Opencast coal miner ATH Resources is to start work on its Muir Dean project in Fife in spring 2008 after the Scottish Government yesterday overturned the local council's refusal of planning permission.

Shares in the company soared 8%, or 18p, to 226p after the company received the go-ahead to start work at the site, which has been five years in the planning.

ATH reckons it can extract two million tonnes of coal from the site, which is five kilometres east of Dunfermline, over the next four-and-a-half years.

An extraction rate of 450,000 tonnes a year is equivalent to a quarter of current output at the AIM-listed company, which has four other mines at sites in East Ayrshire and Dumfries and Galloway. The company also plans to spend 12 months restoring the site and will monitor it for five years afterwards.

In receiving planning permission, ATH has overcome concerns about the welfare of bats, which are a protected species, living in the area of the 181-hectare site. It is analysing the 59-page government report to see if additional requirements have been made.

However, ATH has highlighted the benefits of the development to the area. It believes 118 jobs will be created, of which 49 will be directly concerned with the project.

It is also to tackle water issues by introducing a peat bed that will treat waste water from earlier mining developments.

Operations director Alistair Black said: "We have always thought this site to be an excellent development and it does have great potential for ongoing investment in the Fife economy."

The company started working on plans for Muir Dean five years ago and applied for planning permission in November 2005. The appeal was submitted in December last year.

Company chief executive Tom Allchurch said: "We are naturally delighted that the Scottish Executive has ruled in our favour as we believe that the site will have many benefits for the local community. ATH has a proven track record in the successful operation and regeneration of coal sites, and I am confident that Muir Dean will represent a huge success for the local community and environment."

Stuart Crosbie, team leader for legal services, planning and the environment at Fife Council, said: "We have been informed of the decision and we are now considering our position."

ATH could expand further if an application made in August to extract 1.3 million tonnes of coal from a site in Rigg near Kirkconnel in Dumfries and Galloway is approved.