The water licences were purchased from “entities” in the vicinity of the project area for $A1.4 million, NuCoal said.

“This is another significant milestone for the Doyles Creek coal project as securing water supply for the underground mining process is integral to the development of a modern underground operation,” NuCoal managing director Glen Lewis said.

“The licences are flexible in nature and any surplus supply would be available for NuCoal’s Dellworth projects if required.”

The proposed Doyles Creek mine is designed to host an associated training school.

Planning so far has indicated there is a possible 30-year mine life for single seam scenarios but there are five target seams in the project and NuCoal has flagged the potential for multi-seam longwalling – including a 10-year longwall mine that could produce 4.5-5 million tonnes per annum of semi-soft coking coal.

The Dellworth project is located near the town of Ravensworth, northeast of Doyles Creek and is close to the United longwall mine, which has suspended production.

The explorer aims to start longwall production at Doyles Creek in 2014.

NuCoal shares are unchanged at 30c per share.