The funding agreement between Stanmore and Taiheiyo Kouhatsu, which is supported by New Energy and Industrial Technology Development Organization (NEDO), was signed in Tokyo during a coal marketing trip.

NEDO works to ensure Japan’s power needs are met by providing grants to overseas coal projects via Japanese companies such as Taiheiyo.

NEDO, a subsidiary of Japan’s Ministry of Economy, Trade and Industry, has also provided grants to New Hope Corporation, which is currently supplying its Surat Basin New Acland coal to the Japanese power utility market.

The Range coal, which is tipped to be a premium high energy, low ash product, is expected to be used for power utilities and industrial coal users.

Stanmore managing director Nick Jorss said the agreement demonstrated the overall potential in The Range.

“This is a strong vote of confidence in our export coal product as we work through the important process of selecting our initial joint venture partner at The Range,” he said.

“The strategic benefits to Stanmore Coal of this transaction are substantial as we drive The Range into production in 2015.”

Under the agreement, Stanmore will receive $1.2 million in funding to drill 30 cored, coal quality holes at The Range.

The drilling will enable Stanmore to upgrade The Range resource to JORC status.

In addition, Taiheiyo will be able to purchase up to 40,000 tonnes of coal over the first three years of production at The Range for distribution to Japanese customers.

The Range project is located 25km southeast of Wandoan and is in close proximity to the planned Surat Basin rail line.

The Range project currently contains a JORC marketable reserve of 94 million tonnes and is tipped to produce 5 million tonnes per annum of export coal over 26 years.