Pennsylvania-based coal producer Corsa Coal (TSXV: CSO) said July 25 that the TSX Venture Exchange has conditionally accepted Corsa’s previously announced proposed transaction with Quintana Kopper Glo Investment LLC.
Kopper Glo is a portfolio company of Quintana Energy Partners LP and its affiliated investment funds. When the transaction is fully completed, Corsa will have raised a total of US$40m at C$0.17 a share and acquired Kopper Glo, a Tennessee-based coal producer, from Quintana and Quintana will have acquired a control position in Corsa.
Completion of the transaction is subject to the terms and conditions of an Investment Agreement, including exchange acceptance. The exchange’s acceptance is subject to Corsa satisfying all conditions prescribed by the exchange, including receipt by Corsa of shareholder approval. Shareholders holding approximately 50.3% of the currently outstanding common shares of Corsa have agreed to vote or consent in favor of the transaction, which is sufficient to achieve the required shareholder approval.
Kopper Glo is a private coal producer with a 55-year operating history based in Knoxville, Tenn. Kopper Glo, principally through its wholly-owned subsidiaries, Kopper Glo Fuel (KGF) and Kopper Glo Mining LLC (KGM), is engaged in the production and sale of high-BTU, low- and mid-sulfur thermal coal used in power, industrial and specialty applications.
Kopper Glo has six surface projects and five underground projects with an aggregate area of up to approximately 20,104 acres located in Claiborne and Campbell counties, Tenn., in Central Appalachia.
The Double Mountain Deep underground mine is Kopper Glo’s principal producing mine and Kopper Glo conducts surface and highwall mining operations at the Log Mountain Mine and the Davis Creek Mine. The Log Mountain and Davis Creek operating surface mines and the Double Mountain Deep Mine, have a combined current annualized production rate of approximately 1,132,000 clean tons of coal. Kopper Glo also has a number of surface and underground possible projects at various stages of development, all of which will require various permits before mining operations could commence.
Kopper Glo owns the KG Coal Preparation Plant, which has a capacity of 350 tons per hour of raw coal and is located on the Norfolk Southern rail line (with dual NS and CSX Transportation load-out capability) in Claiborne County. Kopper Glo’s mines, the KG Coal Preparation Plant and Kopper Glo’s refuse site are all located in close proximity providing for efficient operations.
EIA data: Kopper Glo’s largest customer is South Carolina Electric & Gas
Kopper Glo’s largest customer, a public utility, accounted for approximately 88% and 100% of Kopper Glo’s total net sales during its fiscal years ended Dec. 31, 2012, and 2011, respectively. Kopper Glo’s current contract with this unnamed customer is effective through Dec. 31, 2014, said a Corsa offering document.
U.S. Energy Information Administration data shows that Kopper Glo’s largest customer in the first five months of this year was South Carolina Electric & Gas, with shipments made to the Cope, Wateree and Kapstone power plants under a contract due to expire in December 2014. Another customer was Santee Cooper for the Winyah plant.
Kopper Glo and its wholly-owned subsidiary, KGH, were formed by Quintana in June 2007 to acquire certain coal mining assets and operations by way of the purchase of KGF from a selling shareholder and KGF was, ultimately, acquired by Kopper Glo, through KGH, in July 2007. KGM was formed as part of an internal reorganization of Kopper Glo in February 2009 for purposes of conducting certain of Kopper Glo’s operations and, currently, Kopper Glo’s operations are principally conducted through KGF and KGM.
In fiscal year 2007, 100% of Kopper Glo’s production was derived from third-party contract miners, while in fiscal year 2012, in excess of 90% of Kopper Glo’s production was derived from company-operated mines. Further, in fiscal year 2007, 100% of Kopper Glo’s production was derived from surface mines, whereas currently, only 32% of its production is derived from surface mines, with the balance coming from the Double Mountain Deep mine and highwall mines.
- The Double Mountain Deep Mine began to develop mine entries with one production unit in November 2010 and continued mine development through May 2011 with production at the Double Mountain Deep Mine (which is currently ongoing) beginning, using one production unit, in June 2011 and being increased to two production units in April 2012.
- The Davis Creek Mine, a contractor operated contour surface mine, began production in March 2011 and Kopper Glo added a company-operated highwall mining unit to the mine in October 2012. Contract surface mining and company-operated highwall mining production at the Davis Creek Mine are ongoing.
- Finally, at the Log Mountain Mine, a company-operated contour and highwall mining surface mine, production, which began in January 2012, is ongoing.
Coal shipment volumes have grown from 495,000 clean tons in fiscal year 2008, Kopper Glo’s first full year of operations under Quintana’s ownership, to 975,000 clean tons in fiscal year 2012. Kopper Glo supplements its coal production with purchased coal from neighboring producers and, in fiscal year 2012, Kopper Glo purchased 145,576 clean tons from such producers. Kopper Glo’s EBITDA (earnings before interest, taxes, depreciation and amortization) has increased from about $9m in fiscal year 2008 to $16.5m in fiscal year 2012.