Massey has acquired about 23 million tons of reserves and operating assets, including Foundation’s idle Laurel Creek complex in Mingo County. The assets are adjacent to Massey’s existing North Surface mine and Feats rail loadout, and the Virginia producer will also gain a coal processing plant, permitted surface reserves, and impoundment and related equipment.
In return, Foundation has now created a contiguous reserve in the Harts Creek/Atenville area through its receipt of over 19Mt of steam and metallurgical-grade coal. The Maryland operator now holds a reserve block in the area totalling more than 120Mt.
"We are excited about this transaction and the synergies and development opportunities it provides," Massey chairman and chief executive Don Blankenship said, calling the former Massey reserves “non-strategic”
"The addition of a permitted processing plant and impoundment in this area will enable us to more economically mine over 100Mt of Massey-controlled reserves and further enhances our position in Central Appalachia."
Foundation chairman and CEO James Roberts said the deal “improves the reserve position of both companies” while enhancing its Central Appalachian growth possibilities.
"Harts Creek represents one of the largest contiguous, undeveloped reserves in the region and will provide a significant growth opportunity for the company following the completion of our pending merger with Alpha Natural Resources."
Alpha announced its merger with Foundation in May. If approved by the shareholders of both companies at a July 31 vote, the combined company will become the third-largest US coal producer behind Arch Coal and Peabody Energy.
The $US2 billion all-stock transaction will give the combined entity a total of 59 coal mines, 14 preparation plants and 2008 pro forma revenues of $4.2 billion. It will have a very large foothold in the US coal fields, including Foundation’s expansive holdings in the Powder River Basin region, and have total coal reserve holdings of 2.3 billion tons.