SOURCE: Royal Energy Resources, Inc.

August 25, 2015 13:09 ET

Royal Energy Resources to Acquire Coal Assets in Northern Appalachia for $20 Million; Reserves Exceed 150 Million Tons

CHARLESTON, SC--(Marketwired - Aug 25, 2015) -  Royal Energy Resources, Inc. (OTCQB: ROYE) today announced that it has signed a Letter Agreement to acquire the assets and infrastructure of two permitted mines in Northern Appalachia, located on the Ohio River in Meigs County, Ohio and Mason County, West Virginia.

On July 21, 2015, the Company entered into a Letter Agreement with Middle Wilgat LLC and Coal Fields Transports, Inc., affiliates of The Cline Group (collectively, the "Seller"), for the purchase of all of the membership units of Gatling LLC, Gatling Ohio LLC, Meigs Point Dock LLC, Big River Mining LLC, Yellow Bush Mining LLC and Broad Run Dock LLC. Together these entities comprise the "Gatling Mining Complex" situate on an aggregate of 70,000 net acres adjacent to the Ohio River, within 75 miles of existing and operational coal-fired utilities, with an estimated 20 Million tons of cumulative coal burn per annum.

The Agreement provides for an aggregate purchase price of $20 Million, $18.5 Million in cash and $1.5 Million payable in the form of a 2% clean coal royalty. The Company has paid a $250,000 deposit and the entire transaction is scheduled to close on or before October 5, 2015.

The Gatling Mining Complex includes two permitted, room-and-pillar underground mines in both West Virginia and Ohio, a substantial quantity of mining equipment, an operational wash plant, conveyor systems, a coal loading facility on the Ohio River, and a dedicated beltline to the Mountaineer Power Plant of American Electric Power (NYSE: AEP). Based on an appraisal report by Weir International, Inc., the Ohio mine has proven and probable reserves of approximately 121 million tons of coal, and the West Virginia mine 64 million tons of coal, with a Fair Market Value as of March 26, 2014 of $75.35 Million. At peak production in 2009, the Gatling Mining Complex produced approximately 250,000 tons of clean coal monthly and employed approximately 200 miners. The underlying reserves and certain assets are owned by Natural Resource Partners, LP (NYSE: NRP), and are leased to certain of the Gatling entities on a per ton royalty basis. Accordingly, closing on the acquisition is subject to the Company and NRP entering into a modified lease agreement.

Subsequent to execution under the Letter Agreement, the Company has entered into active negotiations with Jet Fuel, LLC ("Jet"), a private, Kentucky-based mining company, to form a strategic partnership upon the acquisition of the Gatling Mining Complex. Principals of Jet have over 40 years of underground mining expertise; were previously under agreement to purchase the Gatling entities; and have a pending Coal Purchase Agreement with AEP's Mitchell Power Plant for 240,000 tons of coal through December 31, 2015. The parties have agreed to terms in substance and agreements are pending, subject to the approval of the Seller. The Company will provide additional information upon the successful completion of the underlying agreements. 

Ian Ganzer, the Company's Chief Operating Officer, commented, "We are extremely pleased to be participating in the acquisition of this premiere low-cost coal mining facility. The long and successful operating history of the principals of Jet, along with their industry-leading safety and environmental records, will add substantial value to the operations."

The Company is committed to continue to report its progress as its business and operations develop, via additional press releases; by visiting its website at www.royalenergy.us; and by searching "Royal Energy Resources" or using the following the social media links: Twitter: https://twitter.com/RoyalEnergyUS, Facebook: https://www.facebook.com/royalenergyresources?ref=aymt_homepage_panel, and Instagram: https://instagram.com/royalenergyresources/. The above release should be read in conjunction with past Press Releases, and submissions of the Company filed with the Securities and Exchange Commission, on Form 8-K or otherwise, and can be obtained online at www.sec.gov

This press release includes forward-looking statements as defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 relating to matters such as prospects, anticipated operating and financial performance. Actual prospects and performance may differ from anticipated results due to economic conditions and other risks, uncertainties and circumstances partly or totally outside the control of the Company. These and other risks are described in the Company's reports filed with the United States Securities and Exchange Commission. These forward-looking statements are made only as of the date of this communication and Royal Energy Resources, Inc. undertakes no obligation to update or revise these forward-looking statements.

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