The company also said it would make a series of differed payments totalling $A13 million, which are tied into set milestones, and a 1.75% royalty on coal sales to Spur Hill UT.

A non-renounceable entitlement offer will help fund the initial payment and costs of the restructure, with Malabar offering – subject to rounding – 75 million fully paid ordinary shares to raise up to $A6 million.

The raised monies will also be used for a planned exploration program and working capital.

Eligible shareholders will be able to subscribe for 15 new shares in the company for every 17 existing shares held at the recorded date of September 21 at 8c per share.

The offer price represents a 23.81% discount to the closing price of Malabar shares on September 11, and a discount of 14.24% to the theoretical ex-rights price.

Under a previous arrangement with Spur Hill UT, Malabar had the right to acquire 80% of the project from its current share of 38.27% through incremental farm-in expenditure of $A30 million and payments totalling $40 million.