The purchase of the reserves, located in Knott County, Kentucky, were funded through the issue of 209,000 new PVR common units as well as $US4 million in cash.
The company intends to construct a new preparation facility and unit train coal loading area on the property. Construction is scheduled to begin in the third quarter of this year and end sometime during the second quarter of next year at a cost of $US12.5 million.
According to the company’s statement, the reserves have been leased to an operator, who will begin mining on a limited basis during the construction phases. Once complete, production is expected to swell – possibly to 1 million tons per annum beginning in 2007.
“This acquisition provides PVR with a high quality, long-lived coal asset in its core area of central Appalachia,” said the chief of the general partner A James Dearlove. “In addition to the coal royalties, fees from the new coal preparation plant and unit train coal loading facility should provide important new revenue sources to the partnership beginning in 2006.”
Pennsylvania-based PVR is a master limited partnership created by Penn Virginia Corporation in September 2001.
