The $US11 million deal was announced in February. A good portion of the proceeds, $10 million, went to repay an outstanding loan scheduled to mature in December.

“With the sale of Straight Creek, the company continues to focus on strengthening its balance sheet with the early repayment of debt,” said National president Daniel Roling.

“This transaction improves our liquidity and allows us to narrow our focus to our other properties in order to meet the growing demand for coal.”

Straight Creek produced 300,000 tons last year.

Currently, the producer has 2 million tons of Alabama and Tennessee coal committed under contract for 2008, comprising 1.5Mt for next year and 630,000t for 2010.

“[National] has the capacity to produce above those commitments should market conditions warrant," said company officials.

In February, Roling said that National was well positioned to increase production from previously idled facilities such as load-outs, preparation plants and operations.

“In addition, we have a number of properties in advanced stages of permitting, which we should be able to start up to meet incremental demand from the current strong coal market," he said.

Xinergy was founded by former National Coal director Jon Nix.