The $US18 million cash deal gives Xinergy an active operation that is currently producing a high-vol metallurgical product.

Xinergy president Bernie Mason said production at the mine, the name of which was not released, was running at a rate of about 10,000 to 12,000 tons monthly.

With limited capital expenditure, the company hopes to ramp up output to 200,000 to 240,000 tons per month.

The newly acquired operation has about 4 million tons of met reserves, Xinergy said, based on the previous owner’s estimates and due diligence. However, a National Instrument 43-101-compliant reserve estimate report process has already commenced so that figure can be confirmed.

The company said that report should be filed within 45 days.

"The addition of an active metallurgical operation with additional reserves is a great transaction for our company, and will be accretive to earnings in Q3 and beyond," Xinergy said.

Last month, the producer announced it had divested its interest in Elk Horn Coal in connection with Elk Horn’s takeover by Rhino Resource Partners.

Xinergy, which had a 17.5% share in the company – or 1,852,367 membership units – said at the time it expected to receive initial gross proceeds of $17.9 million from the sale.

It had purchased the position last November for $7.75 million.

“Consistent with our broader acquisition strategy, we maintained flexibility during the course of this investment in a manner which positioned us to be either a buyer or a seller of an asset we viewed as strategic to our core operations,” chairman Jon Nix said in June.

“As we continue to execute our growth plan, we believe that the outcome of this transaction reflects the considerable restraint and discipline we strive to exercise on a consistent basis towards ensuring that all investments achieve return hurdles commensurate with the specific risks involved.”

Xinergy's other key producing assets are Straight Creek in Bell County and Harlan County, Kentucky, and the Raven Crest complex in Boone County, West Virginia.