The deal, still subject to approval from the Toronto Stock Exchange, would see Justice Corporation subsidiaries Premium Coal Company and National Coal transfer the assets to the Vancouver-based developer for $US8.5 million.

Novadx said the acquisition would create “significant growth and improved market access” for the company through expanded productivity and improved domestic and export capability.

The mine to be acquired is only five miles from Novadx’s Rex mine, is fully permitted and contiguous with the Rex coal seam.

The company expects the addition of the new mine to increase the site’s reserve base, provide a second mine entry at Rex and extend the operation’s mine life.

Acquisition of the preparation plant and rail infrastructure is projected to allow for a more rapid start-up of mining operations and broadened marketing opportunities.

As of last April, Novadx estimated Rex’s proven and measured coal reserves at 11.3 million tons.

The company entered into the letter of intent to acquire the assets nearby Rex with resource project financing company Sandstorm Metals & Energy.

According to the purchase plan, Sandstorm will make an initial cash payment of $3 million plus $2 million through the issuance of shares.

Sandstorm will then retain partial ownership of the properties relative to its final contribution in the purchase price but Novadx will have the option to acquire Sandstorm’s interest.