ICX inked the joint venture contract with CFR on Friday for the development of the Don Juan tenement comprising 43 sub-blocks, or around 130sq.km, in the coal-rich Surat Basin.

Through two phases of exploration investment, ICX has the right to earn up to 71% in the prospective thermal coal project.

“The Don Juan joint venture will provide a relatively low-cost entry into the Walloon coal measures of the Surat Basin,” ICX chief executive officer Glenn Simpson said.

“Development of this project is expected to yield an inferred resource in a target area with known thermal coal export potential.”

Don Juan has an exploration target in the range of 20 million tonnes to 435Mt identified, with 0Mt up to 210 Mt expected at depths of less than 100m.

Mines in the wider Surat/Moreton Basin region including New Acland, Jeebropilly, Cameby Downs and Wilkie Creek already produce export quality thermal coal from the Walloon coal measures.

“The initial program will comprise 2 chip holes with downhole geophysics,” Simpson said.

“We expect this program to yield a small JORC inferred resource and, if we are successful, we’ll move to phase 2 to expand and develop that resource.”

The terms of the JV agreement will see ICX gain an initial 20% interest upon issuing CFR 3 million shares.

Exploration expenditure of $250,000 in the first 12 months will gain ICX a 46% interest, which can be increased to 71% with further expenditure of $450,000 over the following 12 months.

If both phases of spending are completed over the two-year period, ICX will issue a further 3 million shares to CFR.

Simpson said the strategic alliance with CFR and the JV’s preferred supplier, the Moultrie Group, will provide ICX with strong technical experience in the area.

“The program, although relatively low-cost, will be run to industry benchmark standards,” Simpson said.

“An environmental audit is being completed by an independent expert prior to drilling to ensure we fully understand the local environment and our impact.

“All onsite personnel will be undertaking cultural awareness training with Bidjara people representatives and a strong safety culture will be embedded into our operations.”

The deal marks the culmination of negotiations on a term sheet agreed to last November.

ICX said it expected drilling to begin soon, with an environment audit currently being undertaken by an independent expert and the final landowner and cultural heritage clearances being finalised.

ICX has four Queensland coal projects – Bundaberg, South Blackall, Consuelo and now Don Juan.