Hunnu's board of directors has unanimously recommended that its shareholders accept the share and option offer from Banpu, which currently has a 12 per cent share in Hunnu. Banpu's offer values Hunnu's fully-diluted equity at $477 million.

Hunnu, which was incorporated in Australia but operates in Mongolia through a subsidiary, is a key explorer for coking and thermal coal deposits. The transaction provides Banpu with access to Hunnu's coking thermal coal deposits and exploration program in Mongolia.

"This is the second transaction on which Allen & Overy's Sydney office is advising Banpu, following a 12 per cent placement in Hunnu earlier this year," said Sydney-based A&O partner Tony Sparks, who leads the advisory team with Australian based partners Aaron Kenavan and Barry Irwin, with assistance from Bangkok partner Arkrapol Pichedvanichok, and Wendy Ko, Simon Huxley and Jarrad Cooper.

Perth-based firm Steinepreis Paganin is acting for Hunnu. JP Morgan is acting as financial advisor to Banpu.