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GILLETTE, Wyo.--(BUSINESS WIRE)--Cloud Peak Energy Inc. (NYSE:CLD), one of the largest U.S. coal producers, today announced that exploratory drilling is set to begin next week pursuant to the exploration agreement signed in early 2013 by the Crow Tribe of Indians and Big Metal Coal Co. LLC, a wholly-owned subsidiary of Cloud Peak Energy Inc.
The Big Metal option and exploration agreements were signed on January 24, 2013, and those agreements were approved by the Bureau of Indian Affairs (BIA) on June 14, 2013. The terms provide for exclusive options to lease and develop Northern Powder River Basin coal on the Crow Indian Reservation in southeast Montana, near Cloud Peak Energy’s Spring Creek Mine and Youngs Creek Mining Company, LLC and CX Ranch properties.
“Prior to any exercise of the options, one of the next steps in the Big Metal Project is exploration drilling to confirm coal quantity and quality,” said Todd Myers, Cloud Peak Energy’s Senior Vice President, Business Development. “Since signing our agreements in 2013, Cloud Peak Energy has been working with Tribal regulators, BIA, the federal Bureau of Land Management (BLM), Crow landowners and non-Crow landowners, to obtain approvals, permits, and land access agreements to begin exploratory drilling. These permits, approvals and agreements ensure protection for landowners, historic and cultural sites, wildlife and the land. We received the required BIA approval of the exploration plan in April 2014 and have been waiting for the summer weather to start our confirmatory drilling program. That time has finally arrived – with drilling planned to start next week – and we are pleased to mark the occasion with today’s joint ceremonies with the Tribe as a show of respect for the Tribe and the land and for a safe and successful program.”
Exploration drilling is designed to collect information on the in-place coal resource, including the thickness, depth, and consistency and quality of the coal seams. Data will be collected within the Big Metal project area by drilling 6-inch diameter holes from the surface through the coal seams. The approximately 100 holes planned to be drilled in the Big Metal project area will complete and build upon core hole samples collected by other mining companies in the past.
A geologist will be present during the drilling to log and describe the characteristics of the materials encountered as the drilling advances. In the Powder River Basin, coal exploration drill rigs are typically truck mounted with a mast that is laid down on the bed of the truck during transport between holes. Following completion of drilling at each location, the drill site is reclaimed following an approved reclamation plan. BLM, in coordination with BIA and the Crow Tribal Historic Preservation Office, will carry out pre-inspection, periodic- and post-inspection of each drill site as well as access routes to each drill site. During the pre-inspection cultural surveys for exploration, several archeological artifacts and sites have been identified. These sites have been avoided by relocating access roads and drill sites.
Cloud Peak Energy has to date paid a total of $5.25 million in option payments to the Tribe and will make additional annual payments during the remainder of the initial five-year option period that could bring total option payments during the initial period to $10 million. Upon any future exercise and required regulatory approval of a coal mineral lease or leases, and development of mining, Big Metal Coal Co. LLC will provide preferential hiring, training and promotion to qualified Crow Tribal members and Indians living on or near the Crow Indian Reservation and will make lease signing bonus, production tax, and royalty payments to the Tribe. Cloud Peak Energy has also been providing $75,000 per year for post-secondary education scholarships for eligible Tribal members.
Additional information on the exploration and option agreements was provided in a joint press release dated January 24, 2013, which can be found by clicking here or on the Cloud Peak Energy website, under Investor Relations.
About Cloud Peak Energy®
Cloud Peak Energy Inc. (NYSE:CLD) is headquartered in Wyoming and is one of the largest U.S. coal producers and the only pure-play Powder River Basin coal company. As one of the safest coal producers in the nation, Cloud Peak Energy mines low sulfur, subbituminous coal and provides logistics supply services. The company owns and operates three surface coal mines in the PRB, the lowest cost major coal producing region in the nation. The Antelope and Cordero Rojo mines are located in Wyoming, and the Spring Creek mine is located in Montana. In 2013, Cloud Peak Energy shipped 86.0 million tons from its three mines to customers located throughout the U.S. and around the world. Cloud Peak Energy also owns rights to substantial undeveloped coal and complimentary surface assets in the Northern PRB, further building the company’s long-term position to serve Asian export and domestic customers. With approximately 1,700 total employees, the company is widely recognized for its exemplary performance in its safety and environmental programs. Cloud Peak Energy is a sustainable fuel supplier for approximately 4 percent of the nation’s electricity.
Cautionary Note Regarding Forward Looking Statements
This release contains “forward-looking statements” within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are not statements of historical facts and often contain words such as “may,” “will,” “expect,” “believe,” “anticipate,” “plan,” “estimate,” “seek,” “could,” “should,” “intend,” “potential,” or words of similar meaning. Forward-looking statements are based on management's current expectations or beliefs as well as assumptions and estimates regarding our company, industry, economic conditions, government regulations, energy policies and other factors. Forward-looking statements may include, for example, (1) our current estimates of the quantity and quality of the Tribal coal, (2) any future exercise of the options and development, production and marketing of the coal, (3) the anticipated timing and ability to obtain additional required regulatory approvals, (4) business development and growth initiatives and strategies, (5) potential synergies of this transaction, (6) the potential development of the Youngs Creek Mine and (7) other statements regarding this transaction and our plans, strategies, prospects and expectations concerning our business, industry, economic conditions, operating results, financial condition and other matters that do not relate strictly to historical facts. These statements are subject to significant risks, uncertainties, and assumptions that are difficult to predict and could cause actual results to differ materially from those expressed or implied in the forward-looking statements, including the risks that (i) additional required regulatory approvals and permits are not obtained in a timely manner or at all, (ii) economic tons are substantially less than the currently estimated in-place tons, (iii) sufficient additional West Coast terminal capacity is not developed at all or in a timely manner or is not available to us on commercially reasonable terms, (iv) Asian export demand and domestic demand for PRB coal weakens, (v) future development and operating costs significantly exceed our expectations, or (vi) anticipated synergies of the transaction are not achieved. For a discussion of some of the additional factors that could adversely affect our future results or the anticipated benefits of this transaction, refer to the risk factors described from time to time in the reports and registration statements we file with the Securities and Exchange Commission (“SEC”), including those in Item 1A - Risk Factors in our most recent Form 10-K and any updates thereto in our Forms 10-Q and current reports on Forms 8-K. There may be other risks and uncertainties that are not currently known to us or that we currently believe are not material. We make forward-looking statements based on currently available information, and we assume no obligation to, and expressly disclaim any obligation to, update or revise publicly any forward-looking statements made in this release, whether as a result of new information, future events or otherwise, except as required by law.