Portions of this exhibit indicated by ****** have been omitted pursuant to a request for

EXHIBIT 10.3

Portions of this exhibit indicated by “******” have been omitted pursuant to a request for

confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as

amended, and the omitted material has been separately filed with the Securities and

Exchange Commission.

AMENDED AND RESTATED LEASE AGREEMENT

THIS AMENDED AND RESTATED LEASE AGREEMENT (“Agreement”) is made on the 22^nd day of June, 2005, effective as of the 1^st day of January, 2007 (the “Effective Date”), by and between VIRGINIA ELECTRIC AND POWER COMPANY, a Virginia public service corporation with its principal office located in Richmond, Virginia, trading in the Commonwealth of Virginia as “Virginia Power” and in the State of North Carolina as “North Carolina Power” (hereinafter referred to as “LANDLORD”), and METTIKI COAL, LLC, a Delaware limited liability company which has its principal office located in Tulsa, Oklahoma, and which is the successor entity to Mettiki Coal Corporation (hereinafter referred to as “TENANT”). LANDLORD and TENANT sometimes are referred to hereinafter individually as a “party” and collectively as the “parties.”

RECITALS

WHEREAS, LANDLORD is the sole owner of the real estate on which the Mt. Storm Power Station (“Station”) in Grant County, West Virginia, is located; and

WHEREAS, LANDLORD and TENANT are parties to that certain Lease Agreement effective as of January 15, 1996, as amended (the “Existing Lease Agreement”), pursuant to which TENANT leases from LANDLORD a certain parcel of real estate on the Station property for the purpose of operating, using, maintaining, renewing, replacing and repairing that certain truck unloading facility which is located on the Station property and owned on the date hereof by TENANT; and

WHEREAS, subject to the terms and conditions of the Existing Lease Agreement, the term of the Existing Lease Agreement will expire at 11:59 p.m. on December 31, 2006 (the “Existing Lease Expiration Time”); and

WHEREAS, Alliance Coal, LLC, a Delaware limited liability company and the parent entity of TENANT (“Alliance Coal”), and LANDLORD have entered into that certain Agreement for the Supply of Coal dated of even date herewith (the “Coal Supply Agreement”); and

WHEREAS, subject to the terms and conditions of this Agreement, after the Existing Lease Expiration Time, TENANT desires to continue to lease from LANDLORD the parcel of real estate on the Station property which is subject to the Existing Lease Agreement for the purpose of continuing to operate, use, maintain, renew, replace and repair the Existing Truck Unloading Facility as provided in the Coal Supply Agreement; and

WHEREAS, LANDLORD is willing to extend the term of the Existing Lease Agreement on and subject to the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the above Recitals, which are incorporated herein, and for and in consideration of the mutual covenants and agreements set forth below, the parties, intending to be legally bound, agree as follows:

The parties acknowledge and agree that, subject to the terms and conditions of this Agreement, the term of the Existing Lease Agreement shall automatically be extended pursuant to the terms hereof for an additional term of seven (7) years after the Existing Lease Expiration Time. The extended term shall commence at one minute past midnight on the Effective Date and end at one minute before midnight on the 1^st day of January, 2013 unless otherwise extended at the mutual agreement of the parties or terminated sooner in accordance with the provisions of this Agreement.

This Agreement shall automatically terminate upon the earlier of (i) the cancellation or termination of the Existing Lease Agreement prior to the Existing Lease Termination Time, (ii) the expiration, cancellation, or termination of the Coal Supply Agreement, or (ii) the transfer to LANDLORD of title to the Existing Truck Unloading Facility in accordance with the terms of the Coal Supply Agreement.

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The rental fee for the term of this Agreement shall be One Dollar ($1.00), receipt of which LANDLORD hereby acknowledges.

b. During the term of this Agreement, the Existing Truck Unloading Facility shall remain the sole and exclusive property of the TENANT and/or an affiliate of TENANT. Upon expiration or termination of this Agreement, the Existing Truck Unloading Facility shall become the property of the LANDLORD in accordance with paragraph 8.

c. TENANT shall have the right to place on the Premises such non-permanent machines, tools or other equipment and items as it shall consider necessary or desirable for the purpose for which this Agreement is made (collectively, “Equipment”). Such Equipment shall at all times remain the sole and exclusive personal property of TENANT and may be removed by TENANT at any time, whether at the termination of this Agreement, or prior thereto. TENANT shall be responsible for property taxes on the Equipment. Any machines, tools, equipment or other items which TENANT permanently affixes to the Existing Truck Unloading Facility or the Premises during the term of this Agreement shall be deemed to be a part of the Existing Truck Unloading Facility.

