The company said the tentative agreement was for exploration rights and exclusive operations to lease and develop the in-place northern PRB coal neighboring its Spring Creek operation as well as its newly acquired Youngs Creek and CX Ranch properties.

Upon the agreement’s approval, Cloud Peak will pay the tribe $US2.25 million and $1.5 million when the deal is approved by the US Department of the Interior.

Additionally, it will make additional annual payments during the initial option period with a cumulative total of up to $10 million.

Cloud Peak officials said it could make more option payments through any extension periods.

The Crow Tribal Legislature will review the plan in August and, if approved, it will go to the DOI for review.

Cloud Peak officials said it expected it would conduct exploration during the deal’s initial option period to complete delineation of the tonnage.

There are three separate deposits at the Crow Indian Reservation, each with their own exclusive options.

The trio of blocks carries an initial five-year term, with two extension periods through 2035 if conditions are met.

When Cloud Peak exercises the lease, it will pay the tribe 8-15c per ton, hinging upon the lease deposit and inflation adjustment.

The proposed agreement’s adjustable royalty rates range between 7.5% and 15% and standard coal production taxes to be paid to the tribe amount to 20% of free-on-board mine gross proceeds.

Cloud Peak will also provide preferential hiring, training and promotion at the leases for qualified Indians as well as $50,000 in annual funding for tribal member scholarships.

Finally, the producer will support Indian-certified contractors.

Cloud Peak president and chief executive Colin Marshall said if the deal became final, it would be a sizeable growth in its NPRB position.

“The location of the coal next to our Spring Creek mine and the recently acquired Youngs Creek project and CX Ranch lands will let us optimize our mine development,” he said.

“We are comfortable that the option structure and variable royalty rates will enhance the potential development of mining operations on the Crow Reservation.”

Crow Tribal executive branch chairman Cedric Black Eagle said the agreement offered the best potential for the development of its resources.

“Partnering with Cloud Peak Energy will help diversify the tribe’s long-term coal revenue, provide good jobs and potential access to export markets for Tribal coal and Cloud Peak Energy’s recent acquisition of the CX Ranch lands provides surface access for mining and shipping Crow coal through the existing Spring Creek mine train load-out facilities,” he said.

Cloud Peak is the nation’s only pure-play PRB coal operator.