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Japanese conglomerate Sumitomo Corporation is putting its money behind the Hillalong coking coal project, about 105km west-southwest of Mackay.

Project owner Bowen Coking Coal says Sumitomo has agreed to farm-in terms relating to the project.

A non-binding term sheet executed between company subsidiaries will allow Sumitomo to earn an initial 10 per cent interest by funding $2.5 million in exploration at Hillalong.

It will cover the Phase 1 exploration programs for the Hillalong North and Hillalong South – two priority open pit targets- within 12 months of commencement of the farm-in.

Sumitomo will be able to earn an additional 10 per cent by providing a further $5 million within 24 months of a Phase 2 work program being approved.

Bowen Coking Coal managing director Gerhard Redelinghuys said Sumitomo broughts a wealth of experience and significant financial backing in the global coal mining, trading and related steel industries to the Hillalong project.

“Sumitomo has a long history in the Australian coking coal industry and we look forward to building the relationship with them to the mutual benefit of both our companies.”

Located in the northern part of the Bowen Basin, the Hillalong project covers about 99sq km and lies about 16km north-west of the Hail Creek mine, owned by the Glencore-Marubeni-Sumitomo joint venture.

Xstract Consulting has estimated an exploration target of between 61 million tonnes and 409 million tonnes from the Rangal and Moranbah coal measures for open pit and underground targets.

Bowen Coking Coal is also advancing the Isaac River project, east of Daunia mine in the Bowen Basin.

It recently increased the resource estimate there by more than 67 per cent to 8.7 million tonnes.

Sumitomo buys into Hillalong coal project