EXPLORATION AND OPTION TO LEASE AGREEMENT

Exhibit 10.17

Confidential materials omitted and filed separately with the SEC. Asterisks denote omissions.

EXPLORATION AND OPTION TO LEASE AGREEMENT

This EXPLORATION AND OPTION TO LEASE AGREEMENT (hereinafter “Exploration Agreement”), made and entered on this 13 ^th of February, 2004, between the CROW TRIBE OF INDIANS, Crow Agency, Montana 59022, (hereinafter “Crow Tribe”), and WESTMORELAND RESOURCES, INC., a corporation organized under the laws of the State of Delaware, with its principal place of business at P.O. Box 449, Hardin, Big Horn County, Montana (hereinafter “Westmoreland”).

RECITALS

Confidential materials omitted and filed separately with the SEC. Asterisks denote omissions.

THEREFORE, based on the foregoing, and for good and valuable consideration, the parties represent, covenant, state, and agree as follows:

SECTION 1 DEFINITIONS

1.1 Allotted Land: All allotted trust land, as well as all allotted fee land, owned by individual Crow Indians whether or not subject to federal restraints on alienation.

1.2 Regional Director: The Regional Director of the Bureau of Indian Affairs, Rocky Mountain Regional Office, Billings, Montana, or any of that individual’s successors.

1.3 Carrier: Trucks, railroads, conveyor belts, pipelines, or any instrumentality or machinery used to deliver Coal after sale.

1.4 Coal: Any combustible carbonaceous rock, whether classified as anthracite, bituminous, subbituminous, or lignite, as defined by ASTM Standard D-388-77, along with all substances mixed with Coal.

1.5 Coal Delivery or Delivered Coal: Coal loaded into a Carrier at the load out facility operated by Westmoreland on the Tract III Lease for movement to another location for commercial use.

1.6 Coal Lease: The document attached hereto as Exhibit A, which was executed concurrently with execution of this Exploration Agreement, by the Crow Tribe and Westmoreland.

1.7 Crow Indian: An individual who is properly enrolled as a member of the Crow Tribe.

1.8 Crow Reservation: All lands lying within the exterior boundaries of the Crow Indian Reservation in the state of Montana. For the purposes of this Exploration Agreement, the “Crow Reservation” is further divided into: (i) Allotted Land; (ii) Tribal Land; and (iii) Fee Land, as those terms are defined herein.

1.9 Exercise Date: The date on which Westmoreland exercises its option to lease pursuant to Section 3.2.

1.10 Exploration Agreement: This document and the exhibits and attachments hereto.

1.11 Exploration Rights: The exclusive right to enter in and upon the Prospect Area or Mining Area for the purpose of conducting drilling, exploration, environmental testing, monitoring, data gathering, and other incidental rights relating thereto, including the right to remove and test samples of Coal. These Exploration Rights shall be limited in scope and only pertain to Coal exploration.

Confidential materials omitted and filed separately with the SEC. Asterisks denote omissions.

1.12 Facilities Area: The area within the Tract III Lease that will be utilized and is necessary for the production of Coal under this Exploration Agreement, including, but not limited to, haul roads, access roads, buildings, water drainage courses, dams, ponds, water wells and storage facilities, Coal processing facilities, railroads, sidetracks, switches, storage facilities, conveyors, and other structures and improvements.

1.13 Fee Land: Any land except Tribal Land and/or Allotted Land.

1.14 Mining Activities: All functions and activities, whether performed on or off the Crow Reservation, required to prepare for and conduct the mining, preparation, transportation, and marketing of Coal, by any method, from the Mining Area covered by this Exploration Agreement; including, but not limited to:

1.15 Mining Area: The tract of the South Extension Area selected and identified pursuant to Section 8 of this Exploration Agreement.

1.16 Mining Permits: All permits, plans, licenses, and approvals required by the Surface Mining Control and Reclamation Act of 1977; the Clean Air Act of 1990; the Federal Water Pollution Control Act, as amended; and all other applicable governmental permits, plans, approvals, and licenses required in order to conduct Mining Activities as contemplated by this Exploration Agreement.

1.17 Operating Subsidiary: A wholly owned subsidiary of Westmoreland to which Westmoreland may sublease or assign all or a portion of the lands leased pursuant to this Exploration Agreement and the Mining Area.

Confidential materials omitted and filed separately with the SEC. Asterisks denote omissions.

