That project consists of three priority tenement applications and one competing application.

To get its 20% interest, International Coal has to issue Coal Face Resources 17 million of its shares and 10 million options – valid for five years with an exercise price of 20c – and a $100,000 payment.

By spending $2.5 million on project development over the next 18 months, International Coal’s stake in the project grows to 46%.

If International Coal spends another $3.5 million over the next three years it can increase its interest in the Consuelo tenements to 71%.

At the end of that phase International Coal will issue another 8 million shares to Coal Face and pay it $500,000.

International Coal has the right to assign part of its interest in the joint venture if it deems it necessary.

The tenements, in the southern Bowen Basin are considered prospective for thermal and semi-soft coking coal.

An exploration target of 800 million tonnes to 1.7 billion tonnes has been established.

The Consuelo Project tenements are located within 10 to 20km of Xstrata’s Rolleston open pit mine, which is considered to be one of Australia’s lowest cost operating open pits.

The tenements also are within 20-30km of the existing Blackwater rail system that services Gladstone and other ports.