Mt Penny was anticipated to begin production in 2013 and initially build up to 5.2 million tonnes per annum of run-of-mine coal from open cut 1, followed by open cuts 2-4 contributing an additional 4Mtpa of ROM coal. This would have brought total production to 9.2Mtpa ROM coal, equivalent to 6.4Mtpa of product coal, in 2018.

“There has been significant comment in the local area on the effects of mining in the Bylong valley and the results of the above expert reports will be relevant in determining the extent of future mining activities in the area,” White Energy said.

“Until these reports are further advanced, there remains a degree of uncertainty. In light of the risks associated with this uncertainty, the independent board committee of White Energy and the Cascade shareholders have been seeking additional clarity in relation to these matters and negotiating amendments to address these risks in the sale agreement.

“White Energy has been unable to reach agreement on these matters with certain non-White Energy related shareholders of Cascade.

“In these circumstances the committee believes it is appropriate and in the best interests of White Energy shareholders to wait until there is greater certainty in relation to the above issues and by mutual consent White Energy and the Cascade shareholders have agreed to cease negotiations on the transaction and to terminate the agreement.”

The Bylong Valley Protection Alliance has hailed the news as a “victory for common sense”

BVPA interim secretary Craig Shaw said the group had been puzzled all along about how so much money could potentially change hands “when so many issues remained up in the air”

“Everything seemed to be so ‘bullish’ and to be happening so quickly,” he said.

“I’m sure there would be quite a few non-aligned White Energy shareholders heaving a sigh of relief that common sense has prevailed in avoiding what seemed to be very substantial risks.

“We’re hoping now that the scotching of the deal will mean a more measured approach can be taken. We’re seeing it as a kind of ‘circuit breaker’.”

Various expert consultants have been appointed and are active in the field assessing matters such as hydrology, cultural heritage, transportation, social impact, agricultural land and other key matters required by the Department of Planning, White Energy said.

“Cascade has proven up substantial open cut coal resources and reserves at its Mt Penny deposit and has been granted director general’s requirements from the Department of Planning to proceed with the detailed assessment of the project as a prerequisite to development consent,” the company said.

White Energy, which is led by ex-Felix Resources duo Brian Flannery and Travers Duncan, may also be the subject of an audit by the new state government over the awarding of an exploration licence by former state minerals resources minister Ian Macdonald.

The family company of another former NSW minerals resources minister, Eddie Obeid, purchased the Cherrydale Park property in Cascade’s Mt Penny project area in late 2007, with expressions of interest sought for this exploration licence less than a year afterwards.

Five White Energy directors, including Flannery and Duncan, were each 12% shareholders of Cascade but White has refuted any suggestion of a conflict of interest.

“Due to the related-party nature of the Cascade Coal transaction, White Energy established an independent board committee comprising independent directors Graham Cubbin, Vincent O’Rourke and Hans Mende,” Flannery revealed in a presentation.

“The decision to proceed with the acquisition of Cascade Coal follows an extensive and rigorous due-diligence exercise performed by the IBC in consultation with its external advisers. Subsequent to this diligence process, the IBC strongly believes that the transaction represents significant value, is a compelling opportunity and is in the best interests of all White Energy shareholders.”

The IBC also engaged an independent expert, Deloitte Corporate Finance, to prepare a report on the proposed transaction, including an opinion as to whether the acquisition of Cascade shares on the term proposed was fair and reasonable to White shareholders not associated with Cascade shareholders. This included an independent technical review by Behre Dolbear.

A decision to revisit a transaction once development consent is achieved may be available in the future, on terms and conditions relevant at that time, White said.