NRP acquires Illinois reserves

NATURAL Resource Partners (NRP) has finalised the first of three transactions to acquire coal reserves in the Illinois Basin.

Staff Reporter

Houston-based NRP paid Steelhead Development Company $US35 million for reserves of 47.5 million tons. The reserves are leased to Williamson Energy, an affiliate of Cline Resource & Development Company, along with Steelhead.

Steelhead Development, based in Beckley, West Virginia, obtained final mining permits and has started preparation work to develop a longwall mine near Johnson City, Illinois.

First production is anticipated to occur in 2006 during longwall development, and NRP has said it expects the acquisition to be accretive on a calendar year basis beginning in 2007 when longwall production commences.

“Assuming all three closings occur, once the mine is in full operation, production is anticipated to exceed 7 million tons per year generating royalty revenues of $US16-18 million,” NRP said.

The second closing is anticipated to occur in the first quarter of 2006 with the third to follow in mid-2006. The first transaction was funded with $US32 million through the NRP’s existing credit facility and $US3 million in cash.