Both parties are working towards a coal production start date of around March 2007 and Bounty said while broad commercial terms have been agreed, the contract is still subject to approval of both boards.

“There is around 1.5 million ROM tonnes of recoverable coal, providing Bounty with two to three years of continuous mining,” Bounty managing director Mark Gray said.

“We know the mining conditions well, having spent six months mining in the region last year.

“We ran excellent coal here last time, averaging around 50,000 run of mine [ROM] tonnes per month on a four day per week production schedule – the mining conditions are excellent,” he said.