1.18 Prospect Area: The area of land identified on the map or maps attached hereto as Exhibit B.

1.19 Secretary of Interior or Secretary: The Secretary of Interior of the United States or his duly authorized representative.

1.20 South Extension : An area of land on the Crow Reservation south of the existing Tract III Lease, shown on Exhibit “B.”

1.21 Superintendent: The Superintendent of the Bureau of Indian Affairs at Crow Agency, Montana.

1.22 Ton: A measure of weight of 2000 pounds avoirdupois.

1.23 Tract III Lease: The existing Coal Mining Lease (United States Department of the Interior Bureau of Indian Affairs, Contract No. 1420-0252-4088, Tract 3, Sale 3), together with all amendments and exhibits thereto, entered into between the Crow Tribe and Westmoreland.

1.24 Tribal Attorney: An attorney retained by the Crow Tribe to represent and act as the legal representative for the Crow Tribe with regard to this Exploration Agreement.

1.25 Tribal Land: All land, whether now owned or hereafter acquired, held in trust by the United States of America for the Crow Tribe, as well as all Fee Land owned by the Crow Tribe, including Fee Land subject to federal restrictions on alienation.

1.26 Tribal Coal: All Coal, any interest in which is owned by the Crow Tribe, whether held in fee or in trust by the United States for the benefit of the Crow Tribe, or in fee subject to a restriction on alienation.

1.27 Trust Land: All land held in trust by the United States of America for individual Crow Indians or for the Crow Tribe.

SECTION 2 EXPLORATION LICENSE

2.1 Grant. The Crow Tribe grants to Westmoreland, for a term commencing on the date of approval of this Exploration Agreement by both parties and ending on April 1, 2005 (unless extended pursuant to Section 5.4), Exploration Rights in and on the Prospect Area for all Tribal Land and Tribal Coal located within the Prospect Area. Approval by the Crow Tribe shall be given by signature of the Chairman and approval as provided in Section 5.1. Approval by Westmoreland shall be upon approval by its Board and execution of this Agreement by its executive.

Confidential materials omitted and filed separately with the SEC. Asterisks denote omissions.

2.2 Exploration Rights. Westmoreland, as licensee, shall have the right to exercise all Exploration Rights, including the right to drill, prospect, explore, test, develop, and work at its own discretion and at its own expense, on all or any part of the Prospect Area on the condition all work and all improvements made by Westmoreland on the Prospect Area, or any part of the Crow Reservation, under the terms of this Exploration Agreement and during the period of this Exploration Agreement, shall be done in a miner-like and proper manner, so that the Prospect Area shall be carefully operated and the minerals contained in the Prospect Area may be sampled and evaluated in an economical and environmentally responsible manner.

Installations made by Westmoreland in connection with roads may be removed by Westmoreland.

2.3 Licensing and Permits. Prior to exercising the exploration rights set forth in this Exploration Agreement, Westmoreland shall obtain all necessary licenses and permits from the federal government. The parties recognize that time is of the essence in Westmoreland’s ability to conduct exploration within the Prospect Area, and it is contemplated that Westmoreland will be able to obtain a federal approval of a prospecting permit for the limited purpose of conducting those exploration activities immediately after the Crow Tribe’s approval of this Agreement, and prior to federal approval pursuant to the requirements of the IMDA. The Crow Tribe shall cooperate fully with Westmoreland in Westmoreland’s attempt to obtain all requisite licenses and permits, and the Crow Tribe shall impose no charges for same.

Confidential materials omitted and filed separately with the SEC. Asterisks denote omissions.

2.4 Exploration Results. Upon exercise of its option to lease as provided for in Section 3 of this Exploration Agreement, or if Westmoreland elects not to lease, Westmoreland shall provide one copy each to the Crow Tribe, MMS, and the Regional Director of logs, tests, and other raw data obtained through the exploration efforts of Westmoreland on the Prospect Area, which the Crow Tribe, MMS, and the Regional Director agree to keep strictly confidential. If Westmoreland elects not to lease, all data developed hereunder shall be provided to the Crow Tribe as additional consideration for the right of first refusal provided in Section 3.3. Westmoreland shall not provide or disclose the data to any other party. The data provided to the Tribe may be used without restriction by the Tribe and its consultants for planning a Tribally-owned mine or provided by the Tribe to other potential lessors, developers, operators, or partners at the Tribe’s sole discretion.