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(ii) LANDLORD shall provide TENANT written notice of violation of the provisions of paragraph 5.d.(i). If TENANT, in accordance with the applicable laws, fails to initiate correction of such violation and does not identify a cure reasonably acceptable to LANDLORD within thirty (30) days of receipt of LANDLORD’s written notice, TENANT will be in material default under this Agreement. In the event TENANT fails to comply with paragraph 5.d.(i) above, and fails or refuses to cure such noncompliance within thirty (30) days after the date of TENANT’S receipt of written notice of such noncompliance from LANDLORD, the LANDLORD may immediately take remedial action to prevent further noncompliance and contain and clean up releases of such materials or products, and TENANT shall indemnify LANDLORD for any reasonable costs and expenses incurred by LANDLORD. LANDLORD may deduct such costs and expenses from amounts due TENANT under the Coal Supply Agreement. Any such action by LANDLORD shall not constitute a waiver of other rights available to LANDLORD under this Agreement, including but not limited to termination rights. Nothing in this paragraph 5.d. shall relieve TENANT of any of its obligations or liabilities under this Agreement or the Coal Supply Agreement.

Except as otherwise provided herein, if TENANT materially fails to comply with any of the provisions of this Agreement, and such failure shall not be cured within thirty (30) days after written notice thereof from LANDLORD, LANDLORD may terminate this Agreement by giving written notice of termination to TENANT. Such termination shall be effective as specified in the termination notice but not earlier than one (1) business day after the date of TENANT’s receipt of such notice. If LANDLORD terminates this Agreement pursuant to the provisions of this paragraph, Alliance Coal shall be deemed to be in material breach of the Coal Supply Agreement as of the date of such termination and LANDLORD may with respect to the Coal Supply Agreement exercise all remedies available to it at law, in equity or under the Coal Supply Agreement. Termination pursuant to the provisions of this paragraph shall not constitute a waiver of any other right or remedy LANDLORD may have under this Agreement.

In addition to any obligation imposed by the laws of the State of West Virginia or any other provision of this Agreement that is not in conflict with the Coal Supply Agreement, TENANT shall comply with all applicable state and federal spill reporting requirements and shall provide immediate notice to LANDLORD of all known events and occurrences which are regulated by the spill reporting laws.

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By written notice to TENANT, LANDLORD may designate an agent for the purposes of administering this Agreement on its behalf.

In addition to other rights reserved to LANDLORD herein, LANDLORD reserves the right for itself, its agents, employees and assigns, to enter upon the Premises at any time for any lawful purpose.

Except as otherwise provided in this Agreement, during the term of this Agreement, LANDLORD shall pay all taxes and assessments imposed on the real estate constituting the Premises by any state, county or other taxing authority. TENANT shall be responsible for all taxes and assessments imposed by any state, county or other taxing authority on the Existing Truck Unloading Facility and any Equipment located on the Premises.

TENANT shall obtain and maintain, and require its contractors and subcontractors to obtain and maintain, all policies and coverages of insurance as required under Section 12.10 of the Coal Supply Agreement during the term of this Agreement.

During the term of this Agreement, TENANT shall maintain adequate “all risk” property insurance covering the Existing Truck Unloading Facility on a replacement cost basis in order to repair or replace the Existing Truck Unloading Facility in the event of the damage or destruction thereof. LANDLORD shall reimburse TENANT for the cost and expense of such insurance coverage.

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Section 10.2 of the Coal Supply Agreement is hereby incorporated into this Agreement. The reference to “this Article 10” in such section shall mean “this Article 16” for purposes of this Agreement. In addition, except as expressly otherwise provided in this Agreement or the Coal Supply Agreement, TENANT shall not be liable to LANDLORD for injury or death of persons or damage to property arising on account of any latent or patent defects in the Premises. LANDLORD shall be liable for any losses, claims or liabilities for loss of or damage to the Existing Truck Unloading Facility as the result of the negligence or willful misconduct of the LANDLORD and its affiliates and their respective employees, agents, contractors, or subcontractors.

TENANT and LANDLORD each shall comply with all federal, state and local laws, rules, regulations, orders and ordinances applicable to its performance hereunder and its use of the Premises.

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LANDLORD shall obtain and maintain at all times during the term of this Agreement, all licenses, permits, rights, variances, or other approvals which, under the laws, rules, regulations or ordinances of any federal, state or local governmental or regulatory authority or agency having jurisdiction, TENANT may be required to hold in order to use the Premises for the purposes permitted herein.

