A Department of Planning assessment, which this week recommended the project be approved, said there was no technical merit to resident claims Saddleback Ridge, between the Mount Thorley Warkworth mine and the village, protected them from the effects of mining.

The company plans to remove the ridge, leaving the village exposed to views of overburden areas and within about 2.6 kilometres of the open-cut operation.

The assessment said modelling showed adverse weather conditions neutralised "any mitigation" provided by the ridge although it was described as a "key" feature.

The planned expansion will have a "high" visual impact on the villages of Bulga and Milbrodale and the nearest residence will be about 1.5 kilometres from the mine disturbance area.

Bulga Milbrodale Progress Association spokesman John Krey said the assessment conflicted with a 2002 environmental impact study, which said the ridge was a visual and acoustic buffer.

"So important, a ministerial deed was executed to ensure the ridge was not removed," he said.

This week's assessment revealed this 2003 agreement between the government and the company was "flawed" because the ridge area contained substantial coal resources.

This "conflict was acknowledged but not resolved in both the 2003 development consent and the associated deed of agreement," the department assessment said.

Mr Krey said this was the first reference to any conflict related to the agreed conservation of the ridge.

"We find nothing in our detailed submission has been taken into consideration, " he said.

The only matter not resolved was the rezoning of the ridge for conservation, Mr Krey said.

The department says the company will have to acquire private properties and recommended tree planting and rehabilitation of overburden to reduce the extension's visual effects.