2.5 Reservation of Right to Grant Additional Exploration Licenses. The Crow Tribe retains the right to grant exploration rights for minerals other than Coal, on the Prospect Area designated by Westmoreland, but the parties agree any exploration rights so granted shall not interfere with the exploration rights of Westmoreland. Any exploration rights granted to parties other than Westmoreland covering the Prospect Area shall provide that activities conducted pursuant to such rights are subordinate to the exploration rights of Westmoreland and thus shall not interfere with Westmoreland’s exploration rights and shall further provide any selection of a mining (including drilling for hydrocarbons) area by such third parties shall be made only after Westmoreland has selected its Mining Area in accordance with Section 8 of this Exploration Agreement, and after selection, Westmoreland shall have the exclusive use of said Mining Area. To the extent practicable, Westmoreland shall conduct its exploration activities so as not to diminish the quantity or value of the Tribe’s Coal or coal bed methane resources in seams that Westmoreland does not intend to mine under this Agreement.

SECTION 3 OPTION TO LEASE

3.1 Exclusive Option to Lease. Westmoreland shall have the exclusive option to lease the Crow Tribe’s Coal in the Prospect Area. Said option shall be exercised, if at all, upon completion of Westmoreland’s exploration and reserve analysis in the Prospect Area or no later than April 1, 2005, unless Westmoreland elects the extension provided in provision 5.4 of this Exploration Agreement.

3.2 Exercise of Option. If Westmoreland elects to exercise the option granted and receive a Coal Lease to the Mining Area, it shall notify the Crow Tribe in a manner in accordance with provision 25.3 of this Exploration Agreement. On giving such notice, Westmoreland shall be entitled to receive, in accordance with and subject to the terms of this Exploration Agreement, a lease in the form of the Coal Lease attached hereto as Exhibit A. The Crow Tribe shall, on the receipt of the notice of Westmoreland’s intention to exercise its option, deliver the fully executed lease to Westmoreland.

Confidential materials omitted and filed separately with the SEC. Asterisks denote omissions.

3.3 Conversion of Option into Right of First Refusal. The option to demand and receive a Coal Lease, if not exercised, shall convert into a right of first refusal for as long as Westmoreland operates the Absaloka Mine. If the Crow Tribe receives an offer to lease Coal in the Prospect Area from any party other than Westmoreland during the right of first refusal period, it must present to Westmoreland an offer to lease said Coal on the same terms as said offer, and Westmoreland shall have sixty (60) days within which to accept or reject.

This right of first refusal shall not apply if, after Westmoreland fails to exercise its option, the Crow Tribe decides to develop the Coal in the Prospect Area itself, or through any entity or joint venture of which the Crow Tribes owns not less than one-half (i.e., a Tribally-owned mine); provided, however, that Westmoreland will be given the opportunity to bid on any general contract for operating a Tribally-owned mine in the Prospect Area.

The Crow Tribe must inform any offeror no later than five (5) days after receiving any offer of Westmoreland’s right of first refusal.

3.4 Machinery and Equipment. No equipment, tools, machinery, improvements, or personal property of any nature or description brought or placed in the property prior to the exercise of this option by Westmoreland for use in the work shall become a fixture.

All the equipment, structures, improvements, and other property shall remain the property of Westmoreland, subject to removal by Westmoreland. If Westmoreland does not exercise this option, it shall be entitled to remove all equipment, tools, machinery, structures, improvements, and personal property from the property within ninety (90) days after the expiration of this option.

3.5 Title of Owner. The Crow Tribe represents that it is the lawful owner of all minerals located in the Mining Area, as specifically described herein, and such Tribal Land as is located in the Mining Area. The Crow Tribe further represents the minerals covered by this Exploration Agreement are each free from all liens and encumbrances of every nature and description.

During the period of this option, the Crow Tribe shall protect all of its property in the Mining Area from any and all liens except those arising from the acts of Westmoreland on the Mining Area.

The Crow Tribe shall not encumber any of its property in the Mining Area or any part of it and shall furnish to Westmoreland satisfactory evidence of good title to same not less than ninety (90) days after any written request from Westmoreland to do so.

Nothing herein shall be construed as prohibiting the Tribe from pledging or assigning payments due the Tribe under this Agreement, including lump sum payments, royalties, and taxes.

3.6 Unavoidable Delays. Any time lost by Westmoreland in the event of Force Majeure, as that term is defined in Section 11 of this Exploration Agreement, shall not run against the time specified in this Exploration Agreement for exercise of this option.

Confidential materials omitted and filed separately with the SEC. Asterisks denote omissions.

