Peabody sells New Mexico, Colorado coal assets for $358m
TORONTO (miningweekly.com) – US coal miner Peabody Energy has agreed to sell its New Mexico and Colorado coal assets to Bowie Resource Partners for $358-million in cash.
Bowie will also assume about $105-million in related liabilities.
The transaction comprised the El Segundo and Lee Ranch mines, in New Mexico, and the Twentymile mine, in Colorado, which had combined coal reserves of about 330-million tons.
Peabody president and CEO Glenn Kellow said the transaction was in line with the company’s portfolio optimisation strategy, to focus on core regions including the Powder River basin, the Illinois basin and Australia.
"At this time, we believe it is appropriate to monetise the value of these mines in a transaction that would bring forward multiple years of cash flows,” he said.
Peabody's New Mexico and Colorado mines are projected to produce 11-million tons in 2016. Based on Peabody's current operating plans, pre-tax cash flows after capital expenditures for these mines are projected to be about $70-million in 2016.
The transaction was expected to close before the end of the first quarter, subject to customary conditions.
Peabody expected to use transaction proceeds for general corporate purposes and/or deleveraging activities. The sale also reduced the amount of Peabody's self-bonding, in place for reclamation obligations, by more than $300-million.
Morgan Stanley & Co was acting as the financial adviser to Peabody.
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