Penn said it would use both deep and surface mines to exploit the 8300-acre area in West Virginia.
Company vice president Frank Pici told International Longwall News at least one deep mine and two surface mines would be developed to exploit reserves.
Pici said initial production on the reserves was expected in the thrid quarter of 2005 from a deep mine.
Initially revenues will come from transport fees from coal mined in an adjacent property, followed by royalty revenues as the mines commence production.
The undisclosed seller will remain on the property as lessee and operator.
“This transaction is expected to provide current cash flow from fee revenues during the mine development phase and a steady source of cash flow from royalty payments well into the future,” said Penn chief executive officer James Dearlove.
