The company will acquire 100% of First Coal shares, options and warrants for C$1.75 ($1.83) per share.
The proposed acquisition of First Coal provides Xstrata with access to coking coal exploration leases in the Canadian province of British Columbia.
The acquisition, which is subject to customary conditions, will be completed by concurrent statutory plan of arrangement and takeover bid.
First Coal is engaged in the exploration and development of metallurgical coal properties in north-eastern British Columbia, and it holds licenses or applications for licenses in respect of about 94,000 hectares in the Peace River Coalfield.
