On October 18, Contura Energy Inc. closed on the transaction with Eagle Specialty Materials LLC (ESM), an affiliate of FM Coal LLC, to acquire the Eagle Butte and Belle Ayr thermal coal mines located in the Powder River Basin (PRB) in Campbell County, Wyoming.

On October 2, as part of the bankruptcy proceedings for Blackjewel LLC, Blackjewel Holdings LLC and certain affiliated entities, the U.S. Bankruptcy Court for the Southern District of West Virginia approved the sale.

The surety bonding previously posted by Contura’s subsidiary, Contura Coal West LLC, with the state of Wyoming Department of Environmental Quality, Land Quality Division (DEQ) has been replaced with substitute surety bonds arranged by ESM in the amount of approximately $238 million, and neither Contura nor Contura Coal West will have any liability in respect of those substitute surety bonds. As part of an agreement with Contura Coal West, Eagle Specialty Materials, FM Coal and the United States Department of Interior’s Office of Surface Mining, Reclamation and Enforcement (OSM), OSM has agreed that any bond forfeiture related to the mines will not be linked to or held against Contura Coal West and OSM will not link Contura Coal West to any Surface Mining Control and Reclamation Act of 1977 violation by Eagle Specialty Materials.

ESM will operate the mines during the transfer process of certain state permits held by Contura Coal West and certain state and federal leases held by an affiliate of Blackjewel. ESM has agreed to use commercially reasonable efforts to cause the permits to be transferred as promptly as possible.

“Closing this deal with ESM brings about a positive result for our company and the many stakeholders involved in this transaction,” Chairman and CEO David Stetson said. “In our view, this transaction represents a best-case-scenario outcome to a lengthy and uncertain process, putting the mines in the hands of an operator with a long-term interest in the PRB, and getting hard-working coal miners back on the job.”

Contura was a prior owner of the Western assets through its subsidiary, Contura Coal West, though the company has not operated the mines since selling the assets to Blackjewel in December 2017. Because the permit transfer process relating to that transaction was not completed prior to Blackjewel’s filing for Chapter 11 bankruptcy protection, however, Contura Coal West remains the permitholder in good standing for both mines and has maintained bonding to cover related reclamation and other obligations.

Contura paid cash consideration to ESM of $81.3 million at closing and has agreed to pay an additional $8.7 million into an escrow account to be used to make payments in respect to a federal royalty claim against Contura Coal West, and has also agreed to convey certain Wyoming real property to ESM subject to certain conditions. It has also paid $13.5 million to Campbell County, Wyoming, for ad valorem back taxes, has waived its rights to the remaining $3.05 million of a purchase deposit provided to the debtors, and has released or waived certain other claims against the debtors or with respect to certain of their assets. ESM has agreed to indemnify Contura and its affiliates against all reclamation liabilities related and against federal, state and local claims for royalties, ad valorem taxes and other amounts relating to the Western assets for the period beginning on December 8, 2017.