Sunrise Coal, a subsidiary of Hallador Energy Co. announced Tuesday the completion of the purchase of underground coal reserves and a coal sales agreement with Triad Mining LLC's Freelandville mining complex.
“As part of the transaction, Sunrise is purchasing more than 14 million tons of proven and probable leased and owned coal reserves and associated advanced royalties in addition to rights under a coal sales agreement that extends through 2017,” a Hallador press release notes. “In consideration for the sale, Triad will receive $18.25 million.”
Triad is a wholly owned subsidiary of Blackhawk Mining LLC based in Lexington, Kentucky. The Freelandville complex is located in Sullivan and Knox counties.
"This transaction increases our reserve base at our lowest cost mine and creates a solid foundation of sales going forward,” Hallador President and CEO Brent Bilsland said. “We feel this investment ensures the low cost position of the Oaktown mine and solidifies the employment of our dedicated miners."
All reserves purchased in the transaction are contiguous to the Oaktown 1 Mine reserve and will be mined from the Oaktown 1 Mine portal, according to Hallador’s press release. The purchase of the Freelandville reserves grants Sunrise access to tons they already controlled but did not previously include in their reserve base, it adds.
Sunrise Coal Leasing Manager Roy Dressler said on Wednesday that the purchase should increase job security for Sunrise’s Oaktown mine employees, but he did not anticipate the purchase to lead to any additional hirings. Sunrise closed its Carlisle mine and reduced its staff by 175 people last July 27 following that closing.
“Our 730 or so employees we have are certainly equipped to mine the additional assets,” Dressler said. In reply to whether new hires may occur, he stated, “No, at this point, we don’t anticipate any new hires.”
The Freelandville complex consists of one underground mine, one surface mine and a coal preparation facility, according to a Blackhawk press release. It notes that Blackhawk will retain the surface and underground mines and the coal preparation facility, with only “certain underground coal reserves and a coal sales agreement associated” with the complex included in the agreement.
“Production in the Illinois Basin continues to outpace demand,” Blackhawk President and CEO Mitch Potter said in the release. “This transaction effectively monetizes the sales position and underground reserves at our Freelandville complex, bolsters our liquidity position, and allows us to focus on implementing further capital enhancements to our metallurgical coal platform in West Virginia.
“Blackhawk remains committed to our Log Creek mining complex in Gibson and Pike counties,” he continued. “We will source new and existing coal sales from Log Creek while retaining the Freelandville complex for future growth opportunities.”
Hallador’s press release indicates that all sales will be shipped from the Oaktown, Carlisle or Ace in the Hole mines.
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