Tiaro will place 7.4 million ordinary shares with Qinfa subsidiary Bright Rock Holdings at 18c per share, raising $1.332 million.
The placement will give Qinfa 13% control of Tiaro and a place on the board.
Qinfa has also agreed to acquire 6 million 25c options, exercisable before the end of this year, potentially raising $1.5 million.
While the share placement does not require shareholder approval, the options do and will go to a vote at the next general meeting.
The deal will provide Tiaro with the funds to develop its interests in the Mesozoic Maryborough Basin to JORC compliance.
Qinfa will enter a coal offtake agreement for future mining production and will support Tiaro to start coal trading operations.
Tiaro said the deal would also help it develop new coal resource opportunities with third-party coal mining operations.
Tiaro closed steady at 16c.