Contura Energy Inc.’s wholly-owned subsidiary, Contura Coal West LLC, and related entities, have completed a transaction with Blackjewel LLC to sell the Eagle Butte and Belle Ayr mines located in the Powder River Basin (PRB) in Wyoming, along with related coal reserves, equipment, infrastructure and other real properties.
Combined, the two mines shipped 24.5 million short t through the first three quarters of 2017, and Contura subsidiaries controlled approximately 600 million short t of proven and probable reserves in the PRB.
Under the terms of the transaction, Contura will receive deferred consideration of up to US$50 million through various royalty payments. Blackjewel will assume all permit and reclamation obligations associated with the assets acquired, thereby eliminating approximately US$200 million in undiscounted reclamation obligations for Contura. Additionally, subject to further calculation, this transaction is expected to generate for Contura significant income tax deductions of approximately US$400 million to US$450 million, which would be available to offset taxable income in 2017 and future years. The company expects to incur a book loss on the sale, which will be recorded in the fourth quarter of this year.
"In the short 16 months since Contura's launch, our management team and board have maintained diligent focus on three key operating goals – running safe, environmentally responsible, and productive mines, leveraging our Trading and Logistics platform to take advantage of a resurgent metallurgical coal market, and enhancing value for the company's shareholders," said Kevin Crutchfield, CEO. "This transaction allows us to further sharpen our focus on the company's well-positioned eastern assets and a growing met sales portfolio. While these PRB thermal assets will not be part of our company's operational strategy moving forward, the purchaser is acquiring two solid mines with decades of minable reserves, a top-notch, professional workforce and a great operating track record. I appreciate and commend the contributions that current and past employees in the PRB made toward that success, and wish them the very best in the future."
Contura will continue to maintain a diversified production profile comprised primarily of high-quality, metallurgical coal mines in Central Appalachia and its underground, longwall thermal coal mine in Northern Appalachia. Post-transaction, Contura affiliates control nearly 700 million short t of proven and probable reserves in Northern and Central Appalachia and maintain a 65% ownership interest in the world-class Dominion Terminal Associates (DTA) coal export terminal located in Newport News, Virginia.
Read the article online at: https://www.worldcoal.com/coal/11122017/contura-subsidiaries-sell-powder-river-basin-assets/