St. Louis-based Arch Coal (NYSE: ACI) announced March 5 that it has sold its ICG Hazard LLC subsidiary in eastern Kentucky to Blackhawk Mining LLC for $26.3m in cash, prior to post-closing adjustments.
This sale includes the Hazard thermal coal mining complex and related infrastructure as well as about 38 million tons of thermal coal reserves in eastern Kentucky. As part of the sale, Arch has divested $15.6m of reclamation liabilities to Blackhawk, and expects to be released from $43.8m of reclamation surety bonding. In addition, Arch has the potential to receive future royalty payments of up to $35m in aggregate over the next five years resulting from its retention of select coal reserves at Hazard.
“The sale of our Hazard subsidiary demonstrates that we are continuing to streamline our mining portfolio and monetize assets that are not essential to our future growth plans,” said John Eaves, Arch’s president and CEO. “This transaction allows us to further sharpen our focus on strategic assets that have the highest return potential, such as our growing Appalachian metallurgical coal franchise and our low-cost Western thermal coal platform. At the same time, the proceeds from the sale further strengthen our already substantial cash and liquidity position.”
The biggest part of that asset sale program came in 2013 when the company sold its three deep mines in Utah.
The Hazard complex includes four active surface mines: East-Mac & Nellie, Rowdy Gap, Bearville and Thunder Ridge, as well as the Teton preparation plant and Kentucky River Loading facility. In 2013, Hazard sold 1.7 million tons of thermal coal and generated $4.8m in earnings before interest, taxes, depreciation and amortization (EBITDA).
“I would like to thank the Hazard employees for their substantial efforts to reduce costs in this difficult market environment and – even more importantly – for achieving an extraordinary safety performance,” said Eaves. “In particular, the employees of Hazard’s surface operations and its Kentucky River Loading facility accomplished a perfect safety rate in 2013. Blackhawk is fortunate to gain such an experienced and dedicated workforce.”
Arch and its subsidiaries retain 12 major mining complexes and more than 5 billion tons of high-quality thermal and coking coal reserves across the United States.
Arch didn’t identify anything about Blackhawk Mining LLC. The U.S. Mine Safety and Health Administration database shows a company by this name, controlled by RWE Trading Americas Inc. and JMP Coal Holdings LLC, with four registered surface mines in eastern Kentucky. The Kentucky Secretary of State corporate database shows the current managers of Blackhawk Mining as John Potter, Nicholas Glancy, Daniel Moon and Eric Shaw.