The controversial Watermark coal mine proposed for a key northern NSW farming area has progressed closer to reality after passing a planning review.

A huge coalmine on the edge of some of the most productive farm land in NSW has been recommended for approval by planning authorities.

The Watermark coal mine, on the Liverpool Plains near Gunnedah in northern NSW, has been give the go-ahead in a review released by the NSW Planning Assessment Commission (PAC) on Friday afternoon.

The PAC says it is “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 stridently opposed to the mine plan and raised fears about the impact of the mine would have on water availability in Liverpool Plains area – a key food production area renowned for its highly fertile black soil.

Some changes have been recommended to the mine plan by the PAC.

The NSW Department of Planning and Environment will now consider the PAC recommendation.

The open-cut Watermark mine, proposed by Chinese coal giant Shenhua Group, will extract up to 10 million tonnes of coal a year for 30 years if it proceeds.

In its review, the PAC noted farmers’ “grave concern for the security of the region’s water resources”.

The commission says a water expert found a number of questions remained about modelling work supplied by the mine to show the impact on water resources.

The PAC said uncertainties would have to be resolved before any final decision on the mine could be made.

Other concerns raised by mine opponents include impact on the regional koala population, dust, noise from blasting and displacement of families around the three pits that would comprise the mine.

The PAC has recommended the mine lease be amended to ban mining from black soil areas, given their crucial agricultural significance.

Local businesses and the Gunnedah council have supported the mine.

NSW Farmers Association president Fiona Simson said the decision was “incredibly disappointing”.

Ms Simson said the PAC had recommended approval of the mine despite acknowledging problems with the modelling of its impact on water.

“The PAC’s decision will just see more uncertainty for everyone,” Ms Simson said.

“Either it was acceptable and would not cause unacceptable impacts, or it was unacceptable.

“The proponents have had since 2008 to get their project together yet the PAC still finds that they need to do more work.”

Shenhua Watermark, the company behind the proposal, said it welcomed the PAC review but had reservations about recommendations that additional land be acquired around the mine site.

Project manager Paul Jackson said additional acquisitions could add unexpected costs.

Mr Jackson said Shenhua Watermark would carry out a detailed review of the PAC report before responding.

The Department of Planning and Environment will consider the PAC review and send its own recommendation back to the PAC for a final determination.

Ms Simson accused the NSW government of “comprehensively” failing to put in place the right checks and balances to protect agricultural areas.

“Until governments and corporates start listening to communities and their fears about the future of their land and water, they can forget about building any trust,” she said in a statement.

“It is past time the NSW government drew a line in the sand and protected our land, water and livelihoods.”