Westmoreland to Acquire Kemmerer Mine

The Kemmerer coal mine in Wyoming, USA, produces about 4.7 million t/y of thermal coal.
Westmoreland Coal Co. has agreed to pur-chase Chevron Mining’s Kemmerer mine in the Hams Fork Region of southwestern Wyoming for $179 million plus approxi-mately $14 million in working capital. It is anticipated the purchase price will be fund-ed through a combination of cash consid-eration of approximately $74 million, plus the assumption of approximately $118 mil-lion in certain liabilities, including post-retirement medical, pension, black lung and asset retirement obligation liabilities. Over the last five years, Kemmerer has pro-duced, on average, 4.7 million tons of high-quality sub bituminous coal for sale to the adjacent Naughton power station, as well as various industrial customers.

The transaction includes approximately 118 million tons of coal reserves, enough for 20 years of production; a skilled and stable workforce; recently installed state-of-the-art coal preparation and loadout facilities; strong customer commitments; and an expansive fleet of well-maintained mining equipment. Additionally, substan-tially all of Kemmerer’s projected produc-tion for 2012 through 2016 is committed and priced under existing sales contracts.

“Strategically, the Kemmerer mine fits well with our existing mine mouth opera-tions,” said Keith Alessi, president and CEO, Westmoreland. “The mine has a diversified base of stable customers, both utility and industrial. Under Chevron’s stewardship, the mine has been well man-aged and its capital equipment is in excel-lent condition. We anticipate this transac-tion to be cash flow positive immediately upon closing and in line with our strategic plan to de-leverage over time. The acquisi-tion will allow us to leverage our corporate platform, and we hope to close the trans-action by January 31, 2012.”

As featured in Womp 2012 Vol 01 - www.womp-int.com