In acquiring Massey, Alpha Natural Resources (NYSE:ANR) took on the risk of taking responsibility for Massey’s legal battles. In a recent update, the company has agreed to pay $200 million as penalties and other liabilities to resolve several criminal and civil charges related to the Upper Big Branch accident.  Alpha Natural Resources engages in the production, purchase and sale/resale of Industrial and Metallurgical coal. The company competes with other coal producers like Peabody Energy (NYSE:BTU), Arch Coal (NYSE:ACI) and CONSOL Energy (NYSE:CNX).
We have a $33 price estimate for Alpha Natural’s stock, which is roughly 35% above the current market price.See Full Analysis for Alpha Natural Resources Here
From the day the merger was announced, various investors and analysts were skeptical about the expenses the company would have to bear related to the mine accident that killed 29 miners. The Mine Safety and Health Administration (MSHA) will release its report today, issuing close to 360 safety citations and the largest-ever fine on any mining company in U.S.
The bigger concern was Massey’s poor health and safety record in the past. However, the initial operations after the merger appear have calmed the nerves of a lot of investors as it has been a relatively stable period for Massey’s mining, with virtually no major accident being reported during the period.
It is essential that Alpha Natural puts Massey’s past behind it and instills its health and safety procedures across all the mines that were previously owned by Massey.Notes: