BRISTOL, Tenn., Dec. 10, 2020 /PRNewswire/ -- Contura
Energy, Inc. (NYSE: CTRA), a leading U.S. supplier of metallurgical
products for the steel-making industry, today announced the closing
of its transaction with Iron Senergy Holding, LLC (Iron Senergy)
for the divestment of the Cumberland Mine and related assets in
Greene County, Pennsylvania.
The subsidiaries that hold the Cumberland and Emerald mines and the associated coal
reserves, mining permits and operations, infrastructure, equipment
and transloading facilities have transferred to Iron Senergy,
effective today. According to the terms of the transaction,
Iron Senergy has acquired all of the equity of the following
subsidiaries previously owned by Contura: Emerald Contura,
LLC; Cumberland Contura, LLC; Contura Coal Resources, LLC; Contura
Pennsylvania Land, LLC; and Contura Pennsylvania Terminal, LLC
(together, the Pennsylvania Entities). Iron Senergy has also posted
replacement reclamation bonds for the Pennsylvania Entities and
assumed their UMWA collective bargaining agreements.
Additionally, the closing of this transaction released Contura
from all reclamation obligations associated with the Pennsylvania
Entities, which are estimated to be approximately $169 million of undiscounted future cash
outflows. These obligations have been assumed by Iron
Senergy.
"This mutually beneficial transaction with Iron Senergy extends
the runway for Cumberland under
its new ownership, and today's closing is the culmination of many
months of hard work from our respective teams," said David Stetson, Contura's chairman and chief
executive officer. "I commend everyone who worked on this project
for their efforts to bring this to fruition. The transaction is a
transformational milestone in Contura's history, fulfilling our
vision of moving swiftly to sharpen our company's focus on
producing metallurgical products used in steelmaking. At the same
time, dramatically reducing our portfolio's thermal coal production
will yield financial benefits to Contura by significantly reducing
our asset retirement obligations and collateralization
requirements. Today marks a big step forward for our company."
As previously announced, Iron Senergy has expressed its
intention to continue operating the Cumberland Mine beyond 2022,
thereby extending employment opportunities for the Cumberland workforce, providing a continued
tax base for the local community and sustaining business
opportunities for Cumberland's
vendors and a reliable fuel supply for customers. "Our team is
excited about taking over mining operations at Cumberland and extending the operation's
expected lifespan," said Mike
Castle, Iron Senergy's chief financial officer. "We plan to
keep the mine running and continue providing employment
opportunities for the talented workforce at the mine." Cumberland's mine management and sales agent
will remain with the Cumberland
operations under Iron Senergy's new
structure.
Upon the transaction's closing, Contura provided $20 million in cash consideration to Iron Senergy
and transferred $30 million in
existing cash collateral to Iron Senergy's surety provider as
collateral for Iron Senergy's replacement reclamation bonds.
Contura retained a large block of Freeport seam metallurgical-grade coal
reserves, located near the Cumberland and Emerald properties for potential future
development.
2021 Full-Year Guidance
The company is updating 2021 guidance to reflect the divestiture
of Cumberland Mine and the Northern Appalachian (NAPP) reporting
segment.
