Under the agreement, Sedgman will design and build the facilities and NRP will acquire the facilities from Sedgman and lease them back.

 

Sedgman will operate the facilities under contract with mining companies and NRP will receive a throughput fee for each ton of coal handled by the facilities based upon a percentage of the gross selling price with a designated minimum per ton.

 

In addition to the minimum per ton, NRP will receive monthly recoupable minimums on the plants analogous to its royalty arrangement for coal reserves.

 

NRP has already entered into a design and build agreement with Sedgman on the first operations – the Coal Mountain preparation plant, handling facility and rail load-out facility located near Baileysville, West Virginia.

 

The preparation plant is still under construction, but the coal handling and rail load-out facility has been completed and is currently processing coal.

 

NRP expects that approximately 35 million tons of coal will be processed through the $US16.1 million facility during its life.

 

The coal being processed through these facilities is mined by Bluestone Coal, a subsidiary of James C Justice Industries.

 

NRP said it anticipated about $3 million in annual revenues starting in 2007 when the plant will operate for the full year. NRP expects the transaction to be immediately accretive.

 

"We are extremely excited to enter into these agreements with one of the largest coal preparation plant/material handling companies in the world as they expand their business to provide preparation plant operations to the mining industry in the United States,” NRP chief Nick Carter said.

 

“We believe the memorandum of understanding will lead to a number of opportunities, each of which will provide more diversity, and therefore more stability, to our cash flow.”

 

Sedgman USA, headquartered in Pittsburgh, Pennsylvania, is one of the largest international engineering and construction companies specialising in coal preparation and material handling.

 

Sedgman supplies total engineering, construction, project management and contract operations services to the coal, minerals and electric industries worldwide. In addition to Pittsburgh, Sedgman also has offices in China and Russia.

 

Master limited partnership Natural Resource Partners, headquartered in Houston, Texas, owns and manages coal properties in the Appalachian region, Illinois Basin and Powder River Basin.