Under the term sheet condition between Terracom and Singapore-based Bridge, $15 million of existing liabilities carried by BNU will be payable by Bridge Resources.

Terracom chairman Wal King said the BNU divestment would allow the company on its Blair Athol mine in Queensland and its newly-acquired Universal Coal assets in South Africa.

"Terracom is pleased with the execution of this binding term sheet to divest its non-core operating asset, the BNU coal mining business, in line with the company's strategic business plan," he said.

"The divestment will relieve the company's balance sheet of U$15 million of current liabilities and will enable Terracom to continue its transition to a profitable major global thermal coal producer, with a clear focus now on the company's Blair Athol Mine in Queensland and the more recently acquired Universal Coal mines in South Africa."

Bridge Resources is a coal buyer and an existing customer of BNU.

Terracom said it was familiar with the BNU asset and the coal produced, and well versed in doing business in Mongolia.

Bridge Resources will retain current BNU key management personnel as part of the transaction.

At this stage, Terracom keeps ownership of Enkhtunkh Orchlon, which includes the operational MV-19149.

"The company is currently in negotiation to divest EO, which if successful would see Terracom completely exit from Mongolia," it said.