Consol closes on WV mines' sale

CONSOL Energy has closed on its agreement to pay Southeastern Land LLC $US44 million to take its Miller Creek and Fola mine complexes in southern West Virginia.
Consol closes on WV mines' sale Consol closes on WV mines' sale Consol closes on WV mines' sale Consol closes on WV mines' sale Consol closes on WV mines' sale

 

Lou Caruana

The Miller Creek Complex has an active surface mining operation, which produced 2.1 million tons in 2015, and two underground mines, which are idle.

The Fola Mining Complex is a closed surface mining operation in West Virginia.

The Miller Creek and Fola Mining Complexes each have 114Mt of owned and leased coal reserves, and they have a total of $103 million of mine closing and reclamation liabilities on CONSOL's consolidated balance sheets.

These assets and liabilities are classified as held for sale in discontinued operations on the company's consolidated balance sheets, their results of operations are included in discontinued operations on the consolidated statement of Income, and the reclassification of these assets resulted in an impairment charge of $356 million in the quarter.

In the transaction, Southeastern Land acquires the Miller Creek and Fola assets and assumes the Miller Creek and Fola mine closing and reclamation liabilities. In return Consol pays Southeastern Land $27 million cash at the closing, of which a portion will be held in escrow for purposes of obtaining the surety bonds required for the permits to transfer, and an additional $17 million in installments over the next four years.

These payments will mean an additional $44 million loss that Consol expects to record during the third quarter of 2016.

The company estimated a negative earnings before interest, tax, depreciation and amortisation contribution for full year 2016 associated with these assets.

loader