Massey acquires Pennsylvanian reserves

APPALACHIAN producer Massey Energy has received court approval to acquire 8 million tons of metallurgical coal reserves in Washington County, Pennsylvania, its first holding in the state.
Massey acquires Pennsylvanian reserves Massey acquires Pennsylvanian reserves Massey acquires Pennsylvanian reserves Massey acquires Pennsylvanian reserves Massey acquires Pennsylvanian reserves

Massey chief Don Blankenship.

Donna Schmidt

While the company did not disclose financial terms in its announcement, various local media have reported that the now-closed, 1300-acre Mathies mine in Union was purchased for $US5 million.

The operation was owned by Mon View Mining, which operated the mine in the late 1990s.

According to the Pittsburgh Post-Gazette, company owner John Hatch passed away in April and Massey needed approval from the US Bankruptcy Court to acquire the reserves. That approval was received Monday.

Massey has also gained approval to obtain related mining rights and the joint use of a Monongahela River dock facility. It said the mineable reserves at the site in southwestern Pennsylvania could increase depending on permitting requirements and mining methods.

Massey will acquire all of the assets free and clear of liabilities as outlined by the court. The transaction is expected to close in June.

"The sale appears to be in the best interest of the estate," the judge told the Post-Gazette.

"Hopefully, once the sale closes, the transaction will lead to a clearing of the site and more jobs there in the Mon Valley."

Massey president Baxter Phillips Jr said the deal was part of a continued acquisition strategy.

“This [purchase] is particularly exciting as it provides additional metallurgical coal reserves as well as direct access to cost-advantaged transportation alternatives,” he said.

“We are pleased to have a strong balance sheet which enables us to continue making opportunistic acquisitions.”

At the close of the transaction, Massey will have total reserve holdings in northern Appalachia of more than 117Mt, primarily met quality.

Mathies employed 200 workers at its prime, but landed in the Bankruptcy Court in 2005 after a coal broker defaulted on a $7 million loan, according to the paper. Massey initially submitted a purchase bid for the property in March 2008.

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