Sale Done With Eagle Butte, Belle Ayr Mines in Campbell County

Eagle Specialty Materials, LLC, on Friday completed the purchase of the Belle Ayr and Eagle Butte coal mines in Campbell County from Contura Energy, Inc., according to a news release from Contura on Monday.

The sale of Eagle Butte and Belle Ayr -- the fourth and sixth most productive coal mines in the U.S. in 2017 -- by the bankrupt Blackjewel, LLC, was approved Oct. 2 by a federal bankruptcy judge in West Virginia.

"Closing this deal with Eagle Specialty Materials brings about a positive result for our company and the many stakeholders involved in this transaction," Contura's Chairman and CEO David Stetson said in the news release. Contura's subsidiary Contura Coal West is in charge of the Wyoming mines. Eagle Specialty Materials is an affiliate of the Alabama-based FM Coal.

"In our view, this transaction represents a best-case-scenario outcome to a lengthy and uncertain process, putting the mines in the hands of an operator with a long-term interest in the Powder River Basin, and getting hard-working coal miners back on the job," Stetson said.

That uncertain process began July 1 when Milton, W.Va.-based Blackjewel filed for Chapter 11 business reorganization bankruptcy protection.

That same day, Blackjewel closed the two Wyoming mines and about 30 other mines and operations in Kentucky, Virginia and West Virginia. Some 600 miners in Wyoming and about 1,100 at the eastern operations were sent home. A few employees have maintained some operations at the Wyoming mines.

Since then, more than 1,200 pleadings have been filed in the bankruptcy court in West Virginia, including some by Wyoming companies such as Wyoming Machinery in Mills and a miner in a class-action lawsuit.

The court in August approved the mines’ sale to Tennessee-based Contura Energy, which bought the mines from Alpha Natural Resources in 2015 and then sold them to Blackjewel. Contura still holds the Wyoming mining permits. However, the August deal faltered because government officials seeking to collect federal coal royalties withheld approval.

The deal includes replacing surety bonding previously posted by Contura with the Wyoming Department of Environmental Quality with $238 million of substitute surety bonds arranged by Eagle Specialty Materials.

Contura will not have any liability in respect of those substitute surety bonds. Any bond forfeiture related to the mines will not be held against Contura by the U.S. Department of Interior's Office of Surface Mining.

Eagle Specialty Materials also agreed to indemnify Contura against all reclamation liabilities related to the mines and against federal, state and local claims for royalties, ad valorem taxes and other amounts since Dec. 2017.

Eagle Specialty Materials is expected to operate the mines during the transfer of mining permits.

Contura will pay Eagle Specialty Materials $81.3 million, and has agreed pay an additional $8.7 million into an escrow account to be used to pay a federal royalty claim against Contura, has agreed to convey certain property to Eagle Specialty Materials, has paid $13.5 million to Campbell County for ad valorem back taxes, among other agreements, according to the news release.