Known as the Dade Prospect, the property neighbors the Nickajack Gulch and contains four coal beds; Aetna, Dade, Rattlesnake and Mill Creek.

Historical estimated tonnages from the seams are 23Mt at Aetna, 50Mt at Dade, 39Mt at Rattlesnake and 60Mt at Mill Creek.

“MCoal is particularly interested in the Aetna and Dade seams comprised of low and mid- volatile matter, high-quality coking coal which could be potentially mined via both surface and underground mining methods,” the company said.

Novadx and MCoal referred to a 1983 detailed analysis of Aetna and Dade conducted by Nerco Coal, reflecting a free swelling index of 9 on both seams.

British thermal unit for Aetna is listed as 13,632 and sulfur 0.82%, while Dade’s BTU is reported to be 14,357 and sulfur 0.94%.

Rattlesnake and Mill Creek results were taken from a non-National Instrument 43-101 (NI 43-101) compliant technical report from 1926, with FSI not available for either but a BTU of 13,761 listed for the latter.

Sulfur levels listed in that evaluation reflect 0.98% and 0.72%, respectively.

“No recent work has been done on the Dade Prospect to classify the above mentioned historical tonnage estimates as a current mineral resource,” Novadx said.

“The resource estimates are therefore historical estimates only and therefore cannot be relied upon.”

Over the next 18 months, MCoal said it will develop and implement an exploration plan at the property so that it can bring prior estimates into an Ni 43-101 compliant resource estimate.

The historical data review and preparation of that report will be completed by McGehee Engineering, which the companies have retained for the project. The firm will also determine the highest priority targets for future permitting and mining.

“This transaction represents a further step in our strategy to grow the coal business of MCoal through acquisition of both production and reserves of high quality coal,” Novadx and MCoal chief executive officer Neil MacDonald said.

“Our focus is in metallurgical and specialty coals and our objective is to build our production of these coals over the next three to five years. The Dade Prospect is yet another example of our expansion strategy.”

According to the companies, the Dade Prospect was mined on a small scale for metallurgical coal in the late 1800s and early 1900s, but no mining production has been recorded there since the late 1930s.

Since early last century, a total of 117 historical holes have been drilled at the property.

Novadx announced in June that it and MCoal had entered into a letter of intent with Tiacme to obtain its outstanding membership units in a $US5 million transaction.

Tiacme holds one asset, the Rex No. 1 coal operation at the Kentucky/Tennessee border.

The mine, fully permitted and bonded in the fourth quarter of 2008, was estimated via an independent technical report to contain 32.2Mt of measured and indicated resources, and 27.64Mt inferred, on 14,430 acres.

MCoal engaged Gress Engineering, which conducted the initial study, to prepare a technical report to define the property’s resources in compliance with NI 43-101.

As of June, Rex No. 1 had not yet started production, but the company intends to initiate the mandated steps to production once the acquisition closes.

Based on historical and recent drill core assaying and wash testing, coal seam quality has reflected 4.88% ash and 0.92% sulfur on a washed dry basis.

MCoal also operates the Rosa metallurgical coal mine in northern Alabama. Late last month, the company announced increased coal sales following the August 2 addition of a second production shift at the mine, which commenced operations in June.

For the period of August 1-15, MCoal booked coal sales of $228,576, a 100% increase over the same period of July 2010.

On August 16-20 it booked $206,805, a continued week-to-week sales boost.