The deal, worth $US11 million, is with a family-owned 35-year-old operator with three producing mines that have a total production of 480,000t, or 40,000 tons per month.

That producer’s coal brokerage business has average annual sales of roughly 80,000 tons, with revenues of $40.9 million in 2009.

CanAm has the option to acquire an additional 30% of the company’s shares within two years of closing, and the remaining 20% within a five-year period.

“This transaction provides [the company] with significant immediate benefits and further positions [it] for growth,” chief executive officer Timothy Bergen said.

“Through this acquisition, we gain access to: three producing mines, a brokerage business, a stable cash flow, high-quality thermal coal and, last but not least, additional coal expertise.

“Also, this transaction enables CanAm to expedite one of our key strategic goals of producing 50,000 to 100,000 tons of coal per month.”

Combining the production of the company’s Powhatan mine in Ohio with the additional 27,000tpm from the newest transaction, CanAm estimates coal sales for this year will total 40,000 and 50,000tpm.

The seller produces and markets its coal to the industrial, utility and export markets, and its permits and leaded cover about 3000 acres of land.

It owns a large fleet of Komatsu and Caterpillar equipment with a total fair-market value of more than $16 million and has off-take contracts in place for most of its coal production through 2015.

The deal is subject to shareholder and regulatory approvals, as well as due diligence.

In the meantime, CanAm is still considering its financing options to fund the transaction.

The LOI outlines the execution of the deal, including shareholder agreement, by March 31.