SECTION 4 SETTLEMENT WITH MMS

As additional consideration for this Exploration Agreement, the parties agree to settle the matters recited in the Settlement Agreement attached hereto as Exhibit C by executing same and carrying out its terms.

Except for the Exploration License granted in Section 2, the Crow Tribe’s performance of this Exploration and Option to Lease Agreement is contingent upon the Tribe’s receipt of the payment due under said Settlement Agreement as provided in Section 5.2 below.

SECTION 5 LUMP SUM PAYMENTS

Payments. In consideration for the execution of this Exploration Agreement, as well as the grant of the rights and obligations contained in this Exploration Agreement, and the agreement to settle the MMS dispute per Section 4, Westmoreland shall make lump sum payments as follows:

5.1 [*****] upon final approval of this Exploration Agreement, including the Coal Lease and the MMS Settlement Agreement. For purposes of this contingency, the term “final approval” shall mean binding approval of this Exploration Agreement and Coal Lease, and all exhibits and agreements attached thereto, by the Crow Tribe by signed approval of the Executive Branch of the governing body of the Crow Tribe of Indians and final and binding approval by the legislature of the Crow Tribe pursuant to Article V, Section 2(d), of the Constitution of the Crow Tribe. A true and correct copy of the Crow Tribal Legislative Act No. CLB 0402, enacted February 10, 2004, and approved February 12, 2004, approving this Exploration Agreement and the Coal Lease, and all exhibits and attachments, and authorizing the Executive of the Crow Government to execute said agreements on behalf of the Crow Tribe is attached hereto as Exhibit “D.”

If Westmoreland elects not to exercise its option, or if this Exploration Agreement is not approved by the Secretary as provided in Section 21, then the [*****], paid pursuant to this, shall be treated as an advance of royalty and taxes under the existing Tract III Lease and shall be reimbursed pro rata over the next twenty-four (24) months following expiration of the term of the option.

5.2 One Million Five Hundred Thousand Dollars and 0/100 ($1,500,000), following approval per Section 5.1, and upon approval and execution of the Settlement Agreement attached as Exhibit C, according to its terms, releasing Westmoreland from any further royalties, assessments, or taxes of any kind based on option payments received from Xcel Energy (formerly NSP), from the period from 1986 to 1999, as full, final and complete settlement of the MMS dispute. Following approval, execution, and payment as provided herein, the MMS Settlement Agreement shall survive any of the following: termination of this Exploration Agreement or the Coal Lease, or failure or refusal of the Secretary to approve same, and shall be permanent and binding according to its terms.

This lump sum payment for the MMS Settlement Agreement is not contingent upon federal approval of this Exploration and Option to Lease Agreement or associated prospecting permit or Coal Mining Lease and is non-recoupable according to the terms of the Settlement Agreement, as long as it has been separately approved according to its terms.

Confidential materials omitted and filed separately with the SEC. Asterisks denote omissions.

5.3 If Westmoreland elects to exercise the option specified in Section 3 of this Exploration Agreement, Westmoreland shall pay the Crow Tribe the sum of [*****], which shall be paid, less any advance payment as provided in Section 5.4 below, within ten (10) days of exercising the option.

5.4 Westmoreland may extend its exploration rights and the date for exercising its option from April 1, 2005, to June 1, 2006, by paying an additional [*****] to the Crow Tribe on or before April 1, 2005. If Westmoreland subsequently elects to exercise its right to mine, said [*****] shall be an advance on the consideration required for Westmoreland’s right to elect its option as specified in provision 5.3. If Westmoreland elects not to exercise its option, then [*****] of this payment shall be treated as an additional advancement on royalty and taxes under the existing Tract III Lease to be reimbursed over the next eight (8) quarters.

5.5 With the exception of the contingencies outlined in Sections 5.1 and 5.4 of this Exploration Agreement, the above described lump sum payments shall not be recoupable against future royalties, taxes, or any other amounts Westmoreland owes the Crow Tribe.

5.6 All lump sum payments to the Crow Tribe shall be made to the Superintendent in trust for the use and benefit of the Crow Tribe.

5.7 All lump sum payments shall be paid by electronic funds transfer to an account or accounts designated by the Crow Tribe and approved by the Superintendent.

