Twentymile Mine being sold to Bowie Resource Partners
November 20, 2015
Steamboat Springs — Peabody Energy on Friday announced it is selling Routt County’s Twentymile mine to Bowie Resource Partners.
According to a Peabody news release, the company has entered a definitive agreement to sell the El Segundo and Lee Ranch mines in New Mexico and Twentymile for $358 million in cash, subject to customary working capital adjustments. Bowie will also assume about $105 million in related liabilities.
“This transaction is consistent with our stated focus area of portfolio optimization,” Peabody President and Chief Executive Officer Glenn Kellow said in a news release. “While our New Mexico and Colorado operations and workforce have been substantial contributors to our success over the years, we are reshaping our portfolio focus around our core regions, including the Powder River Basin, Illinois Basin and Australia. At this time, we believe it is appropriate to monetize the value of these mines in a transaction that would bring forward multiple years of cash flows.”
The sale is expected to be finalized by the first quarter of 2016.
Officials with Bowie Resources could not be reached Friday.
According to Bowie’s website, the company currently operates the Bowie Mine in Paonia and three mines in Utah. They produce 13 million tons of coal annually.
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Coal production at Twentymile has been on a steady decline due to customer demand.
In 2014, Twentymile produced 6.66 million tons of coal, down 8 percent from 2013, when the mine produced 7.24 million tons.
The amount of coal produced in 2014 was the least amount produced in records going back to 2001.
In February, Twentymile had 335 employees. About the same time in 2014, Twentymile employed about 400 full-time employees.
Despite the cuts, Twentymile remains one of Routt County’s largest employers.
In June, Peabody, the world’s largest private-sector coal company, announced plans to save roughly $40 to $45 million per year by cutting 250 salaried positions within the company "to create a leaner organization with lower costs.”
The three mines being purchased by Bowie have combined coal reserves of about 330 million tons, according to the news release. The mines are projected to produce 11 million tons of coal in 2016.
Bowie plans to fund the purchase through debt refinancing and an equity commitment from a major private equity firm, according to the news release. Peabody expects to use transaction proceeds for general corporate purposes and/or deleveraging activities.