The long-idled Big River, Sask., sawmill owned by Domtar Corp. could be getting a new lease on life.

On Monday, Montreal-based Domtar said it had signed a deal with EACOM Timber Corp. of Vancouver, giving EACOM the option to buy the sawmill.

"The option term is for up to 180 days," Domtar spokesman Michel Marcouiller said. "Basically that period will be used for the company to complete its due diligence and determine exactly what it wants to do with the plant."

EACOM president Rick Doman sounded an optimistic note that the deal would proceed to the next stage.

"The acquisition of this mill would be a significant step forward for EACOM, and I am excited about the opportunity to combine our operational and marketing expertise to a state-of-the-art sawmill," Doman said in a release.

"We will work under this option agreement to further develop this opportunity."

The sawmill that employed 200 people has been closed since 2006. That happened as a result of the Prince Albert pulp and paper mill operation closing.

Also Monday, Domtar and the Saskatchewan government announced a letter of agreement with Iogen Corp. to study the feasibility of the biofuel company buying Domtar's Prince Albert pulp mill to turn it into an ethanol-production facility.