Subject to satisfactory completion of due diligence and shareholder approval, AuIron will acquire YCC's 1 million tonne per annum Yarrabee open cut PCI coal mine in Queensland in exchange for issued shares equivalent to 48% of the issued share capital of AuIron.

Owner of Yarrabee Coal Company (YCC), Resource Management and Mining (RMM), will receive 301 million ordinary shares in AuIron and 150 million options over AuIron ordinary shares. If exercised this would increase RMM's interest in AuIron to 58%.

The twenty year-old Yarrabee open cast coal mine is located in the Bowen Basin, approximately 280 km west northwest of Gladstone. Since YCC took ownership 14 years ago, annual sales have increased from approximately 250,000 tonnes of thermal and low volatile PCI coal to over 1 million tones, providing an annual revenue stream in excess of $50 million.

"In this period, YCC has significantly improved mine operating cost performance and the company has defined coal reserves equivalent to 15 years operation at 1.0 to 1.2 million tonnes per year of sales," AuIron said in an ASX statement.

The mine returned an EBITDA of $4.1 million and EBIT of $3.5 million (unaudited) in the six months ended 31 December 2002.

YCC chairman, Ian McCauley said the company saw an opportunity at the moment for growth in the coal industry against a backdrop of rationalisation which has left a few large players and a few 'incidentals'.

"We see a gap in the market for a pure coal play capitalised in the $200 million to $300 million range," McCauley said.

While YCC has a few 'blue sky' projects, future company growth will be primarily through acquisition targeting open-cut coal projects.