HAYDEN, Colo. (AP) — A federal lease to develop about 3.2 million tons of recoverable coal next to the Twentymile coal mine has sold for $800,000.

Peabody Energy Corp. runs the Twentymile mine near Hayden in northwest Colorado. It has said it plans to operate the Sage Creek Mine next to it to replace production at Twentymile as operations there wind down.

In 2009, Sage Creek Holdings LLC applied to lease a 400-acre parcel next to the mine. The Bureau of Land Management finalized an environmental assessment in April of the application, and Sage Creek agreed to pay $800,000 at a lease sale of the 400-acre tract Wednesday.

The BLM estimates the recoverable coal in the tract could generate $5 million in royalties for the federal government and Colorado.