The company also inked an accommodation services contract with the Whitehaven Coal-led Narrabri Coal Joint Venture to supply 150 reserved rooms on a take or pay basis for an initial term of four years.

But the contract is subject to approvals from Narrabri Shire Council and other authorities.

Pending approvals, The MAC expects the village to be operational by early 2011.

The company expects the Narrabri village to serve as a base for its expansion plans in the state.

The MAC chief executive officer Mark Maloney said the village site is about 1.2 kilometres away from the centre of the Narrabri town, and will be developed in stages to meet local accommodation demand as more mines are developed in the area.

The company also is advancing plans to develop a village at Muswellbrook in the Hunter Valley.

“In addition to seeking additional contracts for the new Narrabri village we are actively pursuing customers for the planned village at Muswellbrook, allowing us to continue to drive our strategy of geographic diversification,” Maloney said.

Whitehaven plans to install Bucyrus longwall equipment at its Narrabri mine in the September quarter of 2011.

The second stage development of the mine aims to increase production to about 6 million tonnes per annum.

But if longwall top coal caving is proven to be feasible and is introduced, the Narrabri mine will be able to double production to 12Mtpa of raw coal.

The JV behind Narrabri consists of Whitehaven (70%), Upper Horn Investments (7.5%), Electric Power Development (7.5%), EDF Trading (7.5%), plus Daewoo International and Korea Resources Corporation (7.5%).

The MAC shares are down 14c to $2.96 this morning, shedding gains made yesterday.