Carabella will carry out an additional drilling program to establish the full extent of coal resources and, subject to the outcome, it intends to progress a feasibility study for a 1 million tonne per annum pulverised coal injection coal mine at Bluff in the first half of 2013.

Carabella managing director Anthony Quin said the company had made significant strides in the last quarter of 2012 which had placed the company in a strong position to progress to first mining.

“On Bluff, the work program to date has given us confidence on its potential for development,” he said.

“We are very pleased about the transaction with Mr Wallin which now gives us the opportunity to develop Bluff in an optimised fashion.

“The team is advancing the approval process at Bluff on a fast-tracked basis given the anticipated 1Mtpa production rate.

“A concept study is underway with plans to commence a feasibility study in H12013.

“Carabella is well funded and remains committed to bringing online a new PCI coal mine in the Bowen Basin.”

Subject to the satisfactory completion of due diligence, Carabella will pay Wallin, the owner of the sub-block, $9.4 million in company shares over time, subject to the achievement of several milestones.

Carabella is capitalised at $54 million.

The acquisition enables Carabella to progress development of the contiguous resource on an optimised single pit basis across the two tenements.

It should enhance resource recovery, reduce operating costs and improve overall pit design efficiency, it said.