Westmoreland buys San Juan Mine in New Mexico from BHP Billiton

2 February 2016 (Last Updated February 2nd, 2016 18:30)

US-based Westmoreland San Juan (WSJ) has completed the $127m acquisition of the San Juan Mine in Farmington, New Mexico, from BHP Billiton.

US-based Westmoreland San Juan (WSJ) has completed the $127m acquisition of the San Juan Mine in Farmington, New Mexico, from BHP Billiton.

The San Juan Mine is adjacent to the San Juan Generating Station (SJGS).

Initially announced in May 2015, the acquisition will expand Westmoreland's suite of mouth mining operations, in addition to offering additional coal resources of 148 million tonnes.

"The addition of the San Juan Mine further enhances our mine mouth business model, which has been fundamental in providing strong cash generation."

Westmoreland also signed an agreement for the owners of SJGS to purchase 100% of its coal from the San Juan Mine.

Under the new agreement, Westmoreland will take over operations this month.

The coal supply agreement will expire in 2022, but the owners of SJGS have an option to extend the agreement beyond 2022.

Westmoreland CEO Kevin Paprzycki said: "The addition of the San Juan Mine further enhances our mine mouth business model, which has been fundamental in providing strong cash generation.

"We look forward to building upon the solid partnership with the SJGS team in the years to come."

WSJ secured a $125m loan from a subsidiary of PNM Resources in order to fund a portion of the transaction.

The completion of this sale process will allow coal to be supplied to the SJGS beyond 2017.