The company said recently that the funds would help it complete the purchase of the machinery needed for the restart of the McDowell County operation, which is aimed to commence production in late April.

Cobalt did not detail which units were still needed, but did note the 15% interest loan had a one-year term and could be conditionally extended for an additional six months. The unnamed lender will receive warrants for the purchase of 3 million Cobalt common shares.

"The confirmation of this loan is a very positive step in the continuing development of our company,” Cobalt president David Lewis said.

“We are very pleased with the direction Cobalt is moving at this time."

The loan and warrants issue are both pending regulatory approval.

Westchester, which extracts from the Sewell coal seam, had produced coal from the fourth quarter of 2008 through the second quarter of last year, but was forced to temporarily suspend production in April 2009 due to difficult economic conditions.

The mine is being operated through Cobalt’s wholly owned Westchester Coal GP subsidiary; the producer owns a 60% after-payout interest in the operation.

Established in 2007 and headquartered in Calgary, Cobalt has an operating branch in Welch, West Virginia.