Over the last five years, Kemmerer has produced, on average, 4.7 million tonnes of high-quality sub-bituminous coal for sale to the adjacent Naughton power station, as well as various industrial customers located nearby.
Westmoreland president and chief executive officer Keith E Alessi said strategically, the Kemmerer mine fitted well with Westmoreland’s existing mine mouth operations.
“The mine has a diversified base of stable customers, both utility and industrial,” he said.
“Under Chevron’s stewardship, the mine has been well managed and its capital equipment is in excellent condition.
“We will look for additional strategic acquisitions as we continue to deliver premium value in the coal industry through close affiliation with world class customers.
“We anticipate this transaction to be cash flow positive immediately upon closing and in line with our strategic plan to de-leverage over time.
“The acquisition will allow us to leverage our already efficient corporate platform and we hope to close the transaction by January 31, 2012.”
It is anticipated the purchase price will be funded through a combination of cash consideration of approximately $74 million, plus the assumption of approximately $118 million in certain liabilities, including post-retirement medical, pension, black lung and asset retirement obligation liabilities.
The transaction includes approximately 118 million tonnes of coal reserves as of December 31, 2011 – enough for 20 years of production; a skilled and stable workforce; recently installed coal preparation and load-out facilities; strong customer commitments; and a fleet of well-maintained mining equipment.
Additionally, substantially all of Kemmerer’s projected production for 2012 through 2016 is committed and priced under existing sales contracts.
“We view the Kemmerer workforce, which totals approximately 290 people, as a core component of the transaction,” Alessi said.
“The employees of Kemmerer will be a tremendous addition to our company and we look forward to welcoming them to the Westmoreland family.
“These skilled employees share our core values of uncompromised safety and environmental excellence.”