The Big Metal option and exploration agreements were signed on January 24, 2013, and those agreements were approved by the Bureau of Indian Affairs (BIA) on June 14, 2013. The terms provide for exclusive options to lease and develop Northern Powder River Basin coal on the Crow Indian Reservation in southeast Montana, near Cloud Peak Energy’s Spring Creek Mine and Youngs Creek Mining Company, LLC and CX Ranch properties.
"Prior to any exercise of the options, one of the next steps in the Big Metal Project is exploration drilling to confirm coal quantity and quality," said Todd Myers, Cloud Peak Energy’s Senior Vice President, Business Development. "Since signing our agreements in 2013, Cloud Peak Energy has been working with Tribal regulators, BIA, the federal Bureau of Land Management (BLM), Crow landowners and non-Crow landowners, to obtain approvals, permits, and land access agreements to begin exploratory drilling. These permits, approvals and agreements ensure protection for landowners, historic and cultural sites, wildlife and the land. We received the required BIA approval of the exploration plan in April 2014 and have been waiting for the summer weather to start our confirmatory drilling program. That time has finally arrived – with drilling planned to start next week – and we are pleased to mark the occasion with today’s joint ceremonies with the Tribe as a show of respect for the Tribe and the land and for a safe and successful program."
Exploration drilling is designed to collect information on the in-place coal resource, including the thickness, depth, and consistency and quality of the coal seams. Data will be collected within the Big Metal project area by drilling 6-inch diameter holes from the surface through the coal seams. The approximately 100 holes planned to be drilled in the Big Metal project area will complete and build upon core hole samples collected by other mining companies in the past.
A geologist will be present during the drilling to log and describe the characteristics of the materials encountered as the drilling advances. In the Powder River Basin, coal exploration drill rigs are typically truck mounted with a mast that is laid down on the bed of the truck during transport between holes. Following completion of drilling at each location, the drill site is reclaimed following an approved reclamation plan. BLM, in coordination with BIA and the Crow Tribal Historic Preservation Office, will carry out pre-inspection, periodic- and post-inspection of each drill site as well as access routes to each drill site. During the pre-inspection cultural surveys for exploration, several archeological artifacts and sites have been identified. These sites have been avoided by relocating access roads and drill sites.
Cloud Peak Energy has to date paid a total of $5.25 million in option payments to the Tribe and will make additional annual payments during the remainder of the initial five-year option period that could bring total option payments during the initial period to $10 million. Upon any future exercise and required regulatory approval of a coal mineral lease or leases, and development of mining, Big Metal Coal Co. LLC will provide preferential hiring, training and promotion to qualified Crow Tribal members and Indians living on or near the Crow Indian Reservation and will make lease signing bonus, production tax, and royalty payments to the Tribe. Cloud Peak Energy has also been providing $75,000 per year for post-secondary education scholarships for eligible Tribal members.
