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Cheyenne Resources sells Appy reserves to James River Coal




James River Coal Co. may have a bigger presence in Letcher County after acquiring nearly 20 million tons of Appalachian coal reserves from Cheyenne Resources Inc.

Richmond-based James River said this week that it will pay $40 million for the reserves and permits, including $24 million in cash and $16 million in either cash or newly issued common stock of the company.

The deal includes about 10.2 million tons of proven and probable surface reserves and 3.6 million tons of proven and probable underground reserves, plus additional surface resources.

James River’s board and Vicco, Ky.-based Cheyenne Resources’ board have approved the deal. It remains subject to closing conditions.

The purchase price consists of about $24 million in cash and $16 million in cash or stock.

The deal includes about 10.2 million tons of proven and probable surface reserves and 3.6 million tons of proven and probable underground reserves.

The new mines at Cheyenne are expected to produce about 500,000 tons per year by the end of 2008.

James River expects about 90 percent of the coal mined from the Cheyenne reserves to be a utility-grade steam coal.

James River said it has secured permits to start mining part of the reserves. No equipment, employees or other assets will be purchased in the deal.

Formed in 1988 and named after the river that flows through Richmond, James River Coal already operates the Blue Diamond complex located in Leslie, Perry, Letcher and Harlan counties. The company also operates Leeco, Inc. in Knott and Perry counties, and the Bledsoe Coal Corporation complex located in Leslie, Harlan and Letcher counties. (AP)


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