This Agreement, and TENANT’s leasehold interest hereunder, are and shall be subject, subordinate, and inferior to any lien or encumbrance now or hereafter placed on the Premises by the LANDLORD, all advances made under any such lien or encumbrance, the interest payable on any such lien or encumbrance, and any and all renewals or extensions of such liens or encumbrances.

Any notice required or permitted to be given in writing hereunder shall be executed in the manner set forth under Article 13 of the Coal Supply Agreement. The reference to “Seller” in such Article 13 shall mean “TENANT” for purposes of this Agreement.

In the event that a governmental agency has authority to regulate the charges for, and conditions of, facility leasing such as that described in this Agreement, or acquires such authority subsequent to the Effective Date, then this Agreement shall be subject to regulation by such governmental agency (“Regulatory Change”). In such event, this Agreement shall be modified but only to the extent necessary to comply with such regulations. Any provisions of this Agreement not subject to regulation shall remain in full force and effect.

Both parties recognize that governmental or regulatory authorities having jurisdiction over LANDLORD or the activities contemplated by this Agreement, including but not limited to the Virginia State Corporation Commission, may take action which prevents

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LANDLORD from performing its obligations under this Agreement. If any court, governmental or regulatory authority for any reason substantially prevents LANDLORD from performing its obligations under this Agreement, LANDLORD may, by written notice to TENANT, immediately terminate this Agreement without obligation or liability to TENANT, except for obligations and liabilities arising from any prior performance or breach of this Agreement. Such termination shall be effective upon the date specified in LANDLORD’s notice, but in no event earlier than TENANT’s receipt of LANDLORD’s notice or if permitted by said court, governmental or regulatory authority thirty (30) days after TENANT’s receipt of LANDLORD’s notice.

Termination of this Agreement due to “Regulatory Prohibition” as described above, shall not be cause for termination of the Coal Supply Agreement.

This Agreement and the rights of the parties hereunder shall be governed by, construed and enforced in accordance with the laws of the State of West Virginia. This Agreement shall be deemed to have been executed in West Virginia regardless of the actual place of signing or the actual place of performance.

The failure of LANDLORD to demand strict performance of the terms of, or to exercise any right conferred in, this Agreement shall not be construed as a waiver or relinquishment of its right to assert or rely upon any such term or right in the future, or a consent to any continuing or subsequent failure or breach.

Section 12.6 of the Coal Supply Agreement is hereby incorporated into this Agreement.

Section 12.4 of the Coal Supply Agreement is hereby incorporated into this Agreement.

This Agreement does not and shall not be construed to establish a partnership, joint venture or other form of business association between LANDLORD and TENANT, and neither party shall have the authority to obligate the other without the other’s prior written consent. LANDLORD shall not be considered an employer, either individually or jointly with TENANT, of any of TENANT’s personnel or the personnel of TENANT’s contractors, subcontractors or suppliers.

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Article and paragraph headings contained herein are inserted for convenience and shall have no effect on interpretation or construction of this Agreement.

No information relative to this Agreement shall be released by TENANT for publication, advertising or for any other purpose without the prior written approval of LANDLORD.

Section 12.3 of the Coal Supply Agreement is hereby incorporated into this Agreement.

Section 12.7 of the Coal Supply Agreement is hereby incorporated into this Agreement.

LANDLORD covenants that TENANT, upon performing the covenants and conditions contained in this Agreement, shall and may peaceably and quietly have, hold and enjoy the leased Premises.

Each of the parties warrants and represents to the other that this Agreement and the transactions contemplated hereby have been duly authorized by all required corporate or limited liability company action, as the case may be.

No amendment or modification of this Agreement shall be valid unless in writing and executed by the duly authorized representatives of both parties.

This Agreement and the provisions of the Coal Supply Agreement that are incorporated herein by reference embodies the entire agreement between LANDLORD and TENANT with respect to the subject matter hereof and supersedes any prior or contemporaneous agreement or understanding between the parties. The parties shall not be bound by or be liable for any statement, representation, promise, inducement or understanding of any kind or nature not set forth or provided for herein. No prior course of dealing, usage of trade or course of performance shall be used to supplement or explain any term, condition or instruction used in this Agreement, nor be deemed to effect any amendment.

In the event of a conflict between the terms and conditions of this Agreement, the Coal Supply Agreement and the provisions of any Annex to the Coal Supply Agreement; the terms and conditions of the Coal Supply Agreement shall have precedence over the

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conflicting provisions of the Annex and this Agreement; and, the terms and conditions of the Annex of the Coal Supply Agreement shall have precedence over the conflicting provisions of this Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, in duplicate originals, on date and year first above written.

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