When the transaction closes, ARLP’s Alliance WOR Processing LLC will assume operating control of the White Oak Mine No. 1 longwall operation, and Alliance will own all of the coal reserves currently leased at White Oak as well as the preparation plant and loading facilities.
Post-deal, the company estimates cost synergies at White Oak of $12 million to $18 million annually beginning in 2016.
“Strategically, owning 100% of White Oak and assuming operating control of the White Oak mine No. 1 enhances our already strong presence in the Illinois Basin,” President and CEO Joseph W. Craft III said. “The White Oak mine is a world-class, low-cost longwall operation with an extensive reserve base. It will be an attractive addition to our asset portfolio and provide ARLP increased flexibility to service our existing customer base and the opportunity to expand into additional markets.”
In the near-term, Craft said that holding all of White Oak gives it a greater optionality to optimize production to match current market conditions.
“Longer term, the ability to add a second longwall at White Oak gives us an additional platform to increase our coal volumes should market conditions allow,” he added.
White Oak No. 1, located in Hamilton County, produces coal from the Herrin No. 6 seam. It currently produces approximately 6 million tons annually.