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Arch will gain access to all of GNP's coal resources in the Otter Creek Tracts in the state’s southeast, covering 9600 acres.
As part of the deal, GNP will receive a front-end bonus of US10c per ton, or $73.1 million, payable in equal annual instalments over five years.
"The lease of GNP's Otter Creek reserves provides an attractive future growth opportunity for Arch to build a significant position in the Northern Powder River Basin coal region," Arch chief executive Steven Leer said.
"We believe future development of these Montana coal reserves will help competitively serve the northern US power generation market, provide Arch with an additional supply source to export into the fast-growing Pacific Rim coal market, or possibly house the site of a future coal-conversion facility.
“Investing in these low-ratio reserves now will give us a future cost advantage in the domestic and international energy markets."
The low-ratio, sub-bituminous coal reserves, which are low in sulfur dioxide content, are located in the Ashland coalfield southeast of Billings.
The reserves would support the future development of a large-scale, dragline-operated surface coal mine.
Today’s deal comes on the eve of the state of Montana potentially putting its interests in the Otter Creek coal reserves up for lease.
State ownership comprises about half of the Otter Creek area – with GNP and Montana owning their respective interests in a checkerboard pattern.