SECTION 6 AMENDMENT TO TRACT III LEASE

6.1 Royalty Renegotiation. Lessor and Lessee agree that the royalty renegotiation provided for in the Tract III Lease, which is scheduled for November of 2004, shall be resolved as follows: Lessor and Lessee agree that the tax and royalty terms of the Coal Lease shall be amended into, and shall apply, to the Tract III Lease from and after December 1, 2004, for new Coal sales (new sales made or contracted after December 1, 2004). Current Tract III Lease Royalty Rates shall remain in effect on all sales made under contracts existing on December 1, 2004, through their term, or any price renegotiation date, whichever comes first, but Westmoreland shall agree that on such sales, the Crow Tribe will realize an overall royalty of not less than that provided in Article 7 of the Coal Lease.

6.2 Extension of Tract III Lease. If Westmoreland exercises its option to lease under this Exploration Agreement, the parties recognize that Westmoreland must use its current Tract III Facilities Area for the efficient production of Coal from the Mining Area for the entire period during which Westmoreland conducts Mining Activities in the Mining Area. The parties further recognize that it is to their mutual interest and benefit to maintain Westmoreland’s Tract III facilities area beyond the end of the current projected Tract III production to provide the means for future production should market conditions warrant. Therefore, if Westmoreland exercises its option to lease hereunder, the Tract III Lease shall be amended to provide that Westmoreland shall have the option to extend the term of the Tract III Lease beyond production of Coal in paying quantities for a term equal to the term of the Coal Lease by the payment of One Dollar and 0/100 cents ($1.00) per acre per year as minimum royalty under the Tract III Lease.

Confidential materials omitted and filed separately with the SEC. Asterisks denote omissions.

6.3 Tribal Employment. The Tribal employment provisions in Article 36 of the Coal Lease shall also apply to the Tract III Lease effective upon the Tribe’s approval of this Agreement.

6.4 Amendment to Tract III Lease. The parties will amend the Tract III Lease to reflect the terms of this Section 6.

SECTION 7 PHOTOGRAPHIC SURVEY

As additional consideration for the promises herein, following execution of this Exploration Agreement and approval by the Secretary, Westmoreland shall actively assist the Crow Tribe in its plan to obtain and create a photographic survey of the Crow Reservation. Westmoreland will provide technical advice and support to the Crow Tribe’s project manager. Westmoreland’s staff, time, and availability will be contingent upon and limited by Westmoreland’s own work load. In addition, Westmoreland will provide One Hundred Twenty-Five Thousand Dollars and 0/100 cents ($125,000.00) to the Crow Tribe to help fund this project. Said fund shall be available thirty (30) days after the date upon which final approval of this Exploration Agreement is granted by the Secretary. At the Tribe’s option and request at any time thereafter, the remaining balance of the fund shall be paid directly to the Tribe.

SECTION 8 SELECTION OF MINING AREA

8.1 Mining Tract Designation. On or before the Exercise Date, Westmoreland shall select, from the Prospect Area, the Mining Area. Selection of the Mining Area shall not itself constitute exercise of the option, and the Mining Area may be amended by Westmoreland prior to the Exercise Date.

8.2 Selection Notice. Westmoreland shall select the Mining Area by delivering to the Crow Tribe written notice, in the manner set forth herein, providing the legal description of the tract selected. The mining tract described in the notice shall constitute the Mining Area. The Mining Area shall be identified and by addendum attached to the Coal Lease.

SECTION 9 COAL LEASE

9.1 Execution and Approval of Lease Form. The parties will execute and the Crow Tribe will approve the Coal Lease in the manner provided in Section 5.1 at the same time as this Exploration Agreement. In addition, the parties shall request that approval of the attached Coal Lease be simultaneous with approval of this Exploration Agreement by the Secretary. The parties agree to cooperate to seek approval of all terms of this Exploration Agreement and Coal Lease by the Secretary as expeditiously as possible. Approval of the Coal Lease is subject to the limitations in Section 21.6.

Confidential materials omitted and filed separately with the SEC. Asterisks denote omissions.

9.2 Effective Date of Lease. In the event Westmoreland elects to exercise its option to lease, the Coal Lease shall take effect thirty (30) days following Westmoreland’s notice of its election to lease.

9.3 Limitation of Mining Area. Notwithstanding any provision in this Exploration Agreement or the Coal Lease, any grant of rights from the Crow Tribe to Westmoreland to use or lease land, or to explore for and/or mine Coal is limited to Tribal Land and Tribal Coal. To the extent there is other land and/or Coal located in the Prospect Area and/or the Mining Area, Westmoreland shall be responsible for obtaining any necessary right to enter, explore for, and mine Coal on said land or to use and occupy said land, including the acquisition of any necessary surface rights.

