Narrabri will be the company's first longwall mine and is set to begin construction early next year and produce first coal in the first quarter of the 2009 calendar year.
In addition to funding the initial development phase of the new mine, Whitehaven Coal will also acquire the remaining 60% interest in its part owned Werris Creek opencut operation.
Whitehaven Coal intends to purchase all shares in the Werris Creek joint venture company, Creek Resources, in a deal worth $48 million cash and will spend a further $4 million purchasing mine equipment.
It has also agreed to pay the vendors of Creek Resources $2 per tonne for a further 5 million tonnes of coal through the issue of about 3.6 million Whitehaven shares.
Development of the Narrabri North Stage 1 project is expected to cost $140 million, $78 million of which will be financed from the capital raising venture and the balance likely to include debt and equipment leasing.