MMC and NuCoal will jointly contribute up to $3 million to fund the Stage 2 exploration activities for the project.
NuCoal, as the holding company, has agreed to grant MMC an option to acquire up to a 25% interest in the project as a joint venture at the completion of the Stage 2 exploration program.
The exercise price for the option will be calculated using an agreed formula at the completion of the Stage 2 exploration activities.
NuCoal chairman Gordon Galt said this is the second significant investment from major Japanese corporations that NuCoal had secured for NSW this year.
Mitsui Matsushima International [MMI] became a partner in NuCoal’s Doyles Creek coal project in the Hunter Valley in September.
Under the terms of that joint venture farm-in agreement, MMI has the right to earn up to 10% equity in the project by spending up to $40 million.
Following completion of a bankable feasibility study, MMI will have the option to buy another 10% stake at a predetermined value depending on the level of end-user off-take commitment made at that time.
MMI will also be entitled to exclusively introduce coal from the project to Japanese customers.
Referring to the agreements with MMC, NuCoal managing director Glen Lewis said: “The company is very pleased to have MMC invest in the Savoy Hill Coal Project and we look forward to a successful long-term relationship with MMC as we jointly progress the exploration activities of the project”