9.4 Acreage Under Lease . Lessee currently leases Coal owned by Lessor outside the boundaries of the Crow Reservation pursuant to the terms of the Tract III lease. Lessee may identify and lease a Mining Area in excess of 2,560 acres, but not more than 3,400 acres, in a single, reasonably compact block. Approval of the Exploration Agreement and Coal Lease shall constitute consent of the Crow Tribe and approval by the Secretary of the Interior, pursuant to applicable law (including 25 C.F.R. §211.25) of: (a) Lessee holding both the Tract III lease and the Coal Lease; and (b) Lessee leasing more than 2,560 acres, but not more than 3,400 acres under the Coal Lease.

SECTION 10 ACQUISITION OF SURFACE RIGHTS

10.1 The parties recognize that Exploration Rights and Mining Activities will require acquisition of surface rights and/or payment for use and/or damage to surface owners. The parties also recognize that without the ability to conduct Mining Activities in the Mining Area, the Crow Tribe will be unable to realize financial returns of significant benefit to the Crow people.

10.2 Westmoreland will be solely responsible for the cost of paying surface property owners for interests acquired, including grants of ownership, easements, or leases, and for payment of any loss of use or surface damage incurred.

10.3 The Crow Tribe will cooperate and reasonably assist Westmoreland in gaining access to the surface as required to conduct Mining Activities. The Crow Tribe acknowledges that, according to the law, custom, and usage of the Crow Tribe, it has the right, particularly within the boundaries of the Crow Reservation, but also elsewhere, to use and disturb the surface and subsurface of lands, including lands owned by others, to explore for and evaluate mineral deposits, to extract minerals owned by the Crow Tribe, and to convey these rights to a mineral lessee, subject only to the obligation of the Crow Tribe, or the mineral lessee as the case may be, to compensate the property owner for any loss of use or damage to the property. The Crow Tribe agrees to fully support Westmoreland’s efforts in accord with this principle, to obtain such surface rights as may be required to conduct Mining Activities under this Exploration Agreement, or to enforce said right to mine subject to said obligation to reasonably compensate surface owners for loss of use and damage to property.

Confidential materials omitted and filed separately with the SEC. Asterisks denote omissions.

10.4 If Westmoreland’s acquisition of surface title within the Crow Reservation would otherwise be prevented as a practical matter by the operation of Section 2 of the 1920 Crow Allotment Act, 41 Stat. 751, 752, and initial acquisition of such lands in the name of the Crow Tribe would lawfully avoid the impediment, the Tribe agrees to cooperate with Westmoreland by taking title to (and, as applicable, exchanging) such lands as are necessary for the purposes of this Agreement in its name and subject to Westmoreland’s rights to use and possess them or to use them for exchange purposes pursuant to Sections 16.2 and 16.3. Nothing in this Agreement shall affect any rights of individual Crow allottees or their heirs or successors arising under Section 2.

SECTION 11 FORCE MAJEURE

11.1 Suspension of Obligations. In the event of Force Majeure, as defined in this section, the obligations of Westmoreland pursuant to this Exploration Agreement and the documents executed pursuant to this Exploration Agreement, including deadlines for exercising options, shall be suspended, and the term of this Exploration Agreement and all time periods provided for herein shall be extended during the period of Force Majeure, but for no longer period, except as otherwise provided by this Exploration Agreement. However, this provision shall not apply to the settlement with MMS addressed in Section 4.

11.2 Definition. The term “Force Majeure”, as used in this Exploration Agreement, means any cause beyond the control of Westmoreland, including, but not limited to: acts of God, labor disputes, insurrections, riots, labor or material shortages, break downs of or damage to equipment or facilities, interruption of transportation of Coal, (including rail car shortages), embargoes, fires, explosions, floods, litigation of any nature preventing Westmoreland from exercising any rights outlined in this Exploration Agreement, the elements, casualties not attributable to Westmoreland, an administrative delay in a governmental agency (including Tribal Government), which is not caused by Westmoreland’s action, newly enacted or mandatory legislation or administrative regulations or changes in the interpretation thereof, orders of civil or military authority or of anybody having jurisdiction over the parties, the Prospect Area or the Mining Area, and extraordinary circumstances not attributable to and not reasonably foreseeable by a reasonably prudent operator, whether such situations affect Westmoreland directly or by reason of their effect on a subsidiary, customer, contractor, shipper, or supplier, which wholly or partly prevent the exercise of the Exploration Rights or the mining or delivery of Coal at a reasonable profit.

