The acquisition agreement – with an unnamed private Canadian company – will create the potential to develop one of the largest thermal coal mines in North America with 20 kilometres of continuous gently dipping strike length with access to an under-utilised port and adjacent rail infrastructure, according to Coalspur.

“Our scoping study completed earlier this year has already shown that the existing HCP can be mined with low operating costs,” managing director and chief executive Gene Wusaty said.

“We will now commence a pre-feasibility study to determine the substantial mining synergies, increased production rate and longer mine life which we anticipate can be achieved with the combined project.”

Coalspur’s combined coal resource will now total more than 900Mt of low sulfur, high volatile bituminous, export-quality thermal coal with more than 810Mt (90%) of the resource in the measured and indicated category.

The new leases are technically advanced, have been subject to a number of feasibility studies and have previously been awarded a mine permit.

The commercial terms of the agreement provide for the payment of an upfront option fee of

$C6.5 million with a further $C83.5 million to be paid on or before November 15, 2010, upon

which Coalspur will secure 100% of the new leases.

The acquisition will be financed from existing cash reserves and a project funding facility from the Highland Park Group. The total acquisition cost represents a transaction multiple of $C0.205 per tonne of coal resource.

Coalspur’s shares surged by 12.5c to 92c in morning trade.