Strategic Minerals (LON:SML) has started bulk sampling at the Tatu coal mine on New Zealand's North Island.
The location of the bulk sample is likely to be the access point for underground operations once the decision to proceed to commercial production is made, added the company.
Once analysis of the bulk sample confirms historical coal quality data, Strategic Minerals said it will discuss the use of the coal in their operations with potential customers.
Alan Broome, chairman said: "The commencement of the bulk sample extraction as a key step in completing its assessment for the commissioning of the mine works at Tatu.
"Upon completion of the laboratory work associated with the bulk extraction, the company will access its New Zealand network to ascertain likely product demand and to review expected project profitability.
“At the same time, the company continues to review funding alternatives, which will be clarified once more definitive data on likely sales volumes, prices and customer demand are obtained."
Tatu's output is expected to be 200,000 tonnes per year of thermal coal once the main mine shaft is finished.