Bowie Resource Partners plans to purchase the El Segundo and Lee Ranch mining complexes in New Mexico and the Twentymile mining complex in Colorado from Peabody Energy for $358 million in cash plus the assumption of $105 million in liabilities. This acquisition will nearly double the size of Bowie’s production output to 25 million tons per year (t/y), making it the largest bituminous coal producer in the western United States. This will also generate top line revenues of $1 billion annually.

Bowie will now operate five mining complexes in Colorado, New Mexico and Utah, employing more than 1,700 people.

“These acquisitions fit the vision and model that were the genesis of Bowie Resource Partners, as we continue to buck the industry trend with long-term contractual partnerships with our customers and secure margins in our niche,” said John Siegel, executive chairman for Bowie Resource Partners. “The El Segundo and Twentymile mining complexes have exemplary safety and productivity records, long-term relationships with domestic customers, and superior reserve quality that combine to render this an accretive and synergistic acquisition for us that will create economies of scale and lower cost.”

In 2014, the El Segundo and Twentymile mining complexes produced 8.4 million tons and 6.7 million tons of high Btu, low sulfur coal, respectively. The Twentymile longwall mine is capable of producing 8 million t/y or more. The Lee Ranch mine was idled in 2013. Production at these mines is fully committed for the next several years and, like Bowie, also supported by other contracts that run into the next decade, Siegel explained. After the transaction, the workforces of El Segundo and Twentymile are all expected to remain in place and become Bowie employees.

The transaction, which includes coal reserves of approximately 330 million tons, has been by approved by the Peabody Board of Directors and is expected to be completed in the first quarter of 2016. This will increase Bowie’s reserves to more than 500 million tons and expand its reserve life to more than 20 years.

Bowie currently operates three underground coal mines in Utah’s Uinta Basin capable of producing 12.6 million tpy. The majority of the company’s current coal sales are to domestic customers, pursuant to long-term, high-volume coal supply agreements with fixed pricing.

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