A battle between Hunter Valley horse stud owners and coalmining interests has been touted since May, when Malabar Coal agreed to buy the Drayton South thermal coalmine from Anglo American.

It has arrived.

Malabar — which is backed by New York billionaire Hans Mende — has drafted a $700 million proposal for an underground mine nine kilometres from the existing but retired site.

The new proposal addresses some of the environmental concerns that led the independent Planning Assessment Commission (PAC) to reject mine expansion for a fourth time earlier this year.

By going underground we take away the key issues, which are dust and open-cut blasting

Whether or not Malabar purchases Drayton South hinges largely on the renewal of the Drayton South Exploration Licence, which is currently being considered by the NSW Department of Planning.

It has been reported that the decision may be handed down as soon as Monday.

It is understood that a letter of support for the underground mine has been penned by union and coal industry reps, and sent to NSW Premier Gladys Berejiklian.

The Muswellbrook Chronicle names Construction Forestry Mining and Energy, Northern District president Peter Jordan, NSW Mining, chief executive officer Stephen Galilee and Muswellbrook Chamber of Commerce and Industry president Mike Kelly, as the parties pushing for licence reinstatement.

However, the coalmining interests can expect fierce opposition from the equine breeding industry, as the new area mapped out for the mine overlaps both the Godolphin Woodlands and Coolmore studs.

Henry Plumptre — vice-president of the Hunter Thoroughbred Breeders Association — told The Daily Telegraph that "there is no such thing as a clean underground coal mine".

"We are not anti-coal but there is a balance in the Hunter. A new mine would tip that balance,” he added.

Malabar’s chairman, Wayne Seabrook, said the mine would be explosive-free and create more than 300 new jobs.

"By going underground we take away the key issues, which are dust and open-cut blasting," he said.