The company, which operates Montana’s only longwall operation Bull Mountain near Roundup, bid $US5.3 million, or 15 cents per recoverable ton, for five coal tracts totaling almost 2680 acres and 35.5 million tons.

The BLM called the November 16 offer insufficient, and following a request from Signal Peak Energy for a new auction the BLM has set February 28 for a second sale to be held at the BLM office in Billings.

BLM coal program coordinator Greg Fesko told the Billings Gazette only that the first bid amount did not meet what was determined through evaluation as the minimum bid.

“We can't really tell you how far off that first Signal Peak bid was because we can't disclose the appraised price before the bid sale,” Fesko said.

He also told the paper that he anticipates Signal Peak will be the sole bidder at the auction next month as well, as it is the only company actively conducting underground mining in the area.

The last coal sale in Montana was held in 2007; it involved 109 million tons and sold for 18.3 cents per ton, or almost $20 million.

“We're working closely to make sure that the state of Montana is aware of and advised of our actions because the state has a stake in this. The state receives about 50 per cent of any royalties,” BLM spokesperson Melodie Lloyd told the Gazette.

The state receives an 8% royalty on the value of all recovered coal from underground mining, and operators must also pay a rental fee of $3 per acre annually. Half of the latter amount, which goes to the federal government, is earmarked for the state.

Signal Peak and operating subsidiary Bull Mountain are owned by Boich and First Energy as well as the Gunvor Group.