indenture of lease

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Exhibit 10.19

STATE OF MONTANA

COAL LEASE RENEWAL

Lease No. C-1088-05

        This indenture of lease, made and entered into between the State of Montana, by and through its lawfully qualified and acting State Board of Land Commissioners, hereinafter referred to as "Lessor", and the person, company or corporation herein named, hereinafter referred to as "Lessee", under and pursuant to the authority granted Lessor by the terms and provisions of Section 77-3-301, et seq ., MCA, all acts amendatory thereof and supplementary thereto, and all rules adopted pursuant thereto, is for the purpose of renewing State of Montana Coal Lease No. C-1088-95.

WITNESSETH:

        The Lessor, in consideration of the rents and royalties to be paid and the conditions to be observed as hereinafter set forth does hereby grant and lease to the Lessee, for the purpose of mining and disposing of coal and constructing all such works, buildings, plants, structures and appliances as may be necessary and convenient to produce, save, care for, dispose of and remove said coal, all the lands herein described as follows:

        TO HAVE AND TO HOLD the said premises for a term often (10) years, together with the right, provided Lessee has complied with all of the terms and conditions hereof, to lease said land for additional, successive ten-year terms. If Lessee shall elect to extend this Lease, Lessee shall so notify Lessor in writing at least ninety (90) days prior to the expiration of this renewal term, or any subsequent renewal term, as the case may be. Lessor expressly reserves the right to reasonably readjust and fix royalties and rentals payable hereunder and other terms and conditions of this Lease in the event Lessee exercises its right to renew. Unless Lessee files objections to the proposed terms or a relinquishment of the Lease within thirty (30) days after receipt of the notice of proposed terms for the ensuing renewal, Lessee shall be deemed to have agreed to such terms.

        IT IS MUTUALLY UNDERSTOOD, AGREED AND COVENANTED BY AND BETWEEN THE PARTIES TO THIS LEASE AS FOLLOWS:

        1.     RIGHTS RESERVED.     Lessor expressly reserves the right to sell, lease, or otherwise dispose of any interest or estate in the lands hereby leased, except the interest conveyed by this Lease; provided, however, that Lessor hereby agrees that subsequent sales, leases or other dispositions of any interest or estate in the lands hereby leased shall be subject to the terms of this Lease and shall not interfere with the Lessee's possession or rights hereunder.

        2.     BOND.     Lessee shall immediately upon the execution of this Lease furnish a surety bond acceptable to the Lessor in the amount of $2,000.00 conditioned upon compliance with the provisions

of this Lease, or, at the option of the Lessor, a cash deposit in the amount of $2,000.00, or an irrevocable letter of credit in a form approved by Lessor drawn upon an approved bank in the same amount. All rentals, royalties and interest must be paid and all disturbance must be reclaimed to the satisfaction of Lessor prior to release of any bond. Additional bonding may be required, or reduced bonding allowed, whenever Lessor determines it is necessary, or sufficient, to ensure compliance with this Lease.

        3.     RENTAL.     Lessee shall pay Lessor annually, in advance, for each acre or fraction thereof covered by this Lease, beginning with the date this Lease takes effect, $3.00/acre as rental.

        4.     ROYALTY.     Lessee shall pay Lessor in money or in kind at Lessor's option a royalty on every short ton (2,000 pounds) of coal mined and produced during the term of this Lease, calculated upon the f.o.b. mine price of the coal prepared for shipment, including production-based taxes, unless modified as provided below. Lessee shall pay a royalty of 12.5% for coal removed by strip or surface mining methods including auger mining and a royalty of 10% for coal removed by underground mining methods. The surface mining royalty rate under this Lease is equivalent to the current federal surface mining royalty rate and shall likewise be adjusted to remain equivalent to such federal rate, including its method of calculation and treatment of production based taxes, except as provided below. Should the effective federal surface mining royalty rate be lowered during the term of this Lease, the lower federal surface mining royalty rate shall be immediately incorporated into this Lease unless, within 90 days from the date of the federal royalty rate change, the State Board of Land Commissioners makes an affirmative finding that the lower rate will not achieve the full fair market value of the coal being produced. Subsequently, the State Board of Land Commissioners shall reasonably determine and fix the royalty rate to reflect full fair market value of the coal f.o.b. the mine site, prepared for shipment. Should the effective federal surface mining royalty rate be raised during the term of this Lease, the higher federal surface mining royalty rate shall be immediately incorporated into this Lease, unless Lessee, within 90 days from the date of the federal royalty rate change, files an objection with the State Board of Land Commissioners. Subsequently, the Board shall reasonably determine and fix the royalty rate to reflect full fair market value of the coal f.o.b. the mine site, prepared for shipment. Any re-adjustment of the royalty rate by the State Board of Land Commissioners, after notice and an opportunity to address the Board, may not result in an effective rate lower than required by state statute. Royalty payments and reports are due on or before the last day of the month for coal produced in the preceding calendar month and shall be reported on such forms as the Department may prescribe.

        5.     DILIGENCE.     Failure to commence actual mining operations by the end of this Lease renewal term shall be deemed non-compliance with the diligence requiremen