The deal is for the southern portion of the Wards Well tenement. Apart from the cash, Stanmore would also receive access to infrastructure as an optional solution which may minimise the start-up capital needed for the initial development of the nearby Lancewood and remaining northern area of Wards Well.

There was also a contingent royalty of up to $US200 million in the future, based on a capped royalty profit sharing mechanism.

Stanmore chief executive Marcelo Matos said it was an exciting transaction for Stanmore.

He said the deal meant funds for Stanmore for an area that Stanmore did not have any immediate plans to mine and was more attractive to Peabody which is mining at the nearby North Goonyella.

“Substantial high-quality hard coking coal resources will be retained in the northern parts of the Wards Well tenement with the transaction providing optionality to minimise start-up capital for the development pathway of Lancewood, before potentially moving underground into Wards Well thereafter,” he said.