Whitehaven Coal says a leak from a storage dam on its Werris Creek mine site is equivalent to a 40mm rainfall event.
The company says it believes some water has now entered Quipolly Creek.
Whitehaven says the Environment Protection Authority (EPA) and all downhill landholders have been contacted, and the breach has been stopped.
Technical Services General Manager, Brian Cullen, says the company is doing all it can to limit flows of mine water on to the nearby properties of landholders.
"The water flowed off the mine site on Sunday and it flowed through Wardells Lane, and over Paynes Road and, unfortunately, it would appear that it's heading for Quipolly Creek and there might even be some of that water in Quipolly Creek now," he said.
ABC News
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