The first step of development will involve initial production of 5.3 million ROM tonnes per year for 1.7Mt of hard coking coal and 0.3Mt export thermal coal.

Costs are estimated at $US270 million, which Riversdale and Tata will fund jointly.

Riversdale said it had $A268 million cash on hand to fund its $US175 million ($A191 million) share of the project development.

The JV hopes to kick off in earnest later this year after environmental approvals are handed down.

Under the $US150 million Stage 2, expected to begin in 2014, a second module will be added to Benga’s coal preparation plant, which will allow increased ROM production of 10.6Mt per annum, including 3.3Mtpa of hard coking coal and 2Mtpa export thermal coal.

The final stage, with the addition of two plant modules, would increase ROM output to 20Mtpa.

Benga has a 4 billion tonne resource, including 1.03Bt measured and indicated resources, of which 893Mt are below 500m deep. The project also has initial coal reserves of 273Mt.

Riversdale has been evaluating rail access to Benga and the viability of barging coal down the Zambezi River.

Plans for a mine-mouth coal-fired power plant are also progressing, with a framework agreement signed with the Mozambican government. Riversdale has been granted access to the existing power transmission network in the African nation.

Shares in Riversdale dipped lower despite the news, falling A20c to $5.52, a 2.8% drop.

At Riversdale’s existing coal operation, the Zululand anthracite colliery, production rose 6.5% in the September quarter to 212,246t.

Product sales reached 184,000t as markets improved, Riversdale said.

During the quarter there was a death at the colliery and two other miners were injured. Riversdale said it was working with local authorities to determine the cause of an underground methane deflagration.