North American GEM has signed an agreement to purchase two coal leases located in the US state of Kentucky from Lonesome Pine Leasing.

The Bay’s Hollow leases are situated in Whitley County include a mining permit ready for production, which is expected to begin in October.

The permit is meant for coal extraction by auger / highwall mining processes, in the Jellico coal seam which averages a thickness of 91cm.

According to the conditions of the agreement, North American Gem will acquire Kentucky State Mining Permit 918-0396 from Buried Sunshine Transport.

The permit will then be transferred to Engle Hollow Mining which will undertake mining of the leases under an agreement for a price of $40 per net ton loaded into trucks to be transported to market.

North American Gem will be given sole and exclusive rights to market the coal generated at the Bay’s Hollow Mine.

Auger mining can produce 4,000t-6,000t a month with an increase to more than 20,000t a month if highwall mining techniques are used, the company said.

Production from the Bay’s Hollow permit is expected to last for 12 to 18 months. North American Gem will continue to explore the area for expansion.

The supply agreements established by production from the Bay’s Hollow mine are expected to be extended as the firm expands operations in the area, North American Gem said.