Rhino Resource Partners LP closed on an agreement with Blackjewel LLC to purchase three underground, mid-vol metallurgical coal mines in Virginia that were actively producing coal before the latter filed for bankruptcy protection.
Rhino purchased the assets through its new Jewell Valley Mining LLC subsidiary for $850,000 in cash, the assumption of associated reclamation obligations and an additional royalty of $250,000 payable within one year of the purchase. The deal also includes a preparation plant, rail loadout facility, related mineral and surface rights as well as certain purchase contracts.
Rick Boone, president and CEO of Rhino's general partner, said in the Sept. 11 release that the acquisition will allow coal miners in the area to return to work, and the company has started hiring key personnel for the operations as it seeks to return them to full production.
"We are also evaluating expanding production with these assets based on market demand for this high quality mid-vol coal," Boone said. "We have already met with the primary existing customer for this coal and they look forward to these mines resuming production as we believe this quality coal is key to the customer's operations."
With the closing, Rhino will add to its portfolio a new type of coal that it believes will have strong market demand into the future given the limited quantities produced in Central Appalachia, Boone said.
Colbeck Capital Management LLC approved a $5.0 million delayed draw under the terms of Rhino's current financing agreement to provide funding needed to refurbish the assets, according to the release.
Blackjewel contacted its furloughed employees in the Powder River Basin on Sept. 9 about a possible recall. Contura Energy Inc. agreed to purchase the western mines and won a bankruptcy auction to take over those assets in August, but that sale hinges on reaching an agreement with the federal government.
