The transaction is part of a chapter 11 plan and is subject to documentation of a definitive asset purchase agreement, bankruptcy court approval of the sale, confirmation of a chapter 11 plan, and other customary conditions. Patriot's mining operations and customer shipments will continue in the ordinary course during the sale process.

Under the terms of the letter of intent, Blackhawk would issue to Patriot’s secured lenders new debt securities totalling approximately $US643 million plus Class B Units providing them an ownership stake in Blackhawk.

In addition, Blackhawk would assume or replace surety bonds supporting reclamation and related liabilities associated with the purchased assets.

Patriot CEO Bob Bennett said: “We feel strongly that the proposed transaction with Blackhawk is in the best interest of Patriot, and its employees and stakeholders.

“Blackhawk shares our dedication to operational and environmental excellence, and this transaction creates a viable path forward in this challenging market environment, enabling our mining operations to continue serving customers and preserving jobs in the communities in which they operate.

“As always, we remain committed to operating safely and serving our customers throughout this sale process.”

Patriot is continuing to negotiate with Blackhawk on the terms of a formal asset purchase agreement. Certain Patriot assets not included in the proposed transaction with Blackhawk will be subject to a separate sale process outlined in the bidding procedures motion.