The agreement, worth up to $A4.5 million, will be used by the Australian junior to finance its takeover bid for Rocklands Richfield.
It will also support the growth of existing Bowen coal projects in Australia, including four coal exploration licences in the Bowen Basin, Queensland.
In return Bhushan will hold a 90% interest in joint projects and have a strategic investment in Australia’s coal industry, effectively securing supplies of Australian coal for its expanding steel operations in Asia.
If successful in its bid for Rocklands Richfield, Bowen will add the EPC 890 Rocklands project, MDL 324 Hillalong Project and 60% of EPC 930 Richfield Project to its portfolio.
Bowen hopes to utilise its agreement with Bhushan and the acquisition of Rocklands Richfield to fast-track the development of MDL 324 and EPC 890.
Other particulars of the agreement state that 75% of funds will be used for exploration of existing coal projects with the remaining 25% spent on general working capital.
Furthermore, Bhushan acquires a first right of refusal to develop Bowen’s existing coal projects and an incorporated joint venture agreement must be drawn in which Bowen will hold a 10% interest and Bhushan a 90% interest.
Bowen closed at 0.27c yesterday.