On January 13, Natural Resource Partners L.P., a Houston, US-based producer of metallurgical coal among other mineral resources, has announced that it has completed the fourth acquisition of coal reserves at the Deer Run mine in Illinois for $70 million from Colt LLC, an affiliate of Illinois-based Cline Group, which operates coal assets in Illinois and Northern Appalachian coal basins.
According to a Natural Resource Partners release, the acquisition was funded through the coal producer's credit facility. Natural Resource Partners has paid $175 million of the $255 million slated for the acquisition of approximately 200 million mt of coal reserves. Future closings will be associated with the completion of certain milestones relating to the new mine's construction. The coal producer anticipates completing additional acquisitions totaling $65 million in 2011 and $15 million in 2012.
New coal mine to be built by 2012
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 coal mine is well underway with longwall production expected to commence in early 2012.
Production from the coal mine is forecasted to be approximately eight to ten million mt per year when the longwall is in full production, from which Natural Resource Partners ultimately anticipates receiving in excess of $40 million per year of income. Based upon these production levels, the life of the coal mine will exceed 20 years.