Nasdaq-listed NewLead says theagreements are expected to generate approximately $873.5m worth of revenue overthe next three years.
The first contract involves theacquisition of title and excavation rights to 5,000 acres of land in Kentuckythat are believed to contain some 18.6 million tons of coal reserves while thesecond is connected to 18,335 acres in Tennessee with mines holding anestimated 143.1 million tons.
The transactions follow supply contractsin which NewLead will need to source coal from other providers at prevailing marketprices if the properties purchased fail to bear fruit, it told investors in astatement Thursday.
“Once we have acquired all of theassets, our coal reserves will consist primarily of sub bituminous B coal, whichis 13,500 BTU with low sulphur,” added chief executive Michael Zolotas.
“We will also have 'Blue Gem' and 'RichMountain' seams of coal, highly sought after in the international market. Webelieve that our international shipping expertise will allow us to exploit thedemand for these coal reserves."
In addition, the company says it hasentered an agreement to acquire a mining management company, which will beresponsible for managing daily operations and excavation, in exchange for $3mworth of common stock and $6.4m worth of warrants.
NewLead noted the mines in Tennessee andKentucky also include natural gas wells and projects related to the extractionof timber, sand, gravel, fly ash and dimension stone, which are being tapped bythird parties that pay royalties.
NewLead is headquartered in Athens whereit oversees a fleet that includes two bulkers, the 76,000-dwtNewLead Victoria (built 2002) and 71,200-dwt NewLeadMarkela(built 1990), and a pair of products tankers, the 37,000-dwt Axelot(ex-Hiotissa,built 2004) and Laima (ex-Hiona,built 2003).
Whilethe freshly minted coal contracts are unlikely to benefit the bulkers initially as both areemployed on time charters, a company spokesman tells TradeWinds that thecommodities business “is expected to help NewLead’s shipping business and viceversa” in the future.
