Alliance Resource Partners (ARP) has signed an agreement with White Oak Resources and related entities for the development of a longwall mining operation in Illinois, US.
ARP has made an initial investment of $69.5m in the mining operation, currently under construction.
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The company estimates its total investment in the project to be $400 to $525m over the next three to four years.
The deal also comprises leaseback of reserves and surface rights, a coal handling and services agreement, and a financing facility for equipment.
ARP will fund the development from its current finance facility and cash from its existing operations.
Mine No. 1 will provide access to approximately 200Mt from the Herrin No. 6 coal seam, including 6.0 to 6.5Mt of coal annually, once it starts production in 2014.
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