Thelon takes over private Tennessee miner

CANADA-based Thelon Capital has increased its US portfolio with the purchase of a privately held, active Tennessee-headquartered producer.
Thelon takes over private Tennessee miner Thelon takes over private Tennessee miner Thelon takes over private Tennessee miner Thelon takes over private Tennessee miner Thelon takes over private Tennessee miner

Thelan's Jellico project

Donna Schmidt

The company purchased 100% of the 30-year-old, unnamed company’s outstanding shares for $US35 million and will pay $7 million for the same amount in surety bonds. The private company had positive cash flow, so there is no debt to assume.

Thelon will now control the seller’s three permitted strip and auger operations totaling 50,000 tons per month, and another four planned for development. It will also take over more than 22 million tons of recoverable coal, including 4.5Mt of Blue Gem seam metallurgical coal under lease.

The new assets also include an estimated $24 million worth of operating mining equipment, a wash plant and other support infrastructure.

“They currently are supplying local industrial and utility markets, with plans to take advantage of the growing US export market,” Thelon said of the seller.

“This acquisition gives Thelon Capital immediate production and is an important step in Thelon achieving its goal of becoming a million-ton annual producer of high-quality compliant coals.”

Thelon said it would retain the current management of the 100-worker organization.

In December, the Vancouver-based operator announced it had acquired the Jellico coal project in Tennessee after exercising its option to purchase Clear Fork Mining. The Toronto Stock Exchange approved Thelon’s May 18, 2010 letter of agreement to purchase the project in late November.

The Jellico project is located on 6350 acres in Campbell and Claiborne counties.

Kentucky private contractor Mountainside Mining entered into a lease agreement with Clear Fork in March 2006 to mine 640 acres of Jellico. It mined a total of 185,600t of compliant coal in the 2010 fiscal year, from which Clear Fork earned $1.1 million in royalty payments.

Output increased throughout the year, and Mountainside Mining said 2011 production would continue to rise while additional tons were added under permit. In total, there are 3Mt of coal under permit, for a mine life of eight years.