The two licences are located in the southern part of the Xinjiang Autonomous Region in north western China and cover a combined area of 36

Total coal resource of the licences is estimated to be about 1.17 billion tonnes under Chinese standards and the coal is a marketable medium to high energy thermal coal.

Altona said that the consideration payable, excluding the option consideration, is about £13m with payments conditional on the achievement of, and staged to reflect development and performance milestones.

The company has also signed a conditional placing agreement with institutional investors to raise £1m to provide additional working capital.