The land Signal Peak is interested in covers over 7000 acres of private property known as Hope Ranch and potentially sits on an estimated 400 million tons of coal.

Signal Peak president John DeMichiei told the Associated Press that before any decision was made on the mine at Hope Ranch, the company would have to analyse drilling samples from an exploration phase, which was planned for the coming months.

The 400Mt figure is only an initial estimate, he said.

"Obviously there's a lot of potential in Montana," DeMichiei said.

"We've developed a world-class operation in Signal Peak, and we have the opportunity to do that elsewhere in Montana on a similar level."

The reservation currently hosts one mine and has recently signed a contract for another.

Westmoreland Resources' Absaloka mine opened in 1974 and produces about 6Mt annually.

In January, Cloud Peak Energy signed a deal with Crow leaders for an estimated 1.4 billion tons of coal on the reservation. Cloud Peak agreed to pay the tribe $2.25 million up front and additional payments in coming years could add up to $10 million.

The tribe's 2.2 million acre reservation sits atop an estimated 9 billion ton coal reserve and is located at the north end of the Powder River Basin. It is one of several sites that Signal Peak is currently considering for a future project, DeMichiei said.

The AP reported that U.S. Bureau of Land Management spokesman Phil Perlewitz said federal officials had given initial approval for Signal Peak's work at Hope Ranch, although the decision remained subject to appeal through March 22.

The agency has authority over the project as part of the government's Indian trust responsibilities because the site is within the reservation's boundaries, said Perlewitz.

Even though the work is being done on private land, it's expected that the company would need cooperation from the tribe to pursue a mine.

Signal Peak also operates the Bull Mountain mine in Montana and exports much of its coal to Asia.