Officials said it had entered into a partnership agreement to process and sell coal from the GreenFields operation in Gary, McDowell County, a mine that had been owned for four decades by US Steel.
During the company’s ownership, it deposited an estimated 10 million short tons of coal fines and 20 to 25Mt of coarse coal.
Blaze signed an initial allocation on October 2 when an unidentified purchaser for about 960,000 metric tons of processed coal; the two are currently negotiating a more definitive agreement.
Specifically, the plan includes the annual purchase of a minimum of $US4.08 ($A4.23) million in mined coal for processing from GreenFields. Advances of $US500,000 will also be made to GreenFields on the purchase and, if necessary, additional advances will be made of $US600,000 for mine improvements.
The 24-month deal has renewal options for 48 additional months.
At present market conditions, full performance under the deal would equate to gross annual revenues exceeding $US117.5 million. Based on internal projections, officials said, net revenue from that scenario could top $26 million.
The transaction meshes perfectly with Blaze’s plan for GreenFields, which includes domestic and international sale of the high-quality metallurgical grade output.
“We are grateful to GreenFields for the opportunity before us,” chairman and CEO A Leon Blaser said.
“With its existing reserves, rail accessibility, and geographic location, the ability to operate out of the GreenFields site was critical to the company's business model, and the fulfillment of the pending coal sales agreement abroad.
In early June, the Idaho-based group confirmed the acquisition of about 17,400 hectares of coal, coal seam gas and other mineral rights in West Virginia.
While the company did not confirm where the 17,700 enriched hectares were located, it did confirm the rights were in addition to a gas lease signed with Consol Energy gas arm CNX Gas.
The transaction, including the mineral rights and associated gas lease – which it said would be managed through newly-formed subsidiary Blaze Minerals – was said to be valued at more than $US51 million.
