The Russell Vale Underground Expansion Project will allow for a five-year extension for mining the Wonga East area of the mine, using the first workings mining method.

Wollongong Coal said work had continued to address the surface and underground mine assets in preparation for the restart work program, which would begin following the government approvals.

It said the decommissioning of the mine's Bulli seam workings and targeted catchment assets was completed in the June quarter, delivering efficiencies and cost savings for the ongoing operation.

Lock the Gate Alliance NSW spokesman Nic Clyde said the project should never have reached this point because the company was a "financial basket case".

"Wollongong Coal is likely trading while insolvent, has a multi-billion dollar debt problem, and would struggle to financially cover the rehabilitation of their existing mine site, part of which is underneath Sydney's drinking water catchment," he said.

"Whatever the true cost of rehabilitation, this company has so little capital, it recently applied to be de-listed from the ASX because it couldn't continue paying basic listing fees.

"It has also been suspended from trading since December 2018.

"The IPC must reject this terrible proposal, because there is clearly too great a risk for Wollongong Coal to be trusted with Sydney's precious water resources."