Profile: Alliance Resource Partners LP (ARLP.O)

Alliance Resource Partners, L.P. (ARLP Partnership) is a diversified producer and marketer of coal primarily to major United States utilities and industrial users. ARLP Partnership operates 10 underground mining complexes in Illinois, Indiana, Kentucky, Maryland, and West Virginia, including the new Tunnel Ridge mine in West Virginia. The Company is constructing a new mine in southern Indiana, operate a coal loading terminal on the Ohio River at Mt. Vernon, Indiana and are purchasing and funding development of reserves, constructing surface facilities and making equity investments in White Oak’s new mining complex in southern Illinois. It also constructing a new mine in southern Indiana, operate a coal loading terminal on the Ohio River at Mt. Vernon, Indiana. Its mining activities are conducted in three geographic regions: Illinois Basin, Central Appalachian and Northern Appalachian regions.

As of December 31, 2011, ARLP Partnership had approximately 911.4 million tons of coal reserves in Illinois, Indiana, Kentucky, Maryland, Pennsylvania and West Virginia. Approximately 204.9 million tons of those reserves are leased to White Oak Resources LLC (White Oak). During the year ended December 31, 2011, the Company produced 30.8 million tons of coal and sold 31.9 million tons of coal, of which 8.1% was low-sulfur coal, 19.2% was medium-sulfur coal and 72.7% was high-sulfur coal. During 2011, it sold 90.6% of its total tons to electric utilities, of which 98.8% was sold to utility plants with installed pollution control devices. It also develops and markets additional services, which include ash and scrubber sludge removal, coal yard maintenance, and arranging alternate transportation services. In April 2012, its subsidiary, Alliance Coal, LLC, acquired all of the coal related assets of Green River Collieries, LLC located in Webster and Hopkins Counties, Kentucky.

Illinois Basin Operations

ARLP Partnership’s Illinois Basin mining operations are located in western Kentucky, southern Illinois and southern Indiana. As of February 1, 2012, it operated six mining complexes in the Illinois Basin. The Company’s subsidiary, Webster County Coal, LLC (Webster County Coal), operates Dotiki, which is an underground mining complex located near the city of Providence in Webster County, Kentucky. The Dotiki complex utilizes continuous mining units employing room-and-pillar mining techniques to produce high-sulfur coal. Coal from the Dotiki complex is shipped via the CSX Transportation, Inc. (CSX) and Paducah & Louisville Railway, Inc. (PAL) railroads and by truck on United States and state highways directly to customers or to various transloading facilities, including its Mt. Vernon Transfer Terminal, LLC (Mt. Vernon) transloading facility, for sale to customers capable of receiving barge deliveries.

The Company’s subsidiary, Warrior Coal, LLC (Warrior), operates an underground mining complex located near the city of Madisonville in Hopkins County, Kentucky. Warrior utilizes continuous mining units employing room-and-pillar mining techniques to produce high-sulfur coal. Warrior’s production can be shipped through the CSX and PAL railroads and by truck on United States and state highways directly to customers or to various transloading facilities, including its Mt. Vernon transloading facility, for sale to customers capable of receiving barge deliveries. During 2011, Warrior acquired the Richland No. 9 Mine (Richland), a one-unit mine located near the Warrior complex.

The Company’s subsidiary, White County Coal, LLC (White County Coal), operates Pattiki, an underground mining complex located near the city of Carmi in White County, Illinois. The Pattiki complex utilizes continuous mining units employing room-and-pillar mining techniques to produce high-sulfur coal. The preparation plant has throughput capacity of 1,000 tons of raw coal per hour. Coal from the Pattiki complex is shipped through the Evansville Western Railway, Inc. (EVW) railroad directly, or through connection with the CSX railroad, to customers or to various transloading facilities, including its Mt. Vernon transloading facility, for sale to customers capable of receiving barge deliveries.

The Hopkins complex is located near the city of Madisonville in Hopkins County, Kentucky. The Company’s subsidiary, Hopkins County Coal, LLC (Hopkins County Coal) operates the Elk Creek underground mine using continuous mining units employing room-and-pillar mining techniques to produce high-sulfur coal. Coal produced from the Elk Creek mine is processed and shipped through Hopkins County Coal’s preparation plant, which has throughput capacity of 1,200 tons of raw coal per hour. Elk Creek’s production can be shipped through the CSX and PAL railroads and by truck on United States and state highways directly to customers or to various transloading facilities, including its Mt. Vernon transloading facility, for sale to customers capable of receiving barge deliveries.

The Company’s subsidiary, Gibson County Coal, LLC (Gibson County Coal), operates the Gibson North mine and its subsidiary Gibson County Coal (South), LLC (Gibson South) is constructing the Gibson South mine. The Gibson North mine is, and the Gibson South mine will be, an underground mine. Both are located near the city of Princeton in Gibson County, Indiana. The Gibson North mine’s preparation plant has throughput capacity of 700 tons of raw coal per hour. Production from the Gibson North mine is either shipped by truck on United States and state highways or transported by rail on the CSX and Norfolk Southern Railway Company (NS) railroads directly to customers or to various transloading facilities, including its Mt. Vernon transloading facility, for sale to customers capable of receiving barge deliveries. The Company’s River View Coal, LLC (River View) is controlled coal reserves located in Union County, Kentucky, from ARH. It controls, through its subsidiaries, Alliance Resource Properties, LLC (Alliance Resource Properties) and ARP Sebree, LLC, undeveloped reserves in Webster County, Kentucky, which it refers to as the Sebree Reserves. It is in the process of permitting the Sebree property for future development by its subsidiary Sebree Mining, LLC (Sebree).

