Advance Metals (ASX:AVM) sold its Elko Coking Coal project, held by its unit Pacific American Coal, to Elko Metallurgical Resources, according to a Monday filing with the Australian bourse.

Under the deal, the company will receive CA$250,000 in cash upon completion, and CA$2.5 million in cash upon the grant of a mining license and all other regulatory permits, the filing said.

The company will also receive another CA$2.5 million in cash once the project reaches commercial production of 2 million tonnes per annum, the filing added.

AVM will also earn royalty on coal produced and sold from the project, the company said.

Shares of the company fell 4% in recent Monday trade.