Sojitz signed a memorandum of understanding with NEC to form a joint venture to advance Emerald towards mine development.
Sojitz will earn a 30% joint venture interest in the Emerald tenement by funding a three-stage, $5.3 million exploration and evaluation program to take the exploration project through to completion of a bankable feasibility study for establishment of a mine.
NEC will also receive an up-front payment of $500,000 from Sojitz on finalisation of the agreement.
After completing the $5.3 million farm-in Sojitz will have an option to acquire a further 19% JV interest for $6.65 million in cash.
NEC managing director Keith Barker said Sojitz would also be entitled to marketing rights over all coal produced from the project while NEC would manage the exploration and evaluation program.
Barker said the Emerald project contained a large tonnage of quality thermal coal offering scope for development of a significant mine complex over time.
In July this year NEC announced an exploration target of 410-460 million tonnes to a depth of 300m following compilation and assessment of historical exploration data from within the tenement area.
NEC said the majority of the area will be assessed as an underground project with potential for some opencut resources close to the subcrop to be assessed in the initial exploration stage.
The rail line from Emerald to Gladstone also passes through the EPC.
Barker said finalisation of the joint venture, marketing and farm-in agreements with Sojitz was expected before the end of the 2006 calendar year with exploration planned to start in the first quarter of 2007.
NEC is currently conducting two drilling programs – at the Maryborough coking coal project and the Elimatta low-sulfur thermal coal project – with results expected from these programs in early 2007.
Barker said NEC would also continue exploration of the Ashford Regional Project for extensions to the hard coking coal resource at Ashford.
After sliding over the past few days, Northern Energy was trading up 0.88% at 58c at midday today.