The examples enumerated above are by way of example, and not limitation. Force Majeure shall not include any condition arising out of business risks such as fluctuations in prices, sales, or costs, including costs of compliance with requirements for environmental protection; commonly experienced delays in delivery of supplies or equipment; or inability to obtain sufficient sales.

11.3 Mitigation. Westmoreland shall diligently attempt to remedy, as soon as possible, any Force Majeure and to mitigate its effects on the implementation of this Exploration Agreement and on the payments due the Crow Tribe hereunder; provided, that nothing contained herein shall require the settlement of strikes, lockouts, or other labor difficulties by Westmoreland contrary to its wishes, and the disposition or manner of handling or remedying any and all such labor difficulties is hereby expressly acknowledged to be entirely within the discretion of Westmoreland.

Confidential materials omitted and filed separately with the SEC. Asterisks denote omissions.

11.4 Procedures. If a period of Force Majeure is incurred, Westmoreland will notify the Crow Tribe within thirty (30) days from the beginning of such period of Force Majeure. The notice will include descriptions of the circumstances that prevent Westmoreland’s performance and Westmoreland’s plans and efforts to remedy or mitigate the Force Majeure, and an estimate of the expected duration of the period of Force Majeure. When the period of Force Majeure has ended, Westmoreland will also notify the Crow Tribe. Notice of the commencement of and cessation of Force Majeure periods will be given to the Crow Tribe in writing in accordance with provision 25.3 of this Exploration Agreement. Notice shall also be given to the Regional Director and to the Tribal Attorney.

SECTION 12 CROW REPRESENTATIVES

Authorized Representative. Crow Tribal Chairperson, who is recognized as such by the BIA, or the said Chairperson’s designee (“Designated Official”), shall be the sole party authorized to deal with Westmoreland on any matters related to this Exploration Agreement, excluding regulatory matters and any action taken or authorized by the Tribal Chairperson or the Designated Official shall be deemed to be action taken or authorized by the Crow Tribe unless the authority of the Tribal Chairperson or the Designated Official has been called into question or otherwise been diminished or withdrawn by a properly adopted Tribal resolution delivered to Westmoreland. Westmoreland may otherwise rely upon the authority of the Tribal Chairperson or the Designated Official in conducting any transactions, negotiations, or dealings involving the Crow Tribe, to the full extent of the Chairperson’s powers as head of the Executive Branch of the Crow Tribal Government as provided in Article IV of the Constitution and Bylaws of the Crow Tribe.

SECTION 13 EMPLOYMENT STANDARDS

Employment Rights . Tribal employment rights are provided in Article 36 of the Coal Lease.

SECTION 14 ASSIGNMENT

14.1 Assignment of Rights. Each right and obligation hereunder shall extend to and be binding upon, and every benefit hereof shall inure to the heirs, executors, administrators, successors, or assigns of the respective parties.

14.2 Restriction on Assignment. Westmoreland agrees not to assign this Exploration Agreement, by an operating agreement or otherwise, not to sublet any portion of the lands under this Exploration Agreement except with the approval of the Crow Tribe and the Secretary, provided, however, such approval shall not be unreasonably withheld. It is further provided such approval shall not be required in the event the assignment or sublease is to an Operating Subsidiary of Westmoreland. Westmoreland shall, however, provide notice of such assignment to the Crow Tribe, the Tribal Attorney, and the Regional Director.

Confidential materials omitted and filed separately with the SEC. Asterisks denote omissions.

SECTION 15 CROW REGULATION

15.1 Recognition of Tribal Sovereignty. Westmoreland recognizes the sovereignty of the Crow Tribe as established by treaty and recognized by federal law. The parties recognize the Crow Tribe, as a sovereign, is concerned with the protection of the health and general welfare of the Crow Tribe and its members, the quality of the environment, the protection, and conservation of tribal resources as well as concerns for the Crow Tribe’s unique cultural interests. The rights provided by this Section 15 are in addition to, and do not diminish, the rights provided in Section 18.

15.2 Tribal Recognition of Competitive Nature of Mining. The Crow Tribe recognizes the competitive nature of mining and the need for Crow Tribal Coal to be competitive in the marketplace with other Coal mines located within and without Montana. The Crow Tribe also recognizes the Coal mined from the property covered by this Exploration Agreement will compete with low-cost incremental Coal production from existing operations, including non-tribal operations.

