Of the entire amount, $195m is allocated to the lease of about 450 million tons of in-place coal and $105m towards the purchase and lease of 38,800 acres of land, which are considered to support potential increased exports through the Pacific Northwest.
The land comprises Youngs Creek surface to the south and extends to the border with Cloud Peak Energy’s Spring Creek mine to the north.
Youngs Creek is an undeveloped, though permitted, surface mine project in the Northern Powder River Basin, located 13 miles north of Sheridan, Wyoming, adjacent to the Wyoming-Montana border.
Cloud Peak Energy president and chief executive officer Colin Marshall said the coal and surface assets acquired position the company well for future growth in Asian exports as additional terminal capacity becomes available.
"The location of the coal and surface lands close to the Spring Creek mine and its rail spur should reduce development costs and allow future operating synergies to be realized," he added.
"The quality of the coal is similar to that of our Spring Creek mine and offers lower sodium levels to further meet the needs of our customers."
Of the in-place coal quantities, the undeveloped Youngs Creek mine permits cover 291 million recoverable tons of low sulfur, high Btu subbituminous coal in which Consol and Chevron will retain a royalty rate of 8.0% on 267 million tons of permitted fee coal.
Cloud Peak Energy said any future development plans will depend on the availability of additional export terminal capacity on the West Coast and continued strong Asian demand for thermal coal.
