TerraCom will also receive $A80 million from Rio Tinto to meet Blair Athol Coal Mine’s rehabilitation liability as determined by Queensland’s Department of Environment Heritage Protection in November 2015.

The Financial Assurance will be provided as cash to be held in a bank account approved and controlled by the Queensland Department of Natural Resources and Mines.

The Blair Athol coal mine ceased production under its current management in late 2012 and has been maintained in good condition, according to TerraCom.

The company plans to start over 50 hectares of site rehabilitation while bringing the mine back into production.

Production is being scheduled around a rate of 2 million tonnes per annum of coal with a target of operations recommencing in the fourth quarter of 2016.

A Rio Tinto spokesman told International Coal News: “The Rio Tinto managed Blair Athol Coal Joint Venture confirms it is in discussions with a potential purchaser regarding its interests in the Blair Athol mine.

“These discussions may or may not result in an agreed transaction and are subject to the execution of a binding sale and purchase agreement and approvals from the Joint Venture participants and the Queensland Government.”

A previous Sale and Purchase Agreement with New Emerald Coal Ltd was terminated after they were unable to meet conditions of the agreement.

Almost 500 hectares of land at the Blair Athol site has already been progressively rehabilitated.

The Terracom transaction will result in the transfer of the Blair Athol mining tenure, on-site assets, infrastructure and environmental obligations.

“The site is in compliance with government requirements and a small workforce continues to ensure it is managed in a safe, secure and stable manner,” the Rio Tinto spokesman said.

The recommencement of mining at Blair Athol Coal mine is forecast to deliver TerraCom positive cash flow through a low overhead structure and operational efficiencies, the company said.

“This acquisition combined with the company’s recent debt restructuring and its hard coking coal mine in Mongolia will transform the TerraCom balance sheet with a materially positive impact on net assets,” it said.

“It provides TerraCom with comprehensive mine facilities and an established mining operation as a regional hub in Queensland to support expansion plans.”

Earlier this year Stanmore Coal started production from its Isaac Plains coal mine in Queensland which it also bought for the cost of $1 from Vale and Sumitomo.