Cockatoo Coal plans to raise $408 million to expand its Baralaba mine in Queensland, repay debt and fund a takeover offer for Blackwood Corporation.

The central Queensland coal producer will issue new shares to raise $153 million, and has also secured a $255 million finance facility from ANZ.

The bank facility will fund a proposed acquisition of rival Blackwood, which holds exploration licences throughout central Queensland.

Cockatoo Coal will offer two of its shares for every one Blackwood share, and Blackwood’s independent directors will recommend the offer to their shareholders.

The proceeds of Cockatoo Coal’s equity raising would allow the company to repay a $95 million loan facility, and expand its Baralaba project, where work is on track to meet its stage 1 timetable.

The company also operates projects in the Surat Basin and Bowen Basin in central Queensland.

Cockatoo Coal shareholders will vote on the equity raising in December.

Blackwood shares gained 1.2 cents, or 16 per cent, to 8.7 cents, while Cockatoo shares have been placed in a trading halt at 5.9 cents.