The deal concludes the definitive agreement anticipated by the previously announced $US4.5 million transaction bridge loan from Anglo Coal, entered into at the end of 2005.

The agreement covers nine of the 11 coal properties Hillsborough holds in northeast British Columbia.

The properties have been grouped into two project areas. The first is the Horizon group, comprising the Barbour, Horizon and Northridge blocks of the Five Cabin property, as well as the Murray and Waterfall properties, and which includes the Horizon mine area on which Hillsborough has already initiated pit design and mine planning work.

Hillsborough will continue developing the mine plan and feasibility study for the Horizon mine. The bridge financing has been now converted into a three-year term loan agreement during which, if Hillsborough decides to develop a mine, Anglo Coal has the option to convert the loan into a 60% interest in the Horizon group.

The second group, to be known as the Murray River Group, includes the Southridge area of Five Cabin as well as the Tent Fire, Prospect, Turning Mountain, Mesa, Reesor and Bullmoose properties, and will form the basis of the new MRG joint venture between the parties.

Under the terms of the MRG joint venture, Anglo Coal is assuming responsibility for the continuing exploration and development of the Murray River Group properties. By financing the first $US5 million of exploration on these properties within three years, Anglo Coal will have a 51% interest in the Murray River Group.

"We are very pleased to successfully conclude our negotiations with Anglo Coal," Hillsborough chief executive David Slater said.

"We look forward to continuing the advancement of these two excellent project areas, and through this new relationship with Anglo Coal we will leverage our joint efforts to develop what is hoped will be the premier metallurgical coal producer of the northeast British Columbia coal fields."