Contura Energy is looking to purchase assets in the Powder River Basin it sold more than a year ago to Blackjewel LLC, which filed for Chapter 11 bankruptcy on July 1. The assets include the Belle Ayr and Eagle Butte thermal coal mines in Campbell County, Wyoming, including related facilities and equipment. Other assets not previously owned by Contura include the S-7 Surface metallurgical coal mine, commonly referred to as the Pax Surface mine, in Fayette County, West Virginia, including related facilities and equipment.

The mines were offered for sale through the bankruptcy proceedings and Contura is trying to serve as the stalking horse purchaser.

Contura said it would provide an initial purchase deposit of $8.1 million, and if no superior bids are accepted, it would pay an additional $12.5 million in cash for the assets. When Contura sold the Wyoming assets to Blackjewel in December 2017, it received deferred consideration of up to $50 million through various royalty payments.

“Contura’s divestment of these PRB assets over a year and a half ago was a strategic decision to focus on our met-heavy eastern asset base, and while that remains our strategic focus, our considerations changed when Blackjewel declared bankruptcy,” said Andy Eidson, interim co-chief executive officer. “Absent another qualified purchaser for the assets, we have determined that the most prudent path forward is to reacquire these mines to reestablish operations, resume safe and responsible coal production, and bring hundreds of miners back to work.”

“As part of this proposed transaction, Contura would also acquire a high-quality met coal mine that provides significant value augmented by material operational synergies with our active operations in southern West Virginia,” added interim co-chief executive officer, Mark Manno. “Those financial benefits, combined with our deep knowledge of the PRB assets, motivated our decision to take a proactive role in this process.”

Pursuant to the terms of the proposed transaction, Contura would acquire the specified assets free and clear of all liens, claims, interests and encumbrances, and would assume no liabilities with the exception of all reclamation obligations under applicable law or permits and any other liabilities expressly agreed to by Contura.

If approved, upon a successful closing of the purchase, Contura said it will hire the majority of the displaced Wyoming employees associated with the Belle Ayr and Eagle Butte mines and resume normal mining operations as soon as possible. Employment decisions with regard to the Pax Assets will be determined based on development plans if and once the mine is acquired.

Contura Coal West, subsidiary of Contura, was in the final stages of the permit transfer process for the Belle Ayr and Eagle Butte mines when Blackjewel filed for reorganization under Chapter 11. Contura Coal West is still the permit holder in good standing for both mines and has continued to maintain sufficient bonding with third-party sureties to cover the reclamation and other obligations for the two mines, according to Contura.

Together, the Belle Ayr and Eagle Butte mines produced 35.5 million tons of thermal coal in 2018 and have more than 550 million tons in associated coal reserves.

The S-7 Surface mine, which is geographically situated near existing Contura-affiliated operations, has approximately 3.5 million tons in associated coal reserves of High Vol A metallurgical coal and could produce up to 500,000 tons annually. Contura has historically purchased raw coal from the mine to supplement its captive met coal production.