New Lexington Coal CEO Steven Poe said the conveyance includes approximately 250 permits and bonding representing $192 million. “Having five mines that are currently in coal production, substantial infrastructure and capital, and an experienced, talented workforce will enable LCC to accelerate reclamation on a five-year timetable with less contingent exposure for the states in which we operate,” Poe said.
Poe said LCC will mine to reclaim, which will lower the cost of reclamation and will bring in revenue while the company continues to divest isolated assets as markets warrant. “Our management team knows the properties and permits, and has a demonstrated a track record of success,” said Poe. “Having 100 million tons of reserves will ensure a long runway for the assets, providing job security and continued opportunities where we operate.”
Specific economic terms were not disclosed, but LCC will receive approximately $199 million in cash and $126 million in installment payments to assist in the fulfillment of bonding, reclamation, water treatment and other obligations.
Alpha Natural Resources CEO David Stetson called the conveyance a win/win for the regulatory agencies and the communities in which the assets are located.
“LCC is well capitalized to meet its responsibilities to those local communities and to do so years earlier than originally planned,” Stetson said. “The transaction also eliminates the risks associated with self-bonding, making this a transformational deal for West Virginia.”
Funding for the transaction was provided by key shareholders under a $150 million credit facility.
“The deal with Lexington Coal represents a major step forward for Alpha,” Stetson said. “The transaction is immediately accretive to Alpha’s business through the elimination of more than $70 million of annual cash costs and will allow Alpha to improve its operations and balance sheet to the benefit of all stakeholders.”
Alpha will continue to operate 20 mines and nine prep plants in West Virginia, and the company still expects to produce 14 million tons of metallurgical and thermal coal in 2017.