The prospects of NuCoal retaining control of controversial coal acreage in the Hunter Valley are receding, following a call by the NSW Independent Commission Against Corruption for the state government to cancel the licences.
It also said the government should legislate to confiscate any profits from those that engaged in the conduct involved in gaining the licences.
The recommendations follow a series of public hearings into the actions of former NSW government minister Ian Macdonald and his dealings with former union official John Maitland, among others, covering the acreage.
ICAC also called for the Mount Penny acreage near Mudgee, which involves former NSW MP Eddie Obeid, to be cancelled.
The granting of the leases "was so tainted by corruption that those [exploration or mining] authorities should be expunged or cancelled and any pending applications regarding them should be refused", ICAC said.
NuCoal said it was "extremely disappointed" with the recommendations and it wanted further consultations with the government before any decision was made.
NuCoal has repeatedly said it is an innocent party in the matter of the exploration licences.
NSW Premier Barry O'Farrell said parties that held the leases in question would be given until mid-January "to show cause why those [ICAC] recommendations should not be put in place".
Trading in NuCoal shares was suspended pending the release of the ICAC report and recommendations on the coal licences.
Mr Maitland, who had initially invested $165,623 in NuCoal, earlier held a 9.2 per cent stake via a private company, Jonca Investments. Jonca halved that holding, reaping more than an estimated $4.98 million, but has sold a significant part of the remainder since and now no longer appears on the list of the top 20 shareholders of the company.
Cascade Coal, which has acquired rights to the Mount Penny acreage, claimed not only were the ICAC recommendations "unfair to Cascade Coal and its shareholders, but it is clearly not in the public interest, nor is it good for the reputation of the state that the NSW government seeks to effectively expropriate Cascade Coal's assets".