Earlier this month the companies confirmed they were negotiating the contract with Mongolian state-owned Erdenes Tavan Tolgoi, operator of the massive project.

The contract is for open cut mining in the Eastern Tsankhi area of the deposit.

While the final contractual details are still being finalised, Macmahon expects mining to begin in the first quarter of next year.

The deposit has the potential to produce 15 million tonnes of coal per annum for more than 30 years, from an estimated 6.4 billion tonnes of reserves.

Last month Peabody Energy was awarded the rights to develop the western portion of the Tavan Tolgoi deposit with Chinese coal giant Shenhua and a Russian-Mongolian consortium.

Since the start of the 2012 financial year, Macmahon’s mining business has secured more than $A1 billion of new contracts across a diverse range of commodities and locations.