American Resources Corp. said it has entered into a letter of intent (LoI) to sell its coal mining assets to an unnamed group for a total consideration of approximately $280 million. The consideration takes the form of an upfront cash payment at closing, a share of profits generated from operations, an ongoing royalty payment based on coal sales and a minority equity interest upside. The assets are the McCoy Elkhorn Coal, Perry County Resources and Wyoming County Coal operating subsidiaries and the transaction includes debt and the reclamation bonds associated with those assets.
“As we have been reviewing various offers and opportunities for our [coal] mining division, we have remained steadfast on maximizing the value of these assets under a variety of potential transaction structures,” said Mark Jensen, CEO of American Resources Corp. “We have worked extensively with this potential acquirer over the past several months and believe the framework of this LoI represents an attractive return for our shareholders. We believe the asset base is one of the last remaining low-cost, highly scalable metallurgical [coal] platforms left in the United States.”
The company said the LoI is non-binding and non-exclusive, but it does expect it to close before year end. It also said the proposed acquirer of the assets has committed to invest the necessary capital to bring additional mines into full production and expand the number of producing mines.
Concurrent with the executed LoI, American Resources said it will continue to advance its Form-10 filing to spin out its American Carbon subsidiary into its own public, pure play metallurgical coal growth company as an alternative opportunity while also advancing the previously announced LoI to sell certain assets associated with its Deane Mining complex toward closing.