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Arch sells Kentucky mining complex

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Arch Coal announced March 5 that it had sold its Hazard subsidiary in eastern Kentucky to Black Mining LLC for $26.3 million in cash.

The sale includes the Hazard thermal coal mining complex and related infrastructure as well as about 38 million tons of thermal coal reserves in eastern Kentucky. As part of the sale, Arch divested $15.6 million of reclamation liabilities to Blackhawk and expects to be released from $43.8 million of reclamation surety bonding. Arch has the potential to receive future royalty payments of up to $35 million in aggregate over the next five years resulting from its retention of select coal reserves at Hazard.

"The sale of our Hazard subsidiary demonstrates that we are continuing to streamline our mining portfolio and monetize assets that are not essential to our future growth plans," John W. Eaves, Arch's president and CEO, said in a news release. "This transaction allows us to further sharpen our focus on strategic assets that have the highest return potential, such as our growing Appalachian metallurgical coal franchise and our low-cost Western thermal coal platform. At the same time, the proceeds from the sale further strengthen our already substantial cash and liquidity position."

Hazard's complex includes four active surface mines: East-Mac & Nellie, Rowdy Gap, Bearville and Thunder Ridge, as well as the Teton preparation plant and Kentucky River loading facility. In 2013, Hazard sold 1.7 million tons of thermal coal and generated $4.8 million in earnings before interest, taxes, depreciation and amortization.

Kentucky-based Blackhawk Mining LLC was formed in 2010. The company owns and operates four underground and five surface mines as well as two processing and loading facilities in Kentucky. According to the company's website, Blackhawk Mining was formed to acquire and operate idled coal reserves, mines, preparation plant and loading facilities formerly owned by Black Diamond Mining in Floyd County, Ky.