ERP Compliant Fuels, an affiliate of the Virginia Conservation Legacy Fund (VCLF) will acquire two mining complexes and mining permits in West Virginia from US-based Patriot Coal.
The company said that the transaction would be accomplished as per Patriot Coals' chapter 11 Bankruptcy plan and is subject to court approval of the sale in addition to other customary conditions.
At the time of sale, Patriot's mining operations and customer shipments will continue as usual.
The latest transaction will enable Patriot to complete the sale process and emerge from chapter 11.
Under the terms outlined in the agreement, VCLF/ERP will buy the Federal Mining Complex in northern West Virginia, the Corridor G Mining Complex in southern West Virginia as well as other mining permits.
VCLF/ERP, which is assuming liabilities of more than $400m, would assume or replace surety bonds supporting reclamation and related liabilities associated with the purchased assets.
Patriot Coal president and chief executive officer Bob Bennett said: "We are pleased to have reached this agreement to sell substantially all of Patriot's remaining assets and liabilities to VCLF, which enables us to take another important step forward in Patriot's chapter 11 process.
"In VCLF, we have found an experienced partner who will responsibly manage our remaining assets consistent with the highest environmental standards, and we believe this proposed transaction is in the best interest of Patriot and its stakeholders."
Upon completion of the two transactions, the company hopes that majority of its employees at its mining operations will be offered employment with Blackhawk or VCLF.
VCLF CEO Tom Clarke said: "Continued mining at Federal will allow us to launch our "compliant fuel" programme which bundles reforestation carbon credits with coal sales, effectively reducing carbon emissions, as required under the new emission standards.
"We expect to maintain employment in West Virginia at the current 683 employee level and expand employment through our investment of up to $176 million in land reclamation, reforestation and water quality improvement."