Westmoreland Coal (NasdaqGM: WLB), through its Coal Valley Resources subsidiary in Canada, has entered into an agreement with Athabasca Minerals Inc. (TSX Venture: ABM) that will result in the production of aggregate from Westmoreland’s Obed Mountain coal mine site in Alberta.
Key highlights of the agreement include Athabasca purchasing the Obed rail transloading facility and royalty payments to Westmoreland for all gravel, sand and hydraulic fracturing sand produced from the Obed Mountain site. The deal is expected to close by the fourth quarter of 2015 and is subject to standard due diligence, as well as Athabasca obtaining consent from the provincial government to transfer the applicable government leases.
“This deal provides Westmoreland with a fair market price for the transloading facility as well as a long term royalty revenue stream,” said John Schadan, Westmoreland’s President of Canada Operations, in a May 12 statement. “We are pleased with the cooperative nature in which the parties concluded this arrangement and look forward to working alongside Athabasca on the Obed property.”
Westmoreland Coal is the oldest independent coal company in the United States. Westmoreland’s coal operations include sub-bituminous and lignite surface coal mining in the Western United States and Canada, an underground bituminous coal mine in Ohio, a char production facility, and a 50% interest in an activated carbon plant. Westmoreland also owns the general partner of and a majority interest in Westmoreland Resource Partners LP, formerly Oxford Resource Partners LP, a publicly-traded coal master limited partnership with six mining complexes. It is the largest steam coal producer in Canada following the April 2014 closing of a deal with Sherritt International, which had shut Obed Mountain in 2012.
Athabasca is a resource company involved in the management, exploration and development of aggregate projects. These activities include contracts works, aggregate pit management, new aggregate development and acquisitions of sand and gravel operations. It also has industrial mineral land holdings in the vicinity of Fort McMurray and Peace River, Alberta, for the purpose of locating and developing sources of industrial minerals and aggregates essential to high growth economic development.