The “major US commodity producer and refinery” will receive compliant coal from the Horizon operation.

As part of the deal, the purchaser has the right to additional tons of coal annually over the life of the contract. If that is fully exercised, the transaction could yield revenues of $36 million for America West.

"Now that we have stabilized coal production at Horizon and are currently producing approximately 30,000 tons per month from a single mining section, we are in active negotiations with a number of new potential customers who are seeking clean compliant coal to fuel their respective energy needs,” America West chief executive Dan Baker said.

“To that end, we are very pleased to welcome this new client to our growing customer base and look forward to further expanding the number of domestic and international companies we supply as coal production from Horizon continues to ramp up."

Three weeks ago, America West inked a spot price contract with a western US co-generation power facility worth $1 million, also for compliant coal from Horizon.

"Production from [the mine] continues to be outpaced by global customer demand for our compliant thermal coal,” Baker said in a mid-October announcement.

“Consequently, we are delighted to be in a position to take advantage of selling our coal at favorable spot prices, thus optimizing our margins and driving greater revenue performance."

The Horizon mine has about 19 million tons of recoverable reserves under lease.

America West also holds the Columbia property, an undeveloped 5200-acre leasehold near the active Horizon complex. According to a geological survey, it is estimated that Columbia holds about 50Mt of recoverable metallurgical coal.

Columbia is on schedule to commence development as early as the fourth quarter of 2010, with production estimated to start in early 2011.

In October, the producer announced the appointments of WC Travis and William Graham, who will assist with America West’s focus on domestic and international coal sales from Horizon.

Reporting to Baker, both will expand the company’s global customer base while securing domestic and export coal supply contracts as part of the sales and marketing team.

"With coal production ramping precipitously at [the operation], we felt the time was right to enhance our sales and marketing assets and expand our sales reach to key markets around the world, such as the Far East, where prevailing demand for compliant thermal coal is exceptionally robust,” Baker said.

In September, America West reported that improving market conditions and the underground mining environment at its mines were leading to a steady upward increase in coal production, so much so that it should see double tonnage by year’s end.

The company replaced a continuous miner and two shuttle cars earlier this summer with rebuild machines, which also played a role in the improved numbers.