The recent deal allows the company to gradually pay for the transaction with cash, shares, bonds and a participation in the former owner’s debt repayments. An initial $US250,000 was paid when the letter of intent was signed.

“Production of coking coal from the developed section of the mine, possibly increased by development of additional sections, will be a strategic fit with the operations and future production of the …Verticalnaya high-grade anthracite mine, currently in the construction stage of reactivation,” EastCoal said.

“If completed, this transaction will provide the company with a second significant mine in the Donbass district of Ukraine.”

Coking coal market demand is also strong, permitting potential export opportunities from Black Sea ports located nearby.

EastCoal said as the operation was actively producing, it had the benefit of an existing management staff and workforce as well as considerable facilities including two shafts, a rail loadout to a wash facility and a conveyor loadout coming from the mine.

With a medium-term production target of about 1 million tonnes annually, the company said it felt production could be considerably increased – it hoped to confirm that goal with a technical review.

Estimates for the initial months of production are about 500t daily.

The resource tonnage cannot be defined until an NI 43-101 compliant review can be done, and work on that phase is set to commence this month.

“Presently, the dimensions of the strike are 5 kilometres and 9 kilometres down dip. If the results of the report are favourable, further development phases will be planned,” the company said.