A binding heads of agreement was signed on Friday between Cockatoo subsidiary Independent Coal and Tinkler Group mining investment arm Aston Resources, to enter into a joint venture to explore and assess the feasibility of the Dingo project.

The project comprises three tenements covering 35,420 hectares.

The first two tenements contain Rangal Coal Measures at sub-crop along a strike length of 36km. The third tenement has Burngrove Formation coal-bearing potential.

The tenements are close to the Blackwater railway and 225km from Gladstone Port.

Under the agreement, Independent does not incur any funding obligation until phase three of the exploration program and feasibility study has been completed, or Aston has spent $A9 million on the project. Spending above $9 million will be funded proportionate to the joint venture interests.

Aston will earn a 30% interest in the joint venture by completing phase 1 of the exploration program or by spending $1.5 million within nine months.

Aston can increase its interest to 51% by completing the second phase of exploration or by spending an additional $2.5 million on the feasibility study within 18 months.

It can then take its interest to 70% by completing phase three of the exploration program or by spending $5 million more on the feasibility study within 27 months.