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American Resources agrees to sell Blackhawk affiliate Perry County coal assets

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American Resources agrees to sell Blackhawk affiliate Perry County coal assets

An affiliate of Blackhawk Mining LLC agreed to purchase at least one Perry County Coal mine and other assets from American Resources Corp. in a deal worth roughly $1 million.

American Resources entered an agreement to sell the E4-1 mine and other assets to Blue Diamond Mining LLC, according to a Jan. 15 filing with the U.S. Bankruptcy Court for the Eastern District of Kentucky. American Resources purchased the assets a few months ago from debtor Cambrian Coal Corp.

Blue Diamond will assume associated outstanding reclamation obligations and take on the mining permits. The Blue Diamond deal includes $700,000 cash and the transfer of $300,000 worth of "certain mutually agreed equipment" owned by Blue Diamond to American Resources.

Blackhawk President Jesse Parrish declined to comment on the deal.

The agreement is contingent on court approval as well as a successful mineral lease negotiation between Blue Diamond and Kentucky River Properties LLC, the mineral lessor at the mine. American Resources was unable to negotiate a lease with the lessor, so it laid off its workforce and began trying to sell the assets. Once the lease between Blue Diamond and Kentucky River Properties is finalized, the Blue Diamond purchase can close, allowing American Resources to use the cash to pay its obligations under the sale order related to Cambrian's bankruptcy proceeding.

"Although [American Resources] has not confirmed the current status of lease negotiation with [Kentucky River Properties], Blue Diamond has advised that the parties are very close and/or have a deal in principle and are just waiting for the lease to be prepared," American Resources stated. "In addition, Blue Diamond is currently paying for the maintenance and upkeep of the mine, the power at the mine and the security at the mine."

American Resources is still fundraising to restart operations at the remaining Perry County Coal assets and pay off its remaining obligations. The company has also discussed potentially selling the rest of those assets to reopen the operations.

It expects the Blue Diamond transaction to close within 15 to 30 days of the filing. Within 30 to 60 days of the filing, the company plans to wrap up its fundraising and potentially the discussions around reopening the remaining Perry County Coal assets as well.

The federal court issued sanctions against American Resources in December 2019 for violating prior court orders and required the company to make payments to Kentucky Employers' Mutual Insurance Company, according to a Jan. 16 order. The insurance company recently confirmed an agreement with American Resources to make the payments and did not ask for new sanctions or enforcement of existing ones, with the court suspending the sanctions issued last month, according to the filing.

"There are still strong concerns regarding [American Resources'] compliance with court orders," the court stated. "But there is enough in the record to suggest [the company] is taking positive steps to comply with its obligations."