Allegiance Coal (ASX:AHQ) and Japan Oil, Gas and Metals National...

Allegiance Coal (ASX:AHQ) and Japan Oil, Gas and Metals National Corporation (JOGMEC) will jointly undertake an extensive exploration program in the Kilmain Coal project in Queensland’s Bowen Basin.

This is a good sign for coal exploration in Australia.

Under the deal, JOGMEC, a Japanese government owned corporation, will provide up to $3 million of exploration expenditure over a 3 year period to earn a 40% interest in the Kilmain Coal Project.

The agreement is subject to final execution of the documents and approval by the FIRB.

Allegiance is to benefit from the recent Japanese national interest in Queensland resources as demonstrated by the signing on 30 September 2013 by JOGMEC and the Queensland State government of a comprehensive Memorandum of Understanding.

The MOU sets out a framework for strong bilateral cooperation on natural resources exploration and development in Queensland including coal, gas and other mineral resources.

Japan considers Queensland one of the most strategically important partners for its resources trade.

The Kilmain Project covers 56 square kilometres, just 12 kilometres west of the Rolleston rail line, and adjoins Bandanna Energy’s (ASX:BND) Arcturus and Springsure Creek projects.

The JOGMEC agreement provides Allegiance with funding for all of the planned exploration expenditure, including seismic exploration, drilling and associated coal quality analysis within the Kilmain Project area.

Funding provided will also allow Allegiance to build a comprehensive geological model of the area utilising the new data along with previous company drilling and historical data within and adjacent to the tenements.

First activities will be seismic surveying which is expected to take place during September 2014.

Allegiance is capitalised at just $2 million.