Vale will have the option to take full ownership of Aquila’s 24.5%-owned Belvedere project by the end of the year.

The Brazilian mining giant first purchased a majority stake in the project back in 2007 but holds the option to acquire 100% at fair market value starting from December.

The current prefeasibility studies for the project are looking at two longwalls producing up to 7 million tonnes per annum from two seams. Aquila said potential production could be 9Mtpa.

The JV has applied for 9Mt port capacity at Wiggins Island and eight mining lease applications have been submitted.

Belvedere has 3.87 billion tonnes of resources, including 1.53Bt indicated and 2.34Bt inferred.

In an update this week, Aquila said its Eagle Downs coal project in the Bowen Basin had operational expenses budgeted at $US72 per tonne.

For initial development with one longwall producing 4Mtpa of coking coal, Aquila has budgeted capital expenditure of $A900 million, including engineering, procurement, construction and management, and contingency expenses.

Aquila has previously said the seams of the hard coking coal project could be thick enough to use the Chinese-developed longwall top coal caving process, which in Australia is only used at Yancoal Australia’s Austar mine.

The company has flagged a mine life of up to 37 years with two longwalls producing 7-8Mtpa; however, Aquila said the second longwall timing was subject to additional port allocation.

Eagle Downs has 879Mt of total resources, comprising 227Mt measured, 124Mt indicated and 528Mt inferred.

Meanwhile, Aquila said its producing Isaac Plains open cut mine, also in the Bowen Basin, would ramp up to 3.6Mtpa to produce 2.8Mtpa of coal product by 2010, following regulatory approvals.

Aquila also said production would ramp up as additional port capacity was supplied at the Dalrymple Bay Coal Terminal.

A joint venture between Aquila and Bowen Central Coal, the mine has an estimated life of 17 years and its production mix is about 75% metallurgical and 25% thermal coal.

A concept study is due for completion in the June quarter for Aquila’s wholly owned Washpool open cut coking coal project, while its Red Hill project in the Bowen Basin could potentially host a 3-4Mtpa longwall operation.

Outside of coal, the Perth-based company has a definitive feasibility study underway for its West Pilbara iron ore project, which is targeting a 30Mtpa mine and has signed agreements with six Chinese and Korean steel mills to test its ore.

Aquila shares surged 40c or 9.3% higher yesterday, closing at $4.69.

But the shares have shed 15c this morning to $4.58.