Both parties signed a non-binding term sheet last week to underpin a potential offtake agreement in the future.

CITIC will provide Bathurst an up to $US40 million, five-year, finance facility to help fund Buller development costs.

The framework covers five years from first coal production, with CITIC to act as the principal for sales of 30% of the future mine’s annual production.

Bathurst said both parties were working towards formal offtake and funding agreements.

“We are delighted to have reached agreement with CITIC on this finance and offtake proposal with CITIC Resources Australia,” Bathurst chief executive officer Hamish Bohannan said.

“It reinforces the belief in the strong underlying fundamentals of the world coking coal market in general, and the high quality of the Buller coking coal in particular.”

The Buller hard coking coal project on New Zealand’s South Island is initially targeting 0.65-1 million tonnes per annum when it starts open cut mining in the December quarter.

There are further plans to hit 2Mtpa under second stage development and then double that to 4Mtpa in later ramp up.

Bathurst shares are up 3.2% to $1.125 this morning.