Item 1.01 Entry into a Material Definitive Agreement.
On January 4, 2017, the Company entered into a Coal Purchase and Sale Agreement with American Steel Industries, LLC (“ASI”), whereby the Company has agreed to sell approximately 500,000 metric tons of coal to ASI for a purchase price of approximately $180 per metric ton, to be adjusted based on changes to the price of coal from the signing of the agreement to the shipment date. The shipment dates are to occur from April 2017 through December 2017, with required shipment amounts varying between 40,000 metric tons and 60,000 metric tons per month. The agreement contained customary representations and warranties for the sale of coal, including shipping and quality requirements. ASI may reject any shipments that do not comply with required quality standards.
The Company intends to supply a portion of the coal from its joint venture property with MSG Mining Corp., with the remaining coal to be purchased from third party mines and delivered to a storage yard for subsequent delivery to an export terminal on the Caribbean coast. The Company will need to obtain financing in order to fill the orders and deliver the coal on the shipment dates.
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