Central Appalachian Operations

ARLP Partnership’s Central Appalachian mining operations are located in eastern Kentucky. As of February 1, 2012, it operated two mining complexes in Central Appalachia. The Pontiki complex is located near the city of Inez in Martin County, Kentucky. The Company’s subsidiary, Pontiki Coal, LLC (Pontiki), owns the mining complex and controls the reserves, and its subsidiary, Excel Mining, LLC (Excel), conducts all mining operations. The underground operation utilizes continuous mining units employing room-and-pillar mining techniques to produce low-sulfur coal. The preparation plant has throughput capacity of 900 tons of raw coal per hour. Coal produced from the mine is shipped through the NS railroad directly to customers or to various transloading facilities on the Ohio River for sale to customers capable of receiving barge deliveries, or by truck through United States and state highways directly to customers or to various docks on the Big Sandy River for shipment to customers capable of receiving barge deliveries.

The MC Mining complex is located near the city of Pikeville in Pike County, Kentucky. The Company’s subsidiary, MC Mining, LLC (MC Mining), owns the mining complex and leases the reserves, and Excel conducts all mining operations. The underground operation utilizes continuous mining units employing room-and-pillar mining techniques to produce low-sulfur coal. The preparation plant has throughput capacity of 1,000 tons of raw coal per hour. Coal produced from the mine is shipped through the CSX railroad directly to customers or to various transloading facilities on the Ohio River for sale to customers capable of receiving barge deliveries, or by truck through United States and state highways directly to customers or to various docks on the Big Sandy River for shipment to customers capable of receiving barge deliveries.

Northern Appalachian Operations

ARLP Partnership’s Northern Appalachian mining operations are located in Maryland and West Virginia. As of February 1, 2012, it operated two mining complexes in Northern Appalachia. It also controls undeveloped reserves in West Virginia and Pennsylvania. The Company’s subsidiary, Mettiki Coal, LLC (Mettiki (MD)), operated an underground longwall mine located near the city of Oakland in Garrett County, Maryland. The Mettiki (MD) preparation plant has throughput capacity of 1,350 tons of raw coal per hour. A portion of the Mettiki Coal (WV), LLC's (Mettiki (WV)) production is transported to this preparation plant for processing and then trucked to a blending facility at the Virginia Electric and Power Company (VEPCO) Mt. Storm Power Station. The preparation plant also is served by the CSX railroad, which provides the opportunity to ship into the domestic and export metallurgical coal markets. The Mountain View mine produces medium-sulfur coal which is transported by truck either to the Mettiki (MD) preparation plant (which is served by the CSX railroad) or to the coal blending facility at the VEPCO Mt. Storm Power Station.

The Company’s subsidiary, Tunnel Ridge, LLC (Tunnel Ridge), controls, through a coal lease agreement with its special general partner, approximately 100.3 million tons of proven and probable high-sulfur coal in the Pittsburgh No. 8 coal seam in West Virginia and Pennsylvania. The Company’s subsidiary, Penn Ridge Coal, LLC (Penn Ridge), is party to a coal lease agreement with Allegheny Pittsburgh Coal Company (Allegheny), pursuant to which Penn Ridge leases Allegheny’s Buffalo coal reserve in Washington County, Pennsylvania, which is estimated to include approximately 56.7 million tons of proven and probable high-sulfur coal in the Pittsburgh No. 8 seam.

Other Operations

ARLP Partnership’s subsidiary, Mt. Vernon, leases land and operates a coal loading terminal on the Ohio River at Mt. Vernon, Indiana. Coal is delivered to Mt. Vernon by both rail and truck. The terminal has a capacity of 8.0 million tons per year with existing ground storage of approximately 60,000 to 70,000 tons. During 2011, the terminal loaded approximately 2.3 million tons for customers of Pattiki, Gibson and Elk Creek. The Company buys coal from non-affiliated producers principally throughout the eastern United States, which it then resells. During 2011, it sold approximately 539,000 tons classified as brokerage coal. In September 2011, it completed a series of transactions with White Oak related to the development of White Oak Mine No. 1, which will be an underground longwall mining operation producing high-sulfur coal from the Herrin No. 6 seam. The Company’s subsidiaries, Matrix Design Group, LLC and Alliance Design Group, LLC (collectively, Matrix Group), provide a range of mine products and services for its mining operations and to unrelated parties. Matrix Group’s products and services include design and installation of underground mine hoists for transporting employees and materials in and out of mines; design of systems for automating and controlling various aspects of industrial and mining environments; and design and sale of mine safety equipment, including its miner and equipment tracking and proximity detection systems.

The Company competes with Alpha Natural Resources, Inc., Arch Coal, Inc., CONSOL Energy, Inc., International Coal Group, Inc., James River Coal Company, Murray Energy, Inc., Patriot Coal Corporation, Foresight Energy LLC and Peabody Energy Corp.