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4 www.coalage.com Janaury/February 2018 news Cloud Peak to Ship PRB Coal to Japan b r e a k i n g n e w s Murray Energy Corp. announced its subsidiary, Murray Kentucky Energy Inc., has entered into an agreement with Armstrong Energy to purchase a 51% ownership interest in a new company that will own certain as- sets formerly held by Armstrong Energy. The secured noteholders of Arm- strong Energy will hold a 49% ownership interest in the new company. "We are pleased that we were able to reach an agreement with Armstrong Energy and its secured noteholders in order to ensure that these mines continue to operate after the bankruptcy process," said Robert E. Murray, chairman, president and CEO of Murray Energy. "After this transaction is completed, Murray Kentucky and the lenders of Arm- strong Energy will jointly own five mines that are strategically import- ant in the Illinois Basin. These operations will complement our existing mines in the Illinois Basin." The transaction remains subject to approval by the United States Bankruptcy Court for the Eastern District of Missouri, which is adminis- tering Armstrong Energy's chapter 11 bankruptcy case. The transaction would be implemented as part of Armstrong Energy's proposed plan of reorganization, which has the support of the company's secured note- holders and its Official Committee of Unsecured Creditors. The new company will be a producer of low-chlorine, high-sulfur thermal coal, with five mines in the Illinois Basin, including three sur- face mines and two operating underground mines. As of June 30, Armstrong Energy controlled more than 445 million tons of proven and probable coal reserves in western Kentucky. The new company will also own and operate the three existing coal processing plants and river dock coal handling and rail loadout facilities. Murray Kentucky will manage these mines, along with the coal preparation and shipment facilities, after this transaction has closed. "This transaction will provide needed stability to the coal indus- try in Western Kentucky," Murray said. "It will also provide operational consistency to our domestic customers and greater opportunity for coal sales into the international export markets." Murray Energy and Murray Kentucky are being advised by legal counsel Schulte Roth & Zabel LLP, in connection with this acquisition. Cloud Peak Energy Logistics (CPEL), a subsidiary of Cloud Peak Energy, has entered into a coal export sales agreement with JERA Trading Pte Ltd. ( JERAT), a trading company based in Singapore. Shipments are expected to begin as early as the end of 2019 and continue for a period of 30-40 months, reaching up to 1 million metric tons (mt) in the final contract year. Coal produced at Cloud Peak Energy's Spring Creek Mine, lo- cated near Decker, Montana, will be carried by the BNSF Railway to Westshore Terminals at Roberts Bank, Vancouver, for loading onto ocean-going vessels for subsequent delivery to two new state-of-the-art Integrated coal Gasification Combined Cycle (IGCC) coal-fired power plants in Fukushima Prefecture, Japan. The two 540-megawatt IGCC plants are being developed by Mit- subishi Corp. Power Ltd., along with Mitsubishi Heavy Industries Ltd., Mitsubishi Electric Corp., Tokyo Electric Power Co. Holdings Inc., and Joban Joint Power Co. Ltd. "Cloud Peak Energy is pleased to be part of the Fukushima IGCC project and to help support Japan's investment in next gen- eration coal technology," said Colin Marshall, Cloud Peak Energy president and CEO. "If similar plants were to be built in the U.S., it would go a long way to addressing concerns about CO 2 emissions while providing low-cost, reliable electricity. Today's announce- ment also demonstrates the strategic importance of American energy resources to key Asian allies." IGCC systems generate power using a combined cycle format incorporating coal gasification and both gas and steam turbines. IGCC systems offer enhanced generation efficiency, as well as re- ductions in CO 2 emissions of about 15% in comparison with the latest, state-of-the-art, conventional coal-fired power plant de- signs and substantially lower than most plants in operation in the United States, according to Cloud Peak. The first new IGCC plant is scheduled to commence operation in September 2020. "JERA Trading is glad to have secured a long-term coal sourcing agreement with Cloud Peak Energy," said Ronan Lory, JERA Trading managing director. "It demonstrates that North America remains a key supplier of quality coal for exports and vindicates our decision to set up our new subsidiary JERA Trading North America LLC." Projects Advancing in Illinois Basin in Early 2018 At the start of 2018, several major Illinois Basin (ILB) coal producers were pursuing projects to expand or extend existing steam coal min- Coal produced at Cloud Peak Energy's Spring Creek mine (above), located near Decker, Montana, will be exported through Vancouver. Murry Energy Will Acquire Majority Interest in Armstrong Energy