Cline Group sells some Northern Appalachia assets

OREANDA-NEWS. August 27, 2015.  The Cline Group is selling some of its Northern Appalachia assets for \\$20mn to a new entrant in the coal industry that plans to restart an idled operation this year.

Royal Energy Resources has signed an agreement with Cline affiliates to buy the Gatling mining complex, which includes two permitted mines on either side of the Ohio river in Meigs county, Ohio, and Mason county, West Virginia. Royal will also buy the Meigs Point and Broad Run docks on the Ohio river.

Royal plans to restart the Ohio mine, which has been idle for about three years, by the end of this year, company president Ron Phillips told Argus. The West Virginia mine has also been off line.

Royal expects to run the Ohio mine at 40,000-50,000st/month initially. It has a pending coal purchase agreement to supply 240,000 short tons (217,724 metric tonnes) to American Electric Power's Mitchell plant near Moundsville, West Virginia, through 31 December 2015.

The company is also negotiating a strategic partnership with Kentucky-based mining company Jet Fuel.

Royal will pay Cline \\$18.5mn in cash plus \\$1.5mn in the form of a 2pc clean coal royalty. The transaction is expected to close by 5 October 2015. The Gatling complex includes a wash plant and dedicated beltline to American Electric Power's Mountaineer power plant near New Haven, West Virginia.

Royal is focused on buying coal, gas and renewable energy assets "that are profitable at current distressed prices." From 2007-2014 the company pursued gold, silver, copper and rare earth metal mining concessions in Romania and mining leases in the US. This year, after an ownership and management change, the company began shedding its existing leases and pursued a plan to buy US energy assets.

The company this year purchased Blue Grove Coal, which operates the GS Energy surface mine in McDowell county, West Virginia. It is working to complete two other deals for West Virginia assets.