JW Resources eyes further coal buys beyond deal with Xinergy

JW Resources Inc., a privately held management and holding company formed by Bayside Capital Inc. and Lawrence Clark Jr., announced Feb. 11 that through certain wholly-owned subsidiaries it has completed the acquisition of the Straight Creek and Red Bird thermal coal mining operations of Xinergy Ltd. (TSX:XRG).

These operations are located in Bell, Clay, Harlan, Knox and Leslie counties, Ky. The purchase price was $47.2m in cash. The Straight Creek Operations are located in Central Appalachia and consist of approximately 48,000 acres containing an estimated 42 million tons of proven and probable high-quality thermal coal reserves.

Assets acquired in the transaction include all permits, contracts, real property leases and mining equipment associated with the Straight Creek Operations, as well as all related infrastructure, including two CSX Transportation-served unit train load-out facilities, a 500 ton/hour prep plant, and two fully permitted refuse impoundment facilities with significant remaining useful lives.

The company’s diverse mix of surface, highwall, and underground mining operations will continue to be managed by seasoned mining executive William “Bill” Snodgrass, who has been responsible for the Straight Creek Operations under Xinergy and will assume the role of Chief Operating Officer of JW Resources, said JW Resources.

JW Resources is a newly-created management and holding company focused on identifying, acquiring and operating thermal and metallurgical coal mining and related assets in the U.S. It is majority-owned by affiliates of Bayside and was formed and capitalized in partnership with Clark, an experienced institutional investor with a proven track record investing in the coal and natural resources industries.

Clark will serve as CEO of JW Resources and will be focused on both guiding the strategic direction of the Straight Creek Operations as well as identifying and executing acquisitions of additional coal industry assets. JW Resources is headquartered in Knoxville, Tenn.

Clark said: “Given recent challenges in the thermal coal industry, it is an attractive time to acquire low-cost producers with substantial reserve life. We are excited to be partnering with Bayside, as its large and flexible capital base provides for an ideal sponsor to both support the Straight Creek Operations and capitalize on additional acquisition opportunities through the JW Resources platform.”

“We established JW Resources in partnership with Larry to acquire premier assets that are positioned to participate in the strong long-term global utility and industrial demand environment,” said Sean Ozbolt, Managing Director of Bayside Capital. “We identified the Straight Creek Operations as an attractive platform due to its low-cost, high-quality CAPP coal assets and its world class operating team led by Bill Snodgrass.”

Bayside Capital is an affiliate of H.I.G Capital, a leading global private investment firm with more than $10bn of equity capital under management.

Xinergy had announced this deal on Feb. 4, noting that JW Resources is minority owned by Jon Nix, the founder of Xinergy. Xinergy recently filed a copy of the Feb. 1 asset sale agreement with Canadian regulators. Attached to the agreement is a list of state mine permits that went in the sale, including permits for the Rainbow Gap Surface/HWM, Alamo Tipple, Spruce HWM, Red Bird Plant, KY 7 Big Run Surface Mine and M.B. Brittain Prep Plant. Note that “HWM” means highwall miner, which is basically a remote-controlled mining unit that burrows into exposed highwalls left from the surface mining to recover coal that is not economic to mine through surface means.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.