Shenhua is exploring a 195 square kilometre area in the Liverpool Plains that is estimated to contain a resource of 500 million inferred tonnes.

The company says there is potential for an open cut mine, located within the ridge country and not on the highly fertile and agricultural intensive black soils of the Liverpool Plain. The mine is expected to have a life of 50 years.

If a viable mine is identified and receives the necessary environmental planning and mining approvals, mine construction will begin in 2012 and production in 2013.

The company currently has 85 holes completed with five rigs onsite and another due next month. The depth of drilling has varied from 35m to 411m to reach the Hoskisson, Melville and Maules Creek coal seams.

Eight groundwater monitoring devices, six of which are piezometers, have been installed.

Shenhua said to date potentially significant deposits of thermal coal have been identified in the Hoskisson and Melville seams, with additional coal in the overlying Hoskisson and deeper Maules Creek seam.

Shenhua is currently focusing on open cut operation and not investigating underground mining, however, the company may look into underground mining further down the track.

Shenhua’s exploration lease covers 197 privately owned lots with 65 owners, areas of Breeza State Forest and public lands.

The company has agreements with private landholders allowing access for prospecting over 8000 hectares and access to 2000ha of the forest.

The Foreign Investment Review Board has given the company approval to buy 11 properties covering 3500ha.

Shenhua told ILN seven properties (four landholders) were currently under contract, one contract was being drawn up and another 18 parcels of land (11 landholders) were under negotiation for purchase.

The company pointed out it was not purchasing property in the black soil unless it was contiguous with the ridge country in the same lot.

Purchased properties will be used for agriculture until any mining is approved and commenced, and land not used will be maintained for agriculture.

If Shenhua does not receive mining approval, all land will be sold as required by the FIRB.

Proposed mining in the Liverpool Plains has been met by strong opposition from many local farmers concerned that mining will damage the flood plains and the aquifer that feeds the rich farmlands.

In response to community concerns, Shenhua has laid out rules to promote the co-existence of mining and agriculture.

The company will not mine the black soil and has attempted to minimise the uncertainty created by an exploration program by giving landholders the choice to sell their property up front.

“Experience has shown that landholders experience stress and anxiety when an exploration licence is granted,” Shenhua said.

“By offering to purchase properties up front, landholders are given a choice to stay and see what happens or sell their property and get on with their lives.

“This approach and choice has been well received by landholders, with the majority of landholders within the proposed mining area expressing an interest in selling their property.”

Landholders are also given a 12-month lease-back option so they can take time to look for a new property and, if unsuccessful, they can take their property back.

Shenhua has also employed a full-time experienced hydrogeologist, Dr Jurgen Schaeffer, who is meeting with landholders to gain a better understanding of the groundwater conditions.

Engineering and environmental consultancy GHD has also been employed to look at groundwater issues.

The Namoi water study is also taking place to look at the impact of mining on groundwater in the area. Shenhua will supply all its data to the study and partially fund the program.

GOS Drilling is undertaking the exploration drilling program and has three Grade 3 water bore licenced drillers working full-time on the project.

Shenhua has also revised the Access and Compensation Agreement for Exploration by incorporating the new changes made in the NSW Farmers Association Access Agreement Guidelines, including the payment schedule.

The company is also working with individual farmers to create a plan for their property, including where to drive and how to leave gates.

All project-based Shenhua management personnel have relocated permanently to Gunnedah.