SunCoke divests coal mining business

LISLE - SunCoke Energy has divested its coal mining business to Revelation Energy, LLC in a transaction that includes substantially all of SunCoke's remaining coal mining assets, mineral leases, real estate and mining reclamation costs.

Under the terms of the deal, Revelation Energy will receive approximately $10.3 million from SunCoke to take ownership of the assets and associated costs. As a result, Revelation Energy and SunCoke's Jewell Coke operations have entered into a coal supply agreement whereby Revelation will deliver approximately 300,000 tons to Jewell Coke annually for the next five years at a favorable delivered cost as compared to alternative coal sources, which is intended to provide a cost-effective, local supply of high-quality, mid-vol metallurgical coal. SunCoke also expects to incur approximately $2 million of transaction-related costs.

"Despite our aggressive efforts to reduce costs by rationalizing our mining footprint, the drastic and sustained decline in coal prices will likely prevent us from generating positive cash flow from our mining operations for the foreseeable future," said Fritz Henderson, chairman, president and CEO of SunCoke. "We believe this value-positive sale will improve our long-term cash flow and allow us to focus on our core cokemaking and coal logistics businesses."

The transaction is expected to be cash flow neutral to SunCoke by the end of 2017 based on avoided potential mine closure and reclamation costs of approximately $12 million. In addition, as compared to potentially closing its mines, SunmCoke expects to realize approximately $2 million to $3 million per year of lower administrative, regulatory, compliance and purchased coal costs through 2020, as well as reduce its mining-related liabilities and collateral requirements.