“This mine should help us achieve one of our key goals – generating free cash flow,” company president Daniel Roling said.

“I am also pleased to announce that a contract for the initial production has been signed, which will result in the company’s average selling price increasing by about 10 per cent during 2011.

“Even though we are eager to participate in this kind of organic growth, it should not go unsaid that we are also focused on the challenge to refinance our debt.”

Mine 12 has received its final permit and development work has begun. First production is anticipated in the fourth quarter, with its performance ramping up over 18 months.

At prime output levels, the mine will add about 40,000t monthly, or about 480,000tpa, to Nationals’ total production tally.

“Given the high quality coal of this block of reserves, sales will be targeted to the specialty coal market,” the company said.

While National has been suffering some financial troubles recently, it noted that sufficient funds are available for it to complete construction on Mine 12 thanks to a recent $US4 million cash sale of surplus equipment.

“A number of key indicators for our end markets appear to be showing improvement,” Roling said of the market outlook.

“Year-to-date electricity generation has increased 3.8 per cent, utility coal stockpiles have declined an estimated 8.5 per cent versus the year ago level, and coal production in Central Appalachia has declined about 7 per cent year-to-date.

“These key indicators, along with an improving economy, point toward a better balance between coal supply and demand.”

NCC’s Tennessee holdings include 79,000 land acres worth of coal mineral and mining rights, and mining complexes include one active underground and one active surface operation as well as a preparation plant and train loadout.