The acquisition package includes a 74-hectare iron ore property hosting a mine producing 30,000 tonnes per month of 62% iron product.

Coal Fe will purchase a 65% stake in the mine’s owner, Mineral Saksur Makmur, via staged payments totalling $US6.5 million ($A7 million).

MSM holds all valid export permits, producing licences and a smelter permit, which will allow Coal Fe to produce and export product.

Coal Fe flagged Krakatoa Steel as the mine’s existing customer at a price of $80 per tonne and said it planned to increase production to 60,000tpm.

The company also aimed to acquire a 70% interest in Tunngal Putra Nusantara, which owns a 100-hectare high-calorie anthracite coal concession that produced 30,000tpm before TPN ceased operations due to insufficient working capital.

Coal Fe intends to restart operations at the coal mine within 2-6 months of shareholder approval with an increased production rate of 500,000 tonnes per annum.

The deal will require payments totalling $250,000, plus a royalty of $5/t of coal sold.

The move follows a strategic review of the Coal Fe’s assets with an objective of acquiring higher quality projects.

It is expected to provide the company with access to cash flow immediately, potentially leading to a re-rating as a producer.

“Coal Fe has a track record of developing and commercialising mines in Indonesia,” Coal Fe managing director Robert Swarbrick said.

“These projects will simply fast-track that process and provide shareholders with access to already producing or historically producing projects that have low capital expenditure but provide good operating margins resulting in significant cash flows for shareholders.”

The acquisitions remain subject to a 60-day due diligence period and shareholder and regulatory approvals.

The transaction will also result in a restructuring of the Coal Fe board, with executive directors Cheng Jew Keng Keng and Faris Azmi Abdu Rahman continuing as non-executive directors.

The remaining board members will resign from the board.

Shares in Coal Fe were last trading 100% higher at A1c.