The divestiture of the operations, which are located in Bell, Clay, Harlan, Knox and Leslie counties, provides the company with a greater mix of premium quality, mid-volatility metallurgical production.

Collectively, there are 42.9 million tons of proven and probable reserves at the properties, according to a Summit Engineering report from March 2012.

“Although we continue to view favorably the long-term prospects for low-cost central Appalachian thermal coal mining, we believe that this transaction is both accretive to our shareholders and value enhancing from the perspective of enhanced liquidity and operational flexibility, as we position our remaining assets for significant growth,” Xinergy chief executive officer Matt Goldfarb said.

Xinergy noted the sale was being considered a “related party transaction” because executive Jon Nix, who owns more than 10% of the company, also had a 5.1% stake in the company purchasing the reserves.

However, it confirmed the two companies were not related parties and Nix was not a member of the Xinergy board.

The board of directors unanimously approved the transaction.

From a debt perspective, the deal appears beneficial.

Net debt will be reduced by about 22% from $216.7 million at December 31 to $169.5 million following the receipt of the sale’s net proceeds.

The company said it anticipated paying the entire $20 million in estimated infrastructure costs at its South Fork complex from the net proceeds from the sale held as restricted cash.

Xinergy, which trades on the Toronto Stock Exchange under XRG, also has coal interests in West Virginia and Virginia including Raven Crest, Brier Creek, True Energy and South Fork Coal.