 (Financialstrend) – The small cap coal mining and processing company Arch Coal Inc. (NYSE:ACI) saw its stock gain by a solid 5.25 during trading on November 8. This increase in the value last week was coupled with a 14.77% increase in value over the past 30 days of trading. This bullishness in the stock is based on the fact that the company claims to hold the 2nd largest reserves of known coal in U.S. It estimates a total of 5 billion tons of reserve base of coal in its portfolio of three distributed mining properties.

The firm is working towards cutting down on its operating expenses by cutting the cost incurred by the firm to bring out yields and by cutting its capital investments down by 45% over the past three years. In addition it is hiving off noncore assets which have long development cycles to accumulate a big cash chest. The firm plans to use the corpus to fund its future operation and expansion projects. In the current quarter, in line with its shedding of noncore assets managed to sell off its Canyon Fuel assets in exchange of $423 million. Due to these new cash influx in addition to strong cash ratios maintained by the firm in the past, the coal mining firm was sitting on nearly a $1.4 billion cash hoard as of September 30. This holding pattern that this firm is getting into is expected to help the firm tide over the downcast operating conditions for coal mining firms. It hopes that its strategy of managing capital while bringing down costs will help it jump back into contention as a sleeker organization when the demand for coal picks up.

Thanks to these measures designed to help the firm sustain and overcome the prevailing weak operating conditions the investors have rewarded the firm by buying it at a 28.3% premium on its 52 week lowest price.