The deal includes a $175 million payment towards the long-awaited new rail crossing through the Liverpool Ranges.

The state Minister for Mineral Resources, Ian Macdonald, will announce the deal this morning, saying China Shenhua Energy Company had won a rigorous tender to explore the 190-square-kilometre coalfield about 35 kilometres south-east of Gunnedah.

The Government's announcement confirms a decision revealed late last month by The Herald.

Mr Macdonald said China Shenhua would pay $300 million within 30 days of the licence being granted, and another $200 million if a mining lease was granted after the exploration period.

It would put $175 million into transport infrastructure and provide $1 million a year for five years to fund a new regional community trust.

Mr Macdonald said a community consultative committee would be set up with former NSW Nationals leader Ian Armstrong as chairman.

"The awarding of this exploration licence will benefit the local area and the state," Mr Macdonald said. "It will generate funding for infrastructure and services such as hospitals, schools and roads."

Mr Macdonald said expressions of interest were invited in October, with bids closing in February.

He said an assessment panel, which included an independent probity auditor, selected China Shenhua.

China Shenhua is described as the largest state-owned coalminer in China.

It has about 42,000 employees and is one of about 30 subsidiaries of its parent company, the state-owned Shenhua Group.