15.3 Notification of Increased Government Costs. The Crow Tribe agrees that while it may adopt laws or regulations that affect the conduct of Westmoreland’s business and exploration and Mining Activities pursuant to this Exploration Agreement, such laws or regulations will not be effective, as to Westmoreland, until one hundred and twenty (120) days after Westmoreland has been provided with a copy of such regulation or law. Westmoreland shall then have the right to determine whether the law results in any increased governmental costs to Westmoreland.

15.4 Objection Procedure. If Westmoreland determines the new law or regulation will increase Westmoreland’s total current Governmental Costs, Westmoreland shall notify the Crow Tribe, in writing, detailing the basis of Westmoreland’s belief. Westmoreland and the Crow Tribe shall thereafter meet within thirty (30) days after the Crow Tribe’s receipt of Westmoreland’s notice to discuss the matter. If, after that meeting, Westmoreland maintains its position and the Crow Tribe does not amend or modify the Tribal Law to remove Westmoreland’s objection, Westmoreland may seek arbitration regarding such law or regulation and its economic impact on Westmoreland.

Confidential materials omitted and filed separately with the SEC. Asterisks denote omissions.

15.5 Effect of Arbitrator’s Determination. If the arbitrators rule that the law does not increase Westmoreland’s Governmental Costs, then Westmoreland shall comply with such law, unless otherwise provided for herein, including Section 18. If the arbitrators determine the new law or regulation results in an increase in Governmental Costs, then Westmoreland shall comply with the new law or regulation but the Crow Tribe shall, at its option, either subsidize the increased Governmental Costs through a tribal tax credit or waive the applicability of the new law or regulation to the extent it results in Westmoreland’s Governmental Costs.

If the arbitrators have not ruled within the one hundred and twenty (120) day period prior to the new tribal law or regulation taking effect, Westmoreland will comply with the new law or regulation as provided above until a ruling is made, provided, however, that in the event the arbitrators subsequently rule that the tribal law under review causes the total Governmental Costs of mining Crow Coal to increase, then Westmoreland shall be entitled to recover the difference in such costs incurred from the end of the one hundred and twenty day (120) period provided for above until the date the arbitrators’ ruling goes into effect. Such recovery shall be paid by the Crow Tribe by giving Westmoreland a deduction in tribal taxes due or to become due from Westmoreland.

15.6 Arbitrators Standard of Review. In determining whether the tribal law under review causes the Governmental Costs of mining Crow Coal to increase, the arbitrators shall compare the Governmental Costs applicable to mining under this Exploration Agreement and the Coal Lease prior to enactment to said Governmental Costs after enactment. Such costs shall include, but not be limited to, fees, operating expenses, safety requirements and reclamation costs. In making this comparison, the arbitrators shall take into account all relevant factors they consider reasonable and necessary to permit a valid comparison. In addition, the arbitrator may consider any savings or reduction in Governmental Costs of mining Crow Coal which have resulted from the passage of other tribal laws, and those savings shall be utilized as offsets in considering the Governmental Costs associated with the tribal law under review.

15.7 Prohibition Against Regulatory Takings. While making no representations as to the quality, quantity, or location of any Coal reserves subject to this Exploration Agreement, the Crow Tribe agrees it will take no action which precludes Westmoreland from mining Crow Coal covered by this Exploration Agreement where such Coal could otherwise be mined under state or federal law, nor will the Crow Tribe enact, as to Westmoreland, any law, ordinance, or regulation which would result in a regulatory taking of the rights and permits granted to Westmoreland under this Exploration Agreement. The Crow Tribe further agrees not to unreasonably withhold or delay any licenses, permits, or other concurrences required by Westmoreland pursuant to any law enacted by the Crow Tribe.

15.8 Procedure. Arbitration shall be conducted in accord with Section 26, except as otherwise provided in this section.

Confidential materials omitted and filed separately with the SEC. Asterisks denote omissions.

SECTION 16 TRIBAL LAND

16.1 Conveyance of Tribal Land. Notwithstanding any provision of this Exploration Agreement or the Coal Lease to the contrary, no lease of coal or option to lease by the Crow Tribe provided for herein, shall be construed by any court or regulatory agency, for any purpose, as a conveyance of Tribal Land in fee. Any such conveyance shall be considered a conveyance of a possessory interest only, and shall in no way be construed to divest the Crow Tribe of its jurisdiction over its land and activities occurring thereon. Except as expressly and unequivocally provided in this Exploration Agreement and Coal Lease (including, without limitation, the limited waivers of sovereign immunity contained therein), the Crow Tribe retains all attributes of its sovereignty and jurisdiction over the lands encumbered by this Exploration Agreement or any right-of