Westmoreland Coal Co. said this morning that it has agreed to purchase Chevron Mining Inc.’s Kemmerer mine in the Hams Fork Region of southwestern Wyoming for $179 million plus about $14 million in working capital.
The Englewood,Colo.-based miner said it anticipates that the purchase price will be funded through a combination of cash consideration of $74 million, plus the assumption of $118.0 million in certain liabilities, including post-retirement medical, pension, black lung, and asset retirement obligation liabilities.
Over each of the last five years, Kemmerer has produced, on average, 4.7 million tons of high-quality sub-bituminous coal for sale to the adjacent Naughton power station, as well as various industrial customers located in the proximate geographic region.
The transaction includes 118 million tons of coal reserves as of Dec. 31, 2011, enough for 20 years of production; a skilled and stable work force; recently installed state-of-the-art coal preparation and loadout facilities; strong customer commitments; and an expansive fleet of well maintained mining equipment. Additionally, substantially all of Kemmerer’s projected production for 2012 through 2016 is committed and priced under existing sales contracts.
“Strategically, the Kemmerer mine fits well with our existing mine mouth operations,” said Keith E. Alessi, Westmoreland’s president and CEO. “The mine has a diversified base of stable customers, both utility and industrial. Under Chevron’s stewardship, the mine has been well managed and its capital equipment is in excellent condition.
“We will look for additional strategic acquisitions as we continue to deliver premium value in the coal industry through close affiliation with world class customers. We anticipate this transaction to be cash flow positive immediately upon closing and in line with our strategic plan to de-leverage over time. The acquisition will allow us to leverage our already efficient corporate platform, and we hope to close the transaction by Jan. 31, 2012.”
“We view the Kemmerer work force, which totals approximately 290 people, as a core component of the transaction. The employees of Kemmerer will be a tremendous addition to our company and we look forward to welcoming them to the Westmoreland family,” Alessi said. “These skilled employees share our core values of uncompromised safety and environmental excellence.”