The following changes to our 2021 guidance reflect the exclusion
of the NAPP segment:
- SG&A reduced by $1 million to
a range of $44 million to
$49 million
- Capital expenditures lowered by $5
million to a range of $75
million to $95 million
- Depreciation, depletion and amortization are now anticipated to
be $5 million lower, in the range of
$155 million to $170 million
- The company lowered its idle operations expense by $3 million to a range of $24 million to $30
million
|
2021
Guidance
|
in millions of
tons
|
Low
|
High
|
Metallurgical
|
12.5
|
|
13.0
|
|
Thermal
|
1.0
|
|
1.5
|
|
CAPP -
Metallurgical
|
13.5
|
|
14.5
|
|
CAPP -
Thermal
|
1.3
|
|
1.7
|
|
Total
Shipments
|
14.8
|
|
16.2
|
|
|
|
|
Committed/Priced1,2,3
|
Committed
|
Average
Price
|
Metallurgical
|
37
|
%
|
$86.76
|
|
Thermal
|
73
|
%
|
$52.12
|
|
CAPP -
Metallurgical
|
40
|
%
|
$81.20
|
|
CAPP -
Thermal
|
99
|
%
|
$57.19
|
|
|
|
|
Committed/Unpriced1,3
|
Committed
|
|
Metallurgical
|
30
|
%
|
|
Thermal
|
24
|
%
|
|
CAPP -
Metallurgical
|
29
|
%
|
|
CAPP -
Thermal
|
1
|
%
|
|
|
|
|
Costs per
ton4
|
Low
|
High
|
CAPP -
Metallurgical
|
$68.00
|
|
$74.00
|
|
CAPP -
Thermal
|
$45.00
|
|
$49.00
|
|
|
|
|
In millions
(except taxes)
|
Low
|
High
|
SG&A5
|
$44
|
|
$49
|
|
Idle Operations
Expense
|
$24
|
|
$30
|
|
Cash Interest
Expense
|
$51
|
|
$55
|
|
DD&A
|
$155
|
|
$170
|
|
Capital
Expenditures
|
$75
|
|
$95
|
|
Tax Rate
|
—
|
%
|
5
|
%
|
Notes:
- Based on committed and priced coal shipments as of December 4, 2020. Committed percentage based on
the midpoint of shipment guidance range.
- Actual average per-ton realizations on committed and priced
tons recognized in future periods may vary based on actual freight
expense in future periods relative to assumed freight expense
embedded in projected average per-ton realizations.
- Includes estimates of future coal shipments based upon contract
terms and anticipated delivery schedules. Actual coal shipments may
vary from these estimates.
- Note: The Company is unable to present a quantitative
reconciliation of its forward-looking non-GAAP cost of coal sales
per ton sold financial measures to the most directly comparable
GAAP measures without unreasonable efforts due to the inherent
difficulty in forecasting and quantifying with reasonable accuracy
significant items required for the reconciliation. The most
directly comparable GAAP measure, GAAP cost of sales, is not
accessible without unreasonable efforts on a forward- looking
basis. The reconciling items include freight and handling costs,
which are a component of GAAP cost of sales. Management is unable
to predict without unreasonable efforts freight and handling costs
due to uncertainty as to the end market and FOB point for
uncommitted sales volumes and the final shipping point for export
shipments. These amounts have historically varied and may continue
to vary significantly from quarter to quarter and material changes
to these items could have a significant effect on our future GAAP
results.
- Excludes expenses related to non-cash stock compensation and
non-recurring business development expenses.
ABOUT CONTURA ENERGY
Contura Energy (NYSE: CTRA) is a Tennessee-based coal supplier with affiliate
mining operations in Virginia and
West Virginia. With customers
across the globe, high-quality reserves and significant port
capacity, Contura Energy reliably supplies metallurgical coal to
produce steel. For more information, visit
www.conturaenergy.com.
FORWARD-LOOKING STATEMENTS
This news release includes forward-looking
statements. These forward-looking statements are based on
Contura's expectations and beliefs concerning future events and
involve risks and uncertainties that may cause actual results to
differ materially from current expectations. These factors are
difficult to predict accurately and may be beyond Contura's
control. Forward-looking statements in this news release or
elsewhere speak only as of the date made. New uncertainties
and risks arise from time to time, and it is impossible for Contura
to predict these events or how they may affect Contura. Except
as required by law, Contura has no duty to, and does not intend to,
update or revise the forward-looking statements in this news
release or elsewhere after the date this release is issued. In
light of these risks and uncertainties, investors should keep in
mind that results, events or developments discussed in any
forward-looking statement made in this news release may not
occur.
INVESTOR
CONTACT
investorrelations@conturaenergy.com
Alex Rotonen, CFA
423.956.6882
MEDIA
CONTACT
corporatecommunications@conturaenergy.com
Emily O'Quinn
423.573.0369
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SOURCE Contura Energy, Inc.