Alpha Natural Resources to Acquire Mining Operations, 73 Million Tons of Coal Reserves from Progress Fuels
prnewswire.com
ABINGDON, Va., April 6 /PRNewswire-FirstCall/ -- Alpha Natural Resources,
Inc. (NYSE: ANR), a leading Appalachian coal producer, announced that is has
agreed to acquire certain coal mining operations in eastern Kentucky from
Progress Fuels Corp., a subsidiary of Raleigh, North Carolina-based Progress
Energy (NYSE: PGN).
Alpha will acquire the stock of Diamond May Coal Co. and Progress Land
Corp. and the assets of Kentucky May Coal Co., Inc. from Progress Fuels. The
operations to be acquired are adjacent to Alpha's Enterprise business unit and
will be integrated with Enterprise.
Alpha will pay approximately $23 million plus an adjustment for working
capital at closing, and will assume $8 million in reclamation liabilities.
Alpha plans to use its existing revolving credit facility to finance the
transaction.
Diamond May operates two surface and two underground mines in Kentucky,
employing 380 union-free employees. Production in 2005 was approximately
three million tons of steam coal. Diamond May controls an estimated
55.5 million tons of proven and probable surface and underground reserves,
including the undeveloped Elkhorn 2 block of more than 35 million tons.
Diamond May also operates a 700 ton-per-hour preparation plant and loadout
facility on the CSX railroad.
Kentucky May Coal Co. owns an estimated 17.8 million tons of proven and
probable underground reserves, most of which are high in Btu content and low
in sulfur. It has no current active mines.
"This acquisition will more than double our reserve base in eastern
Kentucky," said Michael J. Quillen, Alpha's president and CEO. "What we
learned from acquiring and quickly integrating the Callaway coal operations
last October will help us with Progress. Like Callaway, these are the type of
operations that meet our acquisition criteria, and they should benefit from
being managed by one of our best business units, Enterprise."
Over the next two years Alpha plans to develop a slope and shaft into the
underground Elkhorn 2 reserve, with first production expected from the mine in
2008. From a rail transportation standpoint, Elkhorn 2 is advantageously
positioned with the growing utility scrubber market in the Southeast.
Closing is anticipated by May 1, 2006 and is subject to customary closing
conditions.
About Alpha Natural Resources
Alpha Natural Resources is a leading producer of high-quality Appalachian
coal. Approximately 92 percent of the company's reserve base is high Btu coal
and 89 percent is low sulfur, qualities that are in high demand among electric
utilities which use steam coal. Alpha is also one of the nation's largest
producers and exporters of metallurgical coal, a key ingredient in steel
manufacturing. Alpha and its subsidiaries currently operate mining complexes
in four states, consisting of 69 mines feeding 11 coal preparation and
blending plants. The company and its subsidiaries employ more than
3,300 people.
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