The funding will also be used to support Yancoal’s continued investment and expansion within the Australian resources sector, its CEO Reinhold Schmidt said.

“We have responded to the constraints of our current operating cashflow and depressed global coal prices with strong and decisive action to raise new financing in the interests of our shareholders and the future of the underground assets,” he said.

“Yancoal remains committed to investing within Australia, reducing costs and improving operational efficiencies across all operations.”

The bonds will be issued by a newly established wholly owned subsidiary (issuer) of Yancoal.

Yancoal’s interest in the New South Wales mining assets of Ashton, Austar and Donaldson will be transferred to and held by the issuer.

As a consequence of the transaction, Yancoal will cease to control the issuer and, from an accounting perspective, Yancoal’s investment in the issuer will be reflected in its balance sheet as an “investment accounted for using the equity method” and appropriate disclosure of the financial position and financial performance of the issuer will be included in the accounting notes in accordance with applicable accounting standards.

“By way of services agreements with the issuer, Yancoal will continue to manage the Ashton, Austar and Donaldson mines to the highest safety, environmental and operational standards,” Schmidt said.

The transaction remains subject to satisfaction of a number of conditions precedent, including FIRB approval, PRC regulatory approvals, and receipt of certain other third party consents.

Proceeds will be transferred in two instalments: the first of $US757 million upon closing; and the second of $US193 million, on or prior to 30 September 2016.