Aquila Resources has sold its main coal asset to fund a new iron ore project in Western Australia.

Aquila sold its 50 per cent stake in the Isaac Plains coal mine in Queensland’s Bowen Basin to Japan’s Sumitomo Corporation for $430 million.

Aquila also has formed a joint venture with Sumitomo to work on Aquila’s Queensland coal exploration assets.

The proceeds from the sale and the joint venture agreement, on top of Aquila’s existing cash reserves, should provide two thirds of the funds needed to construct an iron ore project in the Pilbara, the company said in a statement on Tuesday.

Once Aquila’s 24.5 per cent interest in the Belvedere coal project in Queensland was sold, nearly all of the funding for the iron project would be secured, it said.

Aquila said the sale process for its its Washpool coal project in Queensland would continue, but the latest deals would give it flexibility to consider other options for the project.

The sale of the South African Avontuur manganese project had been suspended because of the subdued market conditions for manganese, Aquila said.