TORONTO (miningweekly.com) – Eastern US diversified fuel producer Consol Energy last week announced it had sold nonproducing western Canadian coal assets in the closing days of 2012 for $127-million in two separate transactions.

In the first transaction, Consol partnered with private merchant bank Forbes & Manhattan (F&M) for the sale of a portion of its metallurgical coal assets located in Alberta, Canada.

F&M created a new company, Ram River Coal, to buy the coal assets, and bought the Ram River and Scurry Ram coal properties on December 21, 2012, for $105-million, of which $102.5-million was payable to Consol.

Consol said the Ram River coal property has a coal resource of about 380-million tons in place and estimated washed coal product of about 75-million tons.

On the closure of the transaction, Ram River Coal paid $55-million in cash and under the terms of the asset purchase agreement shall make additional payments to Consol of $25.5-million by June 21, and $24.5-million by June 21, 2014.

Consol has the right to receive up to $20-million of the second or third cash payments in common shares of Ram River Coal.

At the same time as closing the acquisition, Ram River Coal closed an offering of common shares at a price of $1 a share for gross proceeds of $85-million. Ram River Coal used Delano Capital and Cormark Securities to act as agents in connection with the offering. Ram River Coal expects to close a second tranche of the offering for additional proceeds of $20-million by January 31.

In the second transaction, clinched on December 20, 2012, Consol agreed to sell its interest in other coal assets in Alberta for $24-million. Sydney-based Riversdale Resources bought the Grassy Mountain surface mine, where Consol’s share of the recoverable reserves was estimated at 30-million tons. The transaction is expected to close during the second quarter this year.

The $127-million in cash from these sales, when combined with the previous asset sales of $224-million, means that Consol sold assets worth more than $350-million during last year; however, none of the transactions generated revenue.

The company said it expects to sell additional noncore assets this year.

The Pittsburgh-based coal miner reported a 106.5% drop in income during the third quarter as a number of planned and unplanned mine idlings impacted on the company’s financial performance, which was expected to have a residual impact during the fourth quarter.