Australian coal firm Aston Resources Ltd. has entered into a conditional agreement with J-Power Australia Pty Ltd for the sale of a 10% stake in the Maules Creek Project in New South Wales for A$370 million payable in a single tranche upon completion.

J-Power Australia is a wholly owned subsidiary of Electric Power Development Co., Ltd. (J-Power) headquartered in Tokyo, Japan. J-Power is a major wholesale power producer and owns and operates seven coal-fired thermal power stations across Japan. J-Power stock is listed on the Tokyo Stock Exchange.

"The transaction includes a long-term thermal coal sales agreement between the Maules Creek Joint Venture and Electric Power Development Co., Ltd. The commercial terms of the off take agreement are market-based (typically for SCoTA standard Newcastle coal) including premiums for higher energy and lower ash content," Ashton said in a statement. to the Australian Stock Exchange.

The proposed off take commences in 2014 for an initial 10 years with sales gradually ramping up from 150ktpa to 900ktpa.

The transaction, however, is conditional on Itochu of Japan, Aston’s existing Joint Venture partner, consenting to the terms of the long-term coal sales agreement. Itochu has a pre-emptive right to match the proposed transaction terms of the asset sale agreement.

The agreement is also conditional on ministerial consent to the transfer of the relevant mining tenements and other conditions precedent customary for this type of transaction.

“Aston is pleased to have agreed terms to sell 10% of the Maules Creek Project for $370 million. These commercial terms recognise the development progress made by Aston over the last two years and the underlying value of the world-class Maules Creek Project. Aston is already in a strong net cash position and, following a successful completion of the transaction, would have the majority of the funds required to develop the project," Aston Resources CEO Todd Hannigan said.

Aston owns 85% of the Maules Creek Project. Maules Creek is considered to be one of only a few remaining “Tier-1” undeveloped coal assets in Australia. Maules Creek is located in the Gunnedah Basin of New South Wales. Maules Creek’s production mix is expected to comprise a majority of high quality metallurgical coal and a premium, low ash, export thermal coal.