The deal, the first major project commitment by the JV partners, will see Sedgman file a final design and implementation agreement for the proposed coal preparation and handling plant at the Benga project.

The initial processing plant will have a throughput of 800 tonnes per hour but Sedgman will also be required to factor in an expansion to 3000tph.

Riversdale is eyeing a 2009 start-up for the project with production to begin by 2010, with hopes to export coking coal and utilise thermal coal at a minemouth power station.

Benga, which is 35%-held by Tata after a buy-in last year, has 42Mt measured resources and 981Mt indicated, with a further 1.09 billion tonnes falling into the inferred category.

Riversdale plans to complete a bankable feasibility study into developing Benga by the end of this year.

Shares in the company were last trading at $9.54, up over 6% or 61c.