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Arch expands metallurgical coal portfolio

World Coal,

Arch Coal announced that it has signed an agreement to acquire the Guffy property from Patriot Coal for US$ 16 million.

The Guffy reserves are adjacent to Arch Coal’s Tygart Valley reserves and the Leer mine, and are of comparable quality to Leer’s metallurgical coal reserves.

Extended mine life

The addition of the Guffy reserves will enable Arch Coal to recover up to 8 million t of metallurgical coal at the Leer mine, and will consequently extend the estimated mine life of Leer by almost three years.

"The Guffy acquisition represents a valuable, synergistic, bolt-on opportunity for Arch that extends the reserves and mine life at Leer, one of our premier, metallurgical coal operations in Appalachia," commented John Eaves, Arch Coal CEO.

Resolution of legal claims

Arch Coal also announced that it has resolved all legal claims with Patriot Coal arising from Arch's sale of coal companies to Magnum Coal Company, a subsidiary of ArcLight Capital Partners LLC in 2005, and the subsequent purchase of those companies by Patriot in 2008.

In consideration for this release, Arch Coal will pay US$ 5 million to Patriot upon its exit from bankruptcy.

Focus on business

"This comprehensive settlement with Patriot relieves Arch of costly legal expenses, resolves the distraction of litigation claims, and allows Arch's management team to remain focused on steering the business through current market conditions and preparing for a recovery," continued Eaves.

Following the settlement with Patriot, Arch will continue discussions regarding a potential resolution with the United Mine Workers of America (UMWA) on outstanding litigation claims. The US District Court recently dismissed the ERISA claim the UMWA had filed against Arch Coal.


Adapted from press release by Katie Woodward

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