Contura Energy has signed a definitive agreement to merge with Alpha Natural Resources Holdings with the aim of creating a US-based metallurgical coal platform and cost-competitive thermal coal portfolio.

Contura is set to offer 0.4071 common shares to Alpha shareholders for each Alpha Class C-1 share or common share currently held as part of the deal.

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Alpha shareholders are expected to own approximately 46.5% of the combined entity following the completion of the merger.

The transaction is slated to offer an enhanced competitive positioning for both parties, as well as create cost synergies of around $30m-$50m per year.

"The transaction is slated to offer an enhanced competitive positioning for both parties, as well as create cost synergies of around $30m-$50m per year."

Contura Energy CEO Kevin Crutchfield said: “While this transaction would probably not have been possible even a year ago, resurgent global coal markets, a tightened production profile by way of recent asset divestments made independently by both Alpha and Contura, and resulting potential cost synergies together provide an exciting opportunity for value creation through combining our respective operational portfolios.

“The Contura team is excited to join forces with Alpha’s set of highly competitive coal operations and unify some of the best coal miners in the world under one organisation.”

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Contura was originally formed in July 2016 by a group of Alpha’s former first lien lenders.

The company’s establishment was marked by the acquisition of a number of coal assets from Alpha Natural Resources and occurred simultaneously with Alpha’s emergence from its Chapter 11 reorganisation process.

Contura’s portfolio is set to comprise metallurgical and thermal coal mines in Central Appalachia following the closure of the merger, as well as a longwall thermal coal mine in Northern Appalachia and a 65% ownership interest in the Dominion Terminal Associates (DTA) coal export facility in Newport News, Virginia.

The combined entity sold roughly 12.6 million tonnes (Mt) of metallurgical coal and 13.8Mt of thermal coal last year on a pro-forma basis.

The transaction is subject to shareholder approval and other customary conditions and is currently scheduled to be completed in the third quarter of this year.

Alpha has undertaken various steps to streamline its capital structure since its exit from bankruptcy.

In addition, the company sold certain idle operations through a series of targeted asset divestments.