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.

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.