The company said on Tuesday it inked a letter of intent on February 1 for private mineral leasehold rights to a mining property in Owsley County with AMS Development and Colt Resources.

Liberty, after paying $US20,000, will have 45 days to complete a due diligence process it has already commenced.

If at the end of the period it elects to proceed with development, it will pay an additional $60,000 to purchase rights to the existing mining permit.

The Owsley property is made up about 1000 acres of fee surface and coal rights. There is a mine plan in place.

The property’s phase 1 permit has been technically approved by the Kentucky Department of Natural Resources and can be activated when the mandated reclamation bonds and liability insurance is posted.

Liberty said the surface-mineable recoverable coal resources total more than 2.6 million short tons.

Auger-mineable coal exceeds 950,000 short tons.

Owsley also includes 2.2 million short tons that can be extracted via deep mining, however, underground coal is not included in the existing permit.

Under a planned lease and royalty agreement with AMS Development and Colt Resources, the latter groups may receive a $5 per ton royalty with applicable performance and minimum royalty provisions.

“We are pleased to have access to this advanced project,” Liberty president Ed Morrow said.

“We believe the project can be in production approximately 90 days after groundbreaking.

“We project initiation of development in spring 2012.”

Liberty is publicly traded on the Over-The-Counter Bulletin Board under LBTG.