Bandanna Energy has announced to the Australian Stock Exchange that it's gone into voluntary administration.

Bandanna Energy is the proponent for the controversial Springsure Creek Coal Mine, 47 kilometres south-east of Emerald, in Central Queensland. Listen Duration: 4 minutes 2 seconds 4 m 2 s Listen Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Stakeholders talk about what the voluntary administration of Bandanna Energy will mean for the area Download 1.9 MB

The underground coal mine was proposed in the Golden Triangle, a highly productive farming area classed as strategic cropping land, and was heavily opposed by local farmers, who were concerned about subsidence and the effect on underground water supply.

But Bandanna Energy hailed the project as an example of how underground mining and agriculture could co-exist.

In June, the mine was issued Federal Government approval, and production was scheduled to begin mid next year.

The board of Bandanna Energy has appointed PPB Advisory as the administrators of the BND Group.

The announcement to the Australian Stock Exchange says the company has been in discussions with Credit Suisse AG since June.

"Bandanna, on behalf of the BND Group, has worked constructively with Credit Suisse and numerous proposals to extend the SSGFA (Senior Secured Guarantee Facility Agreement) have been discussed," the announcement said.

"During this time, Bandanna vigorously explored alternative funding sources, including from Credit Suisse, existing and potential new major equity investors and also explored opportunities for binding commitments to asset sales.

"Negotiations with Credit Suisse have been both extensive and cordial however the Board, after significant deliberations, determined by majority decision that an agreement with Credit Suisse could not be reached.

"With no direct improvement in Bandanna's financial position and with limited ability to raise additional funds to progress the grant of the mining lease, the Board formed the view that Bandanna was not able to continue as a going concern."

Bandanna chairman John Pegler says the company had made substantial progress towards the development of the Springsure Creek project, including State and Federal environmental approvals and "broad support from the local community and Local Government."

"Unfortunately, progress has been impacted by delayed approval of the Springsure Creek mining lease and the deepening cyclical decline in seaborne thermal coal prices, which together have further exacerbated delays in investor interest and participation," Mr Pegler says.

Landholder consultant George Houen has represented and advised some of the landholders affected by the Springsure Creek project.

He says landholders will have to wait and see how the administrators intend to move forward.

"You would expect the administrators would try to sell the Mining Lease Applications, they're a tradable asset, and that may happen.

"The whole environment for coal mining and particularly for any new mines especially the more expensive variety such as a long wall underground mine like this one, the market wouldn't be strong and whether anyone would be interested in buying applications like that, that are at a pretty volatile stage where the are objections to them are in the land court and there are some expensive obligations that would come with acquiring the leases.

"So whether the administrators can succeed in selling those applications or not remains to be seen, so the landholders will be on tenterhooks to see the outcome."

The Springsure Creek Coal mine was to have an operational life of 40 years, and peak production of 11 million tonnes of thermal coal per year.

It was expected to create 350 construction jobs and more than 500 operational jobs.

Central Highlands Regional Council Mayor Peter Maguire says it's a blow for the local economy.

"A lot of people in the region were banking on this project to get a kick along, to get a start and assist a lot of businesses and industries and people in the region to see some improvement in the whole region.

"With the downturn in the resources sector... and the price of coal and all those sort of issues around it, the high Australian dollar although it is going down, we'll just have to wait and see."

In a statement, a spokesman for the administrators, PPB Advisory, says the company is currently undertaking a preliminary review of the BND group.

In the meantime, BND will operate on a business as usual basis, with all staff continuing in their roles.

PPB Advisory partner Grant Sparks says his focus is on working with management to understand the current options available to BND - and the administrators will seek expressions of interest to purchase the business and assets, restructure or recapitalise the BND group at an appropriate time.

The first meeting of creditors is due to take place on October 2.