Fox has agreed to an option to acquire 16 coal exploration permits, and one EPC under application, in the Styx, Bowen, Maryborough and Galilee basins of Queensland. They were formerly owned by Currawong Coal, a joint venture of XLX Exploration, Cliffs Natural Resources and Conarco Minerals.

Together, the tenements comprise more than 10,000sq.km within the major coal-bearing basins of Queensland, which Fox considers highly prospective.

The exercise of the option would mean Fox could achieve a major diversification of its exploration program, in terms of geographic spread of the projects and the targeted minerals, Fox Resources chief executive officer Bruce Garlick said.

“These assets are attractive for a number of reasons,” he said. “They are adjacent to an abundance of high quality coal deposits, with historical data indicating a presence of coal or potential to leverage off exploration work conducted previously.

“In addition, the tenements have good access to rail and port infrastructure."

All the tenements are considered to be prospective for either coking or thermal coal, according to the company.

Fox will now conduct due diligence before determining whether to exercise its option to acquire the tenements by 21 December 2012. The Binding Terms Sheet is subject to a number of terms and conditions.

If it decided to take up the option, Fox would pay $1 million in cash, $725,000 of ordinary shares in Fox following exercise of the option, a further $725,000 of ordinary shares in Fox if certain levels of JORC compliant thermal or coking coal resources were identified within five years, and a 0.95% gross proceeds royalty in respect of Fox's interest in the tenements.

Fox will pay the vendors an option fee of $100,000 within seven business days, regardless of whether it exercises the option.