(Source: PRNewswire)HOUSTON, Sept. 10 /PRNewswire-FirstCall/ -- Natural Resource Partners L.P. (NYSE: NRP) announced today that it has signed a definitive agreement to acquire approximately 200 million tons of coal reserves related to the Deer Run mine in Illinois from Colt LLC, an affiliate of the Cline Group, through eight separate transactions for a total purchase price of $255 million. Upon closing of the first transaction, NRP paid $10.0 million, funded through its credit facility, and acquired approximately 3.3 million tons of reserves associated with the initial production from the mine. Future closings anticipated in 2010, 2011 and 2012 will be associated with the completion of certain milestones relating to the new mine's construction.

Acquisition Details

The Deer Run mine is located near Hillsboro in Montgomery and Bond Counties, Illinois and the coal reserves are leased to the mining company Hillsboro Energy, an affiliate of the Cline Group. Construction of the new longwall mine has already commenced. Initial production is expected in 2010, and longwall production is expected to commence in 2011.

The acquisition will begin generating revenue for NRP in the first quarter of 2010, and royalty income will grow substantially as production at the new mine comes online. NRP expects approximately $12 million in revenues in 2010 from the Deer Run mine. Production from the mine is forecasted to be approximately eight to ten million tons per year, from which NRP ultimately anticipates receiving in excess of $40 million per year of income. Based upon these production levels, the life of the mine will exceed 20 years. NRP expects the acquisition to be accretive to cash flow in 2010.

"We are excited about the opportunity to acquire additional coal reserves in the Illinois Basin as the Cline team develops this new mine," said Nick Carter, President and COO. "With this acquisition, NRP continues its diversification in the Illinois Basin. When this mine is completed and in production, our Illinois Basin production is expected to be approximately 20 million tons per year, up from less than 3 million tons in 2006," said Carter. "This is the third acquisition in the Illinois Basin resulting from our relationship with the Cline Group, announced in late 2006. There are several acquisitions anticipated over the next few years that will continue to build our production base in the Illinois Basin."

Partial Forgiveness of Distributions by General Partner and Holders of Incentive Distribution Rights

In conjunction with the closing of the first transaction, the holders of the incentive distribution rights (IDRs) have elected to forgo the distribution associated with the highest splits for the next two quarters.