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news Bowie Resource Partners Acquires Canyon Fuels Mines Bowie Resources and the Galena Private Equity Resource Fund created a joint venture, Bowie Resource Partners, to purchase Canyon Fuel Co. from Arch Coal for $435 million in cash. The sale has been approved by the Arch board of directors and is expected to be completed in the third quarter of 2013. Bowie Resource Partners (BRP) will own the Bowie and Canyon Fuel mines and will be based in Louisville, Ky., with a regional office in Grand Junction, Colo. It will have an annual productive capacity of 15 million to 17 million tons of thermal coal and a workforce of 1,100. Trafigura AG will be the exclusive marketing agent for all of BRP's production. "From the beginning with Bowie, our goal has been to establish a core business rooted in the Western Bituminous Region and to grow organically, as well as with specifically targeted synergistic acquisitions. We see this as an opportune time to position ourselves, with very selective mining and transportation assets, to be out in front of an anticipated renewed global interest in western U.S. coal," said John J. Siegel, chairman, BRP. "The exemplary safety and productivity record of Canyon Fuel, the company's long-term relationships with its cornerstone domestic customers, and the superior quality and geology of its reserves, in conjunction with our recent development of significant West Coast export throughput capacity, combine to make this an extraordinary acquisition for us." The Galena Private Equity Resource Fund was created in 2012 to invest in equity and debt of small- to medium-sized metals and mining companies in a development or expansion phase. The fund will make a cash equity investment of $104 million in BRP to acquire a significant minority stake in the joint venture company. "Galena has built an impressive record of prudently selecting high performing investments," said Jeremy Weir, CEO, Galena Asset ± B R E A K I N G Management. "We believe that Bowie Resource Partners has a unique opportunity to reshape the western U.S. coal paradigm." Canyon Fuel includes the Sufco and Skyline longwall mines and the Dugout Canyon continuous miner operation, all located in Utah. Canyon Fuel is projected to generate EBITDA of about $90 million in 2013. In addition to these active operations and related support facilities, Arch will transfer approximately 105 million tons of bituminous coal reserves to BRP in Utah. BRP plans to expand that reserve base. The workforce at the Canyon Fuel operations will remain in place after the transaction and will become BRP employees. Bowie operates a 5 million ton per year longwall mine, located in Paonia, Colo. It opened in 1998, and was purchased by a group headed by John Siegel and Steve M. Rickmeier in July 2009. More than half (60%) of Bowie's production and remaining reserves are N E W S Drummond Lays Off Miners in Alabama; Union Negotiations Continue in Colombia Officials at Birmingham-based Drummond Co. have announced intentions to lay off as many as 425 miners from their Shoal Creek longwall mine in Alabama. In a state-filed notification, Drummond said the cuts will begin September 9. In a letter to union representatives, Drummond cited "a significant downturn in business," as driving the cutbacks. "Although these layoffs may not be permanent, they will be of indeterminate length and will more than likely extend for more than six months," added the letter. Under the Worker Adjustment Retraining Notification (WARN) Act, state notification is mandatory for mass layoffs. Alabama's Department of Economic and Community Affairs' State Dislocated Worker Unit has officially confirmed the company's notification. 4 www.coalage.com The Canyon Fuel Co. mines represent three of the five mines in Arch Coal's Western Bituminous Group. In other Drummond news, union workers at its coal mining operations in Colombia will resume wage talks with the company after both sides failed to reach an agreement, company officials said in a statement quoted by Reuters. Union representatives said they would decide soon whether to strike or pursue arbitration. "Both sides have expressed intent to continue, as a result of which negotiations will resume," Drummond's statement said. Workers seek a salary increase and a fixed monthly pay over hourly wages that can fluctuate based on shift lengths. Miners are also demanding improved safety conditions and more health benefits. For their part, officials at Drummond—the No. 2 Colombian coal miner— have said their offer of a 3.8% increase in 2014, coupled with a onetime bonus of nearly $2,000, is above and beyond established labor mandates. July 2013