The Vancouver-based company signed a Letter of Intent with owners of the resource Farrell-Cooper Mining Company to develop the mine.
The company said substantial engineering work and planning had already been undertaken by consulting group Norwest Engineering.
The transaction remains subject to due diligence in areas such as resource estimation, environmental permitting and formal mine planning. A definitive agreement is yet to be penned, which will then require approval by the respective boards of Hillsborough and FCM.
Hillsborough said the proposed underground coal mine, like its Crossville mine in Tennessee, was a logical extension of opencut mining recently completed in the area. The coal is a low volatile, low-sulphur, high-Btu metallurgical coal that is in demand by steel manufacturers.
"The Hillsborough team is very excited about the prospects of working with Farrell-Cooper Mining to bring this mine into production," said Hillsborough chief David Slater.
"The experience at our Tennessee mine leads us to believe that Hillsborough has significant value to add in the area of steep-dip underground mining. The quality of the product, its proximity to rail transportation routes to the Gulf sea ports, and the quality of the Farrell-Cooper team led us to believe that this will be an excellent addition to the Hillsborough portfolio."
Hillsborough Resources operates the Quinsam underground thermal coal mine in British Columbia serving the local and west-coast US cement industry, and the Crossville underground coal mine in Tennessee serving the regional power utility and industrial markets.
