Rio and Mitsubishi announced its original proposal on August 8, offering Coal & Allied shareholders $122 a share for the 14.1% of the company they do not already own.

The companies have now signed a bid implementation agreement after Coal & Allied directors backed the revised offer.

If Coal & Allied shareholders approve the offer, the company will issue shareholders with a special dividend of $8 per share.

The increased bid was reached after a proposal response committee made up of Coal & Allied directors Bryan Davis, Chris Renwick and Annabelle Chaplain reviewed the initial indicative proposal.

Coal & Allied recently reported a bumper June quarter for its Hunter Valley operations, with saleable coal production 28% higher than the previous quarter and 26% higher than the corresponding quarter in 2010.

The mine produced the highest quarterly coal output for five years, recovering strongly from the low levels of blasted inventory early in the year that hampered first quarter production.

Rio first started accumulating an interest in Coal & Allied in 1977 and by 1991 owned 70% of the Hunter Valley miner.