Australia-based exploration company Newera Resources has formed a joint venture to explore Ulaan Tolgoi coal project in the South Gobi province of Mongolia.

The company has signed a Memorandum of Understanding for the 43,830 hectare project, reported Proactive Investors.

Under the terms of agreement, Newera will pay $64,000 after the due diligence results meet the company’s criteria. During the first phase, the company can acquire 51% of the project by paying $200,000 by 30 June 2014.

It also has an option to gain further 19% in the project by paying additional $1.2m or by undertaking drilling of 4,000 meters in three-year period.

The deal comes on lines with company’s plans to extend its coal projects portfolio.