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ASX-listed Allegiance Coal will acquire US-based family owned Black Warrior Minerals (BWM), which owns the BWM mine in Alabama, having completed a A$30-million capital raise.

Under the terms of the agreement, Allegiance would purchase the BWM mine for $4-million in cash and would replace the $5.3-million reclamation bond.

The purchase price will be fully funded by $6.21-million of Allegiance cash and a $3.18-million insurance bond, the company told shareholders.

To fund the acquisition, and to assist in transforming the BWM mine into a metallurgical coal producer for the seaborne market, Allegiance has raised A$30-million through a share placement to institutional and sophisticated investors.

The company will issue 44.77-million shares, at a price of 67c each under its existing placement capacity, along with 1.3-million broker options exercisable at 83c each on or before August 5, 2024.

The BWM nine produces around 220 000 t/y of coal operating just five ten-hour day shifts per week with a total workforce of around 60 employees. In April last year, the equipment fleet was independently valued at $5.9-million, fair market value. Other than a small equipment finance facility to CAT of around $200 000, all equipment is unencumbered.

Coal is currently mined and sold run-of-mine to the domestic power market, via the Alabama Power Cooperative, on an annual supply contract.
Allegiance on Friday told sharheolders that it would develop a life-of-mine mine plan for BWM mine including capital and operating costs, and washplant which amongst other things will allow Allegiance to release Joint Ore Reserves Committee compliant proven and probable reserves.

The company is hoping to trade the majority of existing equipment for larger excavators and haul trucks to significantly reduce the size of the fleet and increase the hourly capacity to remove more material, while also adding five night shifts to the five day shifts per week and spreading the existing workforce over the reduced fleet.

Furthermore, Alliance is aiming to build a washplant on site and wash both the Mary Lee and Blue Creek (MLBC) deposit coals at the same time. The BWM mine is permitted for a washplant but the mine permit will require a revision to include the location of the washplant onsite. The Newcastle deposit coal will be either sold as a thermal coal to the power market or washed, stock piled and added to the MLBC coal in small quantities, or both.
Allegiance will truck the washed MLBC coal to the Port of Birmingham (POB) 10 miles from the BWM mine, and blend it 50:50 with NPA at the POB as it is loaded into a barge on the Black Warrior River.