Vectren owns the Oaktown No. 1 and Oaktown No. 2 mines near Oaktown as well as the Prosperity complex in Petersburg; the Oaktowns are seven miles from Sunrise’s current Carlisle underground operation.
During the last 12 months, the Oaktown mines sold 5.1 million tons of coal, the Prosperity mine sold 1.8 million tons and Sunrise sold 3.2 million tons from the Carlisle mine. Current 2015 coal sales commitments stand at a total of 9.5 million tons.
The transaction, for which Sunrise has retained its group of banks headed by PNC Bank to secure necessary financing, should close on or around September 1.
“This acquisition enables Sunrise to mine our War Eagle reserve, which is adjacent to the Oaktown 2 mine, through the Oaktown 2 portal without spending the approximately $150 million in capital expenditures that would otherwise be necessary to develop War Eagle to its full capacity,” said Brent Bilsland, Hallador president and CEO.
He noted that Oaktown 1, Oaktown 2, Carlisle, and War Eagle will become one large underground complex representing 230 million tons of identified reserves (with 161 million tons controlled reserves), with three portals, two wash plants and two rail facilities.
Carl Chapman, Vectren chairman, president and CEO, called Sunrise the “logical buyer” for the Vectren Fuels in that they are already an active Illinois Basin participant who will put additional capital into growing the overall business.
“Given our company’s emphasis on growing our infrastructure and energy services businesses, now is the right time for us to divest of these commodity-based assets,” he said. “I am very pleased Sunrise Coal has advised us they have already established plans to promptly conduct job fairs at which the contract miners currently employed by Black Panther and Five Star will be considered for employment at the mines. These contract miners should be very well situated given the combined workforce needs of the mines being sold by Vectren Fuels and the overall available workforce of miners in southwest Indiana.”