To boost funds, Caledon will issue 11 million new ordinary shares on London’s Alternative Investment Market to raise up to 3.3 million pounds.

Both Caledon and Polo also extended the short-term credit facility they entered into in late April.

Notably, one of these facilities was changed so up to $A4 million can be fully drawn at short notice anytime up to the end of September for the “potential” lodgement of a bid bond linked to the Wiggins Island tonnage allocation process.

Bywater will be a new director for Caledon at the end of this month.

He oversaw seven mining operations producing 60 million tonnes per annum during his time at RTCA.

Bywater also serves as the CEO of London-listed GCM Resources, which seeks to develop the Phulbari coal project in Bangladesh.

Meanwhile, the Cook coking coal mine in Queensland is falling short of management goals for production this year.

“Caledon has put in place operational changes to address this shortfall to assist in achieving its 2010 annual production target of 700,000 tonnes of saleable coal,” the company said.

Caledon managing director Mark Trevan said the termination of merger discussions with Polo was a “reflection of the difficulties presented by the current market environment”

“As a result, Caledon will remain one of the few independent coking coal producers in Australia and we are pleased to have the continued support of Polo demonstrated by the placing and extension of the loan facilities,” Trevan said.

“Stronger coking coal prices since April 2010 endorse our belief in the strength of the underlying operating business.

“Caledon and its shareholders are well placed to benefit from robust coking and thermal coal markets through the company’s 100 per cent ownership of the Cook mine and the Minyango project.”

Caledon’s shares on the Australian Securities Exchange shed 4c to 54c on Friday.