The deal for the longwall operation’s super-compliant coal was made February 4 and gives L&L rights in the region for 18 months. Should sales targets be achieved, the operator will have the option to extend the agreement.

L&L projects about 500,000 tons of coal will be available this year, and at least that much in 2012. The tonnage should be shipped to the Zhanjiang Port in China’s Guangdong Province as well as other Asian port facilities.

The company announced a deal January 20 with the port for a feasibility study that would establish a blending and distribution center at the harbor; shipments are expected to commence in about four to five months.

"This is an important milestone of our progress as we continue to strive toward our goal of becoming a global coal provider," L&L chairman and chief executive Dickson Lee said.

In December, L&L provided a secured bridge loan to Bowie Resources for the operation of the longwall mine, which was idled earlier in 2010 pending financing.

The agreement provided Bowie with initial funding, in tranches, of up to $US3 million in loans to be used for ongoing operations. The loans had a 9% interest rate per annum and gave L&L the option to acquire up to a 9% equity interest in Bowie at nominal costs.

L&L shares co-senior status with Bowie's only other secured creditor, GE Energy Financial Services.

The Bowie operation near Paonia began production in 1997, with longwall operations at the mine starting in 1999. Between 2000 and 2007, Bowie produced 4-5.5 million tons per annum of high-quality coal and its future output is projected to be 4-5Mtpa.

The operation has 25Mt of proven reserves and potentially another 15Mt after permitting. Bowie’s largest customer is the Tennessee Valley Authority with 3Mtpa and the mine also has other long-term, multi-year contracts.

Bowie produces high-quality thermal coal with about 12,000+ Btu per pound (6668 kilocalories per kilogram), low sulfur at approximately 0.5% and low ash of 8-10%.