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September 26, 2011

Alliance Resource and White Oak sign agreement for US coal mine development

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.

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.

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