Early results from the drilling had been encouraging for the company, Auspac CEO Paul Byrne said.

“Given the difficulties in securing cash for exploration activities in today’s market environment, we have entered into an exploration agreement that will enable our drilling partner to earn an equity interest in these projects,” he said.

Rio Tinto is also continuing its exploration of Auspac’s Mt Hillalong tenement through 2014 as part of an agreement between the two companies.

“Our tenement falls within a larger regional exploration program for Rio,” Byrne said.

“Their program provides a very positive outlook for the progress of our agreement with Rio.

“I repeat our strongly held view that payback from our strategy of identifying good quality metallurgical coal prospects, close to established infrastructure, will create value for our shareholders.

Progress is being made in adding value by exploring our tenements.

“Opportunities to realise value from the company’s assets are also surfacing,” Byrne said.

“We are strategically placed to develop our resources moving forward.”