The deal, which has closed, includes all SXC coal assets, mineral leases, real estate and mining reclamation costs. Most of the company’s remaining assets are located in Tazewell and Buchanan counties in southern Virginia.
Revelation will receive $10.3 million from SunCoke to take ownership. SXC said it will also incur about $2 million of transaction-related costs.
Combined with the sale transaction, SunCoke’s Jewell Coke operations and Revelation have inked a five-year, 300,000-tons-per-year coal supply agreement “at a favorable delivered cost,” by Revelation, giving it a cost-effective and local supply of high-quality, mid-vol met product.
“Despite our aggressive efforts to reduce costs by rationalizing our mining footprint, the drastic and sustained decline in coal prices will likely prevent us from generating positive cash flow from our mining operations for the foreseeable future,” SunCoke Chairman, President and CEO Fritz Henderson said. “We believe this value-positive sale will improve our long-term cash flow and allow us to focus on our core cokemaking and coal logistics businesses.”
In fact, he added, the deal should make SXC cash flow neutral by the close of 2017 based upon $12 million in avoided potential mine closure and reclamation costs and $2 million-3 million annually in administrative, regulatory, compliance and purchased coal costs through 2020.
The transaction does not include the producer’s legacy black lung and workers’ compensation liabilities.
SunCoke said it may transfer other properties to Revelation in the future for additional payment to the buyer of up to $700,000.