Cloud Peak Energy Inc. unit Big Metal Coal Co. LLC will pay the Crow Tribe $1.8 million to exercise its option for a coal lease and to extend two other lease options covering approximately 1.4 billion tons of coal reserves in the Powder River Basin.
The Upper Youngs Creek, Squirrel Creek and Tanner Creek project areas are in southeastern Montana on the Crow Indian Reservation, near Cloud Peak's Spring Creek Mine and Youngs Creek project, the company said in a June 7 SEC filing.
Big Metal and the Crow Tribe entered into an agreement in January 2013 that granted Big Metal the exclusive right for the exploration and leasing of the three areas over an initial five-year term, which expires June 14. The deal has an option for two extension periods through 2035.
Exercise of the Upper Youngs Creek option and payment of the initial option payments for the Squirrel Creek and Tanner Creek project areas trigger commencement of the first option extension periods for Squirrel Creek and Tanner Creek through December 2025.
The Upper Youngs Creek coal lease will require approval from the U.S. Department of the Interior and related regulatory actions before it becomes effective.
