Massey Energy Company (MEE) has fully acquired 15 million tons of coal reserves in West Virginia from rival Appalachian Fuels LLC, which went bankrupt recently, for over $6 million. Massey has also acquired permits needed to develop infrastructure and plans to begin production at the Dante Coal Reserves site. The transaction was completed on November 13, 2009.
Massey secured rights to the reserves through an auction in the bankruptcy of Appalachian Fuels. The acquisition was announced last month and completed on Nov. 13. The company expects the value of the reserves to increase significantly as conditions in the metallurgical coal market improve. The acquisition is Massey’s second from Appalachian. In September, Massey bought 23 million tons of reserves and other assets in West Virginia’s Fayette County from Appalachian for $5.1 million.
Massey Energy is the fourth largest coal company in the US and the largest in Central Appalachia. The company is continuously making acquisitions of coal mining assets and reserves. The Dante Coal acquisition has raised the company’s current total coal reserves to 2.3 billion tons. Of the total current reserves, 1.0 billion ton is metallurgical coal. The company had recently acquired the mining assets from Appalachian.
At more than $5.1 million, the assets include 23 million tons of coal reserves, permitted deep and surface mines, a permitted preparation plant and some mining equipment. These assets are located in Fayette County, West Virginia, close to Massey’s existing Mammoth and Nicholas Energy resource groups.
Over half of the acquired reserves are metallurgical coal in the Powellton and Eagle Coal Seams. Massey plans to resume mining metallurgical coal in the Powellton Seam in the near term. However, it has no immediate plans to start the other idled deep and surface mines acquired in the transaction. The coal produced will be processed at Massey’s Mammoth preparation plant. Massey expects the acquisition to be immediately accretive to earnings.
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