Cloud Peak Energy Inc. (NYSE:CLD), one of the largest U.S. coal producers, and the Crow Tribe of Indians today announced that they have signed the option and exploration agreements covering an estimated 1.4 billion tons of in-place coal in the Northern Powder River Basin (NPRB). The agreements will now be submitted to the U.S. Department of the Interior for review with a request for approval within 180 days. Department of the Interior approval is required in order to consummate the transactions contemplated by the agreements. Cloud Peak Energy made a $2.25 million payment to the Crow Tribe at signing and, if approved by the Department of the Interior, will make an additional $1.5 million payment, followed by annual option payments over an initial five-year term. Total payments through the initial five-year option period could amount to $10 million. The option and exploration agreements provide for exploration and exclusive options to lease three separate coal deposits containing approximately 1.4 billion tons of Northern Powder River Basin (“NPRB”) coal on the Crow Indian Reservation in Montana over an initial five-year term, with two extension periods through 2035 if certain conditions are met. The three deposits are in the vicinity of Cloud Peak Energy’s Spring Creek mine and Youngs Creek project in Montana and Wyoming, respectively, and would potentially be developed as part of a larger mining complex with these properties. Subsequent to approval by the Department of Interior, if obtained, and subject to customary regulatory approvals, Cloud Peak Energy will conduct exploration activities to complete delineation of the potentially economic coal tonnages that are subject to the options. Upon exercise of an option(s) to lease, Cloud Peak Energy would pay the Tribe an amount equal to $0.08 per ton to $0.15 per ton, depending on the specific lease and coal deposit and subject to adjustment for inflation. The agreements also set forth adjustable royalty rates, ranging from 7.5% to 15%, and coal production taxes amounting to a nominal 20% of FOB mine gross proceeds payable to the Tribe. Cloud Peak Energy would provide preferential hiring, training, and promotion for qualified Indians for work on the Reservation, funding of Crow scholarships at an initial amount of $75,000 per year under the option agreement and $150,000 per year upon the exercise and approval of a lease(s), subject to adjustment for inflation, and support for Indian-certified contractors, among other things.