The company secured the privately owned properties for a purchase price of $US6 million payable on closing, and royalties have been capped at $9 million.

The site seeing 2011 output has already been permitted, the company said Tuesday. In total, the newly acquired properties make up 14,000 acres, mostly mineable using surface methods.

Royal has commenced a drilling program for the development of a National Instrument 43-101 compliant resource estimate.

"This property will be an excellent addition to our portfolio and is in line with our growth strategy aimed at securing additional significant open pit reserves with long-term production," chairman Tom Griffis said.

Royal has submitted a $100,000 non-refundable deposit to the seller for a 45-day option so that it may complete final due diligence and enter a definitive purchase agreement.

The deal is expected to close by February 28 pending the completion of the company’s financing arrangements.

Royal Coal is headquartered in Toronto with a regional office in Hazard, Kentucky.