The approval comes as the NSW corruption watchdog prepares to launch its inquiry into the initial grant of the Doyles Creek exploration lease in the Hunter Valley to union stalwart John Maitland.

“FIRB approval is another significant milestone for the Doyles Creek underground coal project and training mine facility,” NuCoal managing director Glen Lewis said.

“NuCoal has been working for in excess of twelve months to obtain this investment for the state of NSW and we look forward to the transaction being finalised on completion of the remaining condition precedent.

“Discussions are underway with MMI on how this condition precedent may be satisfied.”

The key terms of the joint venture farm-in agreement provide MMI the right to earn equity of up to 10% by spending up to $40 million on the project.

After the completion of a bankable feasibility study, MMI will have an option to purchase an extra interest of up to 10% in the project at a predetermined valuation which is dependent on the level of end-user offtake commitment made at the time the option is exercised.

MMI will be entitled to exclusively introduce coal from the project to its customers in Japan.

The Doyles Creek tenement contains a 512 million tonne JORC-compliant measured, indicated and inferred resource of premium quality semi-soft coking and thermal coal.

The coal brands to be produced at Doyles Creek include Whybrow, Whynot and Woodlands Hill coal which are marketed for sale by other Hunter Valley producers to overseas steel mills and both the domestic and international power generation industry.

More recently, the project identified an initial probable ore reserve of 50.9Mt across two of the five identified target seams.

The ore reserve comprises premium quality semi-soft coking coal and thermal coal products.