Elk Horn is a coal leasing company based in eastern Kentucky, US with approximately 156,000 acres of owned mineral.
The estimated proven and probable reserves in the Southern Floyd area are approximately 40 million tons which includes several developed deep mines, a prep plant site, and a permitted refuse area.
The annual production is estimated to be 3.5 million to 4.0 million tons of coal per year by fourth quarter, 2011.
The Elk Horn coal is high quality, a portion is expected to meet the standards for pulverized coal injection, and the steam coal is generally high BTU with mid sulfur content.
Elk Horn had leased approximately 65 million tons of proven and probable coal reserves and approximately 55 million tons of non reserve coal deposits to third parties the last year and the lease rates are in the range of 6% to 9% of the coal sales revenue.
Elk Horn is expected to generate annualized run rate earnings before interest, taxes of $15m to $18m by late 2011or early 2012.
The acquisition will initially be funded from Rhino’s existing credit facility which will finance the acquisition with approximately 50% debt and 50% equity.
Rhino Resource Partners controls and operates steam and coal properties and other stable, cash generating non-coal natural resource assets whose current operations are in Central Appalachia, Northern Appalachia, the Illinois Basin and the Western Bituminous region.
