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We are maintaining our Buy recommendation on Natural Resource Partners. The partnership looks to improve distributable cash flow next year as its lessees have locked in ?09 coal production at prices above ?08 levels. Its low CapEx requirements, strong cash flow profile and $250 MM of available liquidity should put the partnership in a strong position in 2009. The partnership will have the option to engage in several unitholder maximizing investments such as strategic acquisitions, further distribution increases and debt repayments.
Although the slowing global growth story will put some downward pressure on coal prices, continued supply issues should help offset decreases in demand for electricity and steel.
