The company said on Friday the assets, located in the area of Phelps, included leasehold interests and both surface and mineral permits including steam coal reserves and non-reserve coal deposits.
The deal also includes $8.75 million in potential additional payments, which hinges upon the future issuance of permits and the unnamed purchaser’s commencement of mining activities.
“Rhino believes the sale of these assets will allow the partnership to concentrate more resources on its internal development projects that are focused on producing metallurgical coal and pulverized coal injection product,” officials said.
“The transaction also transfers certain liabilities related to the assets sold that the partnership believes will positively impact future cash flows, while also supplying an immediate inflow of cash that Rhino can utilize in its current operations.”
Also, the miner said it had limited operations on the assets sold, so it felt the divestment would not affect its future financials negatively.
“Rhino expects to record a gain in relation to this transaction,” it said.
The Tug River mining complex, according to the producer’s website, consists of property in Kentucky and West Virginia that borders the Tug River.
At the end of March 2011, there was an estimated 34.8 million tons of proven and probable coal reserves and an estimated 9.1Mt of non-reserve coal deposits.
Coal from Tug River is truck delivered to the Jamboree load-out, where it is loaded onto trains on the Norfolk Southern Railroad line.
Rhino's current operations are in central and northern Appalachia, the Illinois Basin and in the Western Bituminous region.