The company retained Montana consultant Mission Engineering to prepare and submit a coal prospecting permit application for the Judith Basin County property to the state Department of Environmental Quality.

American’s drilling program comprises 61 locations and total drilling of 52,740 feet. The company hopes to be able to classify most of Pace’s holdings as proven and probable and support its projection of a 20-year operational life for the mine.

"We are very excited with the progress of operations to date and with the general state of the coal market,” American Power chief executive Al Valencia said.

“Walter Energy's recent acquisition of Western Coal for $US3.2 billion and Rio Tinto's recent offer of $3.5 billion for African coal producer Riversdale Mining, show how strong the coal market is at the moment.

"We believe the company is well positioned to take advantage of this increased M&A market activity."

American Power acquired the 29,000-acre Pace property in April. Mobil Oil (now known as ExxonMobil) drilled 30 holes over 14,000 acres at the site in 1979, delivering 45 samples that reflected a high quality and significant quantity of bituminous B coal. Past reports have provided a resource range of 172-410 million tons and beyond.

The Pace property infrastructure includes a major railroad, highwall, power lines and pipelines which run throughout.

The company said that, given the healthy price range for 12,500 BTU-range coal between May and July of this year, the scope of the complex could prove to be very substantial.