Under the deal, the company will pay $60m in cash and $5m in shares.

With this acquisition, Anglo Pacific will be able to receive royalty payments of 1% from gross revenue on coal produced from the area covered under the royalty.

Anglo plans to finance the acquisition through a combination of a proposed firm placing, placing and open offer for up to $60m, which will be partially underwritten by the joint bookrunners, and a three year revolving credit facility from Barclays Bank.

Anglo Pacific CEO Julian Treger said: "The Narrabri royalty will immediately enhance our portfolio of producing royalties and diversify our royalty income.

"The Acquisition demonstrates the opportunities that the current market conditions provide and we will continue to look to enhance our royalty portfolio and further diversify our royalty income stream for the benefit of all our shareholders."

The Narrabri mine is said to have an estimated 22 years of mine life at Narrabri North, and potential to extend production at Narrabri South.