Production at Mine 12 will be ramped-up over a period of 18 months, with first production planned in the fourth quarter of 2010.

The company said that it has sufficient funds available to complete construction and to begin operation of this new mine from a recent sale of surplus equipment that generated about $4m in cash.

Daniel Roling, president and CEO of National Coal, said: “With the beginning of construction on Mine 12, the company reaffirms its focus on lower costs, higher selling prices and improved margins. This mine should help us achieve one of our key goals – generating free cash flow.”

National Coal’s operations in Tennessee include the coal mineral and mining rights to approximately 79,000 acres of land, along with mining complexes that currently include one active underground mine and one active surface mine.