Allegiance, through its subsidiary Allegiance Coal USA Ltd., has agreed to acquire Black Warrior Minerals Inc., a privately held company that owns and operates the Black Warrior No. 1 mine, located 40 miles northeast of Birmingham, Alabama. Allegiance will pay $4 million in cash and provide $5.3 million to replace a reclamation bond. The transaction is expected to be completed during August.
The Black Warrior mine produces more than 200,000 tons per year of high CSR coking coal from the Blue Creek and Mary Lee seams. The mine’s reserves are estimated at 9.6 million tons. Operating five 10-hour shifts per week, the open-pit mine currently sells its run-of-mine coal to the Alabama power market.
Allegiance said it will continue to supply the power market in the near term during which time it will convert the Black Warrior mine into a met coal producer. The company plans to upgrade the equipment spread and use highwall mining to recover more coal at a lower cost. The company said it also plans to double output and build a new prep plant and coal handling facility. The objective is to provide an on-spec high vol A coking coal for export.
To fund the acquisition and assist in transforming the Black Warrior mine into a met coal producer for the seaborne market, Allegiance has raised A$30 million ($22 million) through a placement with investors. The company said demand for the placement was 2.5 times what was sought.
