The agreement relates to Bankura’s Anandapur sector, Biharinath block in the Raniganj coal field, located in West Bengal, India.

Under the agreement, Bankura has granted India Resources’ subsidiary IRL Coal India the sole and exclusive right to the mine for four months in order to finalise the technical and commercial terms of the deal.

Once those terms have been agreed, the parties plan to sign a long-term agreement that will see IRL Coal appointed as the sole and exclusive contractor to develop two declines of 2km each, sink two shafts of 170m and 490m in depth and undertake underground coal mining operations.

IRL will be required to deliver coal to the pit head as per the approved mine plan.

The current mine plan envisages first delivery of coal of 30,000 tonnes in the third year of operations, ramping up to reach a target production of 480,000t per annum in the seventh year of operation.

The mining plan involves up to seven coal seams, 1.2-4.3m wide, over a 10-square-kilometre area at a depth below surface of 100-500m.

India anticipates the capital required for the project will be raised through the current share purchase plan, debt facilities and a capital contribution from Bankura.

Shares in India Resources gained A0.7c to 2.5c in morning trade.