The companies said Tuesday under the deal, signed with a private contractor, production would start in the 2012 calendar year at the project site, now known as Miller Mt.

The second site is projected to add 20,000 tons on average per month for about seven to 10 years. Thelon will receive the greater of $US7 per ton royalty, or about 9% of the coal’s gross sales price, under the lease’s terms.

To put it into perspective, Thelon and Clear Fork noted, thermal coal is currently selling for $90/t and Blue Gem Coal, which the companies produce at the complex, is currently selling for $185/t.

The entire 6400 acre Jellico project encompasses a minimum of more than 12 million tons of high quality thermal and metallurgical coal, according to a 2009 report by AR Leamon.

As that report is not compliant with NI 43-101 standards, Thelon said last year it would confirm and expand the reserve and file a compliant report.

There is currently 20,000 tons per month being produced from a 640 acre section of the Jellico Coal project referred to as White Oak.