Natural Resource to acquire coal reserves in Illinois
Natural Resource Partners has signed a definitive agreement to acquire approximately 200 mt of coal reserves related to the Deer Run mine in Illinois from Colt LLC, an affiliate of the Cline Group, through eight separate transactions for a total purchase price of $255M.
The Deer Run mine is located near Hillsboro in Montgomery and Bond Counties, Illinois and the coal reserves are leased to the mining company Hillsboro Energy, an affiliate of the Cline Group.
Construction of the new longwall mine has already commenced. Initial production is expected in 2010, and longwall production is expected to commence in 2011.
The acquisition will begin generating revenue for Natural Resource in the first quarter of 2010, and royalty income will grow substantially as production at the new mine comes online, it said.
It expects approximately $12M in revenues in 2010 from the Deer Run mine. Production from the mine is forecasted to be approximately 8-10 mtpa, from which NRP ultimately anticipates receiving in excess of $40M per year of income. Based upon these production levels, the life of the mine will exceed 20 years.
NRP expects the acquisition to be accretive to cash flow in 2010.
"We are excited about the opportunity to acquire additional coal reserves in the Illinois Basin as the Cline team develops this new mine," said Nick Carter, President and COO.
"When this mine is completed and in production, our Illinois Basin production is expected to be approximately 20 million tons per year, up from less than 3 million tons in 2006," said Carter.
"This is the third acquisition in the Illinois Basin resulting from our relationship with the Cline Group, announced in late 2006. There are several acquisitions anticipated over the next few years that will continue to build our production base in the Illinois Basin."
