Coalworks (Vickery South) Pty Ltd, a wholly owned subsidiary of Coalworks Limited, has signed a Farm In Agreement with ICRA Vickery Pty Ltd, a subsidiary of ITOCHU Corporation, to develop its coal project in the Gunnedah Basin of NSW in a deal worth AUD 11 million.

Mr Andrew Firek MD of Coalworks said that the benefit of having ICRA Vickery Pty Ltd as a joint venture partner is of inestimable value. He said “Now that we have established a 42 million tonnes resource we are in a better position to draw on the strength of ITOCHU and ICRA Vickery Pty Ltd which will bring us closer to bankable feasibility study.”

Up to AUD 11 million will be spent by ICRA Vickery Pty Ltd at the Vickery South Coal project, where a drilling program has already commenced, to undertake a preliminary feasibility study and complete a bankable feasibility study by mid 2011.

Since the signing by CVS of a MoU in February 2010, Coalworks has announced a maiden resource of 42 million tonnes of export quality thermal coal with coking coal potential which Coalworks believes will be mined by open cut methods.

The MoU provides for ITOCHU to enter into a marketing and sales agreement and off take option agreement whereby ITOCHU will arrange the sale and marketing of all, and have the option to buy, coking and thermal coal produced from the Vickery South Coal project.

ITOCHU Corporation is a major Japanese trading house which has extensive experience in the development of coal mines and the global marketing and sale of coal. It has numerous joint ventures and investments in coal mines in Australia which includes joint ventures with Xstrata, Yancoal Australia, and Anglo American Metallurgical.