This was a 94Mt increase from previous inferred and indicated resources, providing scope for a major open-cut mine, Northern Energy said.

Northern Energy managing director Keith Barker said positive drilling results for its Elimatta project, which led to the increase, showed potential for a 4-5Mt per annum mine.

“It has improved the understanding of the coal seams and provides a sound geological base for mine planning and project development,” Barker said.

“Mine planning is currently underway to establish a marketable reserve at Elimatta which expected to be released by November.”

The Elimatta project is located in Queensland’s emerging coal region, the Surat Basin.

Barker also said the resource upgrade gave the company a higher level of confidence to build rail and port infrastructure in the region, which is due for completion by mid-2012.

Earlier this month Northern Energy said it would move ahead with its proposed Colton mine near Maryborough in Queensland after indicative specifications for a hard coking coal.

Northern Energy stock was unchanged this morning, trading at $1.33 on the Australian Securities Exchange.