Nasdaq-listed NewLead says the
agreements are expected to generate approximately $873.5m worth of revenue over
the next three years.
The first contract involves the
acquisition of title and excavation rights to 5,000 acres of land in Kentucky
that are believed to contain some 18.6 million tons of coal reserves while the
second is connected to 18,335 acres in Tennessee with mines holding an
estimated 143.1 million tons.
The transactions follow supply contracts
in which NewLead will need to source coal from other providers at prevailing market
prices if the properties purchased fail to bear fruit, it told investors in a
statement Thursday.
“Once we have acquired all of the
assets, our coal reserves will consist primarily of sub bituminous B coal, which
is 13,500 BTU with low sulphur,” added chief executive Michael Zolotas.
“We will also have 'Blue Gem' and 'Rich
Mountain' seams of coal, highly sought after in the international market. We
believe that our international shipping expertise will allow us to exploit the
demand for these coal reserves."
In addition, the company says it has
entered an agreement to acquire a mining management company, which will be
responsible for managing daily operations and excavation, in exchange for $3m
worth of common stock and $6.4m worth of warrants.
NewLead noted the mines in Tennessee and
Kentucky also include natural gas wells and projects related to the extraction
of timber, sand, gravel, fly ash and dimension stone, which are being tapped by
third parties that pay royalties.
NewLead is headquartered in Athens where
it oversees a fleet that includes two bulkers, the 76,000-dwt
NewLead Victoria (built 2002) and 71,200-dwt NewLead
Markela (built 1990), and a pair of products tankers, the 37,000-dwt Axelot
(ex-Hiotissa,
built 2004) and Laima (ex-Hiona,
built 2003).
While
the freshly minted coal contracts are unlikely to benefit the bulkers initially as both are
employed on time charters, a company spokesman tells TradeWinds that the
commodities business “is expected to help NewLead’s shipping business and vice
versa” in the future.
