UPDATE 1-Phoenix Coal acquires Petersburg Coal reserve

* Acquires Petersburg coal reserve

* To pay $3 mln at closing

March 27 (Reuters) - Phoenix Coal Inc (PHC.TO) said it entered into a sublease agreement with Petersburg Coal, LLC, enabling the Canadian miner to control over 40 million tons of underground reserves within its Gryphon Mining Complex.

Phoenix will pay $3 million at closing and an additional $3 million upon certain contingencies, including receipt of all required permits.

The company added that the total royalty rate for coal sold from the Gryphon Mining Complex shall be 6 percent of gross sales price.

"The addition of Petersburg expands a project that is an important component of Phoenix Coal's growth plan and enhances the strategic value of our entire asset base," CEO David Wiley said in a statement.

According to an independent estimate, Gryphon Mining Complex contains a proven and probable mineral reserve of about 43 million tons of thermal grade bituminous coal.

In addition to the estimated coal reserves contained within the Gryphon Mining Complex, Phoenix said it also controls 76 million tons of coal mineral resource at its Panama South Property as of Dec. 31, 2007.

Shares of Phoenix Coal closed at 21.5 Canadian cents Thursday on the Toronto Stock Exchange. (Reporting by R. Manikandan in Bangalore, Editing by Dinesh Nair)