Xinergy inks LOI for WV reserve

TENNESSEE-based Xinergy has signed a letter of intent with an unnamed party to acquire a metallurgical coal reserve in southern West Virginia.
Xinergy inks LOI for WV reserve Xinergy inks LOI for WV reserve Xinergy inks LOI for WV reserve Xinergy inks LOI for WV reserve Xinergy inks LOI for WV reserve

Image courtesy Xinergy

Donna Schmidt

The property, which is considered to contain a “significant” reserve of high-quality, mid-volatility coal, consists of about 15,000 acres with the majority classified as mineable using surface methods.

Xinergy did not speculate on the size of the reserve, but did confirm it was in negotiations with the privately held seller for a purchase price of $US5 million with an overriding royalty. Of that, $3.5 million is subject to the receipt of the required West Virginia Article 3 permit for the property.

Total consideration includes all mineral, surface and mining rights as well as technical information and associated permits already in place.

Exploration to determine reserve estimates compliant to National Instrument 43-101 standards will commence immediately.

"This property will be an excellent addition to our portfolio and it is in line with our acquisition growth strategy,” Xinergy chairman Jon Nix said.

“This is our initial foray into the met coal arena and we do not expect it to be our last."

Xinergy said the acquisition should be instantly accretive, taking into account current pricing for similar quality central Appalachian met coal in the range of $150 per ton.

The company has submitted a non-refundable deposit for a 90-day option to complete final due diligence and exploration.

It is expected to commence production from the reserve in the second half of next year.

Xinergy has active coal properties in eastern Kentucky and Alabama.