The PAC said that the mine was approvable but uncertainties around water impacts are required to be addressed prior to the final approval.

PAC was quoted by the Australian Associated Press as saying that it: "generally satisfied that the site of this proposal, on the less fertile, higher ground above the Liverpool Plains, should be able to be mined without significant impacts on the agricultural productivity of the Liverpool Plains."

Farmers have been raising concerns over the project that it would have an impact on water availability and fertile black soil in Liverpool Plains region.

NSW Farmers president Fiona Simson said: "The NSW Government has comprehensively failed to put in place the right checks and balances to protect precious agricultural areas.

"The commission has rightly identified that the mine would be located in the middle of some of the most significant and valuable agricultural land in the country, but has underestimated the actions needed to ensure the long-term viability of farming in the area."

Watermark Coal project manager Paul Jackson said: "We have always maintained the project should be considered using fact and science and we hope the PAC review will satisfy any doubts there may be about the science underpinning our assessment.

"For the last six years we have worked tirelessly, consulted widely with the community, listened to their views and refined our proposal to accommodate community concerns."

If the project secures all the required approvals, it is expected to produce ten million tons of coal each year.