Westmoreland Coal Co. has agreed to purchase Chevron Mining’s Kemmerer mine in the Hams Fork Region of southwestern Wyoming for $179 million plus approximately $14 million in working capital.
It is anticipated the purchase price will be funded through a combination of cash consideration of approximately $74 million, plus the assumption of approximately $118 million in certain liabilities, including post-retirement medical, pension, black lung and asset retirement obligation liabilities. Over 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.
The transaction includes approximately 118 million tons of coal reserves, enough for 20 years of production; a skilled and stable workforce; 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 Alessi, president and CEO, Westmoreland. “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 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 corporate platform, and we hope to close the transaction by January 31, 2012.”
