Eastern Corporation bought the coal mine - formerly known as Nightcaps - in September last year as part of its New Zealand coal strategy and was awarded the Fonterra contract from a tender process.

Managing Director Campbell Smith said Eastern Corporation will make considerable expenditure commitments on plant and equipment in the coming months, and has already made big improvements to the mine.

"Since taking ownership of the mine we have upgraded the existing processing facilities, however construction will soon commence on a new plant capable of handling significantly higher tonnages," Smith said.

“The Takitimu mine has also been awarded several other contracts to supply coal in the district so we are targeting … 50,000 tonnes in the coming year, increasing to over 200,000 tonnes thereafter. We will also be supplying 'clean' low sulphur bagged coal for domestic use."

Other NZ-based projects for Eastern Corporation are two prospecting permits, one surrounding the Takitimu site and the other on the coast at Orepuki.

The company is also developing its exploration permit at Whareatea West on the Denniston Plateau to expand on the $A12 million investment it has made in NZ's South Island.