Geo Energy Resources (SGX:RE4) entered into a binding term sheet with to acquire a 50.1% stake in Harfa Taruna Mandiri, through the acquisition of 50.61% in the issued share capital of Mutiara Hitam Sukses.

Harfa Taruna is a subsidiary of Mutiara Hitam which is 75% held by Trinita Maitreya Pradana, according to a Wednesday filing with the Singapore Exchange.

Under the term sheet, Geo Energy Investama, the company's subsidiary, will acquire the stake for 911 million Indonesian rupiah.

The subsidiary will also provide shareholders of Mutiara Hitam with a refundable deposit as guarantee of $10 million following the execution of a definitive share purchase agreement.

Harfa Taruna owns a mining concession in Indonesia and has proved and probable reserves of over 25 million tons of coal.

The acquisition is part of the company's strategy to diversify and enhance its coal mining portfolio from thermal coal to coking coal.

Shares of the coal producer were up nearly 3% in Wednesday trading.