Yancoal successfully appealed against PAC’s refusal last December of the SEOC project, which is being planned to replace the North East open cut operation that closed in early 2011.

“Yancoal Australia has successfully appealed the refusal of this application and, as a result, PAC will now review its decision,” the companies said in their merger presentation.

“Capital investment of approximately $290 million is expected to be spent over the period 2012 to 2016, which includes the South East open cut.”

The operations comprise both an operating underground mine and an open cut mine development, with total production from Ashton in 2011 being 2.2 million tonnes of run of mine coal and 1.2Mt of saleable product (including coal from the now-closed North East open cut).

Both the underground and open cut Ashton mines typically produce semi-soft coking coal.

Currently, Yancoal Australia is the operator of the Ashton unincorporated joint venture and has a 90% interest, with the remaining 10% interest held by ITOCHU Corporation.

Yancoal and Gloucester are currently awaiting approval for a scheme of arrangement that will see Yancoal acquire Gloucester for Yancoal shares, with Yancoal to list on the Australian Securities Exchange as MergeCo.

The company is applying for approval of the SEOC, lying east of Glennies Creek and south of the New England Highway, which will have production of up to 3.6 million tonnes per annum of ROM coal.

It is also seeking permission to construct infrastructure and facilities to support the SEOC and coal handling facilities that will integrate with the existing coal handling, preparation and train loading facilities.

The company is seeking to modify the existing its development consent to increase the throughput of the coal handling and preparation plant and rail loading facilities to cater for approximately 8.6Mtpa of ROM coal (or an additional 2.3Mtpa of product coal).

It is also seeking an increased coal extraction rate from 2.95Mtpa ROM to 5Mtpa ROM coal in the existing underground coal mine.

Ashton has an established rail loop and loader, with current rail capacity in line with port entitlements.

Ashton currently has port allocation of 3Mtpa through Port Waratah Coal Services and should the merger proposal not proceed, it intends to apply for additional PWCS T4 capacity in late 2012.