Morien Resources has agreed to sell its 25% stake in the Donkin coal project in Nova Scotia, Canada to Kameron Collieries.

Kameron owns the remaining 75% stake in the project which it acquired from Glencore in December 2014.

Under the purchase and sale agreement, Kameron will pay $5.5m in cash, $2m on closing, $2m on or before the second anniversary of closing, and $1.5m on or before the third anniversary of closing.

The seller will also receive production royalty of 2% on the first 500,000 tons of coal sales per quarter and 4% on sales from quarterly tonnage above 500,000 tons.

Morien shareholders will decide on the transaction at a special meeting in February.

Based on current and forecasted coal prices, the company expects to receive up to $6.7m a year in royalty payments.

Capital cost associated with the development of the project is estimated at more than $300m, according to studies by Glencore.