The business focused study was based on a 30 year mine life for the unique under-sea mine to be located off the coast of Sydney, Nova Scotia, Canada.

Already two access tunnels to the mine have been dewatered and samples of the Harbour Seam taken by the Donkin Coal Alliance - 75% owned by Xstrata and 25% owned by Erdene Gold.

The Alliance plan to mine the seam using a longwall system and three continuous miners for roadway development.

Undertaken by Norwest Corporation, the PAS study was calculated on an indicated resource of 101 million tonnes and inferred resource of 115Mt. Norwest anticipated about 109Mt ROM coal would be extracted throughout the mine's life.

The resource averaged 4.5% sulphur and 12% ash - classifying the product as high volatile A bituminous, high sulphur, medium ash coal.

While much of the PAS was based on the results of further testing of the seam and market conditions, Norwest urged the Alliance to hasten plans for the longwall to start up to capitalise on the strong coal market.

The thermal coal will be sold to domestic customers, as well as exported with the main target market US eastern seaboard plants equipped with flue gas desulphurization.

It is expected that ROM tonnage after year 16 years would be above the market specification for ash provided by Xstrata of 14%. However, the report suggests further exploration may result in mine plans being altered to avoid high ash content coal.

The report states that a detailed and final determination on the project's economic merits will be completed after: in seam drilling programs are completed to test the coal's gas content and the best course for gas drainage is established; regulators have assessed the project; coal seam samples have been analysed; a wash plant option is determined; and issues of ventilation have been identified and addressed.