Cline Mining shares soar on New Elk mine purchase

(In U.S. dollars, unless noted)

TORONTO, May 12 (Reuters) - Cline Mining (CMK.TO: Quote, Profile, Research) jumped by nearly 80 percent on Monday with more than 14 million shares traded after the company said last week it planned to go ahead with the purchase of the New Elk metallurgical coal mine in Colorado.

Cline said late on Thursday it had acquired the existing coal property surface assets at New Elk -- which has been closed since 1989 -- for $1.6 million plus the assumption of an existing reclamation bond worth $967,000.

The Sudbury, Ontario-based company acquired the rights last year to buy the mine from previous owner New Elk Coal Co.

Cline said it is now arranging financing to buy the mine itself and related coal properties, which will cost $13.8 million, the assumption of a $2.8 million reclamation bond, and a $1 per ton royalty on coal sales.

The mine, located in Los Animas County in Colorado, has metallurgical and thermal coal resources of 315 million tons, according to a technical study also released last week.

The shares were up 71 Canadian cents at C$1.62 on the Toronto Stock Exchange on Monday, and have nearly quadrupled from their close at 44 Canadian cents on Thursday.

It was the most actively-traded issue on the TSX.

The surface assets purchased include the coal preparation plant, silos, buildings, railway right of way, surface real estate, mining equipment, conveyor systems, electrics, and coal waste dump. ($1=$1.00 Canadian) (Reporting by Cameron French; Editing by Peter Galloway)