Penn picks up Illinois property

PENN Virginia Resource Partners (PVR) last week dipped its toe into the Illinois Basin for the first time with its $US62.3 million acquisition of 95 million tons of coal reserves from a private seller.
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Courtesy Penn Virginia Resource Partners.

Angie Tomlinson

The cash acquisition was funded using PVR’s recently expanded credit facility, increased from $US150 million to $US300 million to provide access to capital to feed the company’s growth strategy.

The reserves are located on 56,000 acres along the Green River in Henderson County, Kentucky.

Current operations on the property consist of approximately 45 million tons of coal reserves leased to Peabody Energy.

PVR expects cash flow from operations from the property over the first 12 months to be $US3.4-4 million.

PVR said the remaining coal reserves would be leased over the next several years, with a gradual increase in coal production and related cash flow from the property.

“We are pleased to have completed this acquisition, which provides PVR with additional geographic diversification and organic revenue expansion opportunities over the next several years,” PVR chief James Dearlove said.

“It has been PVR’s stated intent for some time to enter the Illinois Basin, because we believe the basin is becoming an increasingly important source of coal supply.”

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