Wollongong Coal has unveiled a plan to convert its coal mine into prime real estate.

Wollongong (ASX:WLC) — which owns 455 hectares of land 15 km south-west of Wollongong — says the opportunity to transform almost half of its landholding is too good to pass up.

“Given the state of the real estate market in Wollongong and the prices at which adjacent properties to the non-operational land have been sold, WLC could derive substantial proceeds from the sale of the non-operational land,” the coal miner told investors on Thursday.

Shares in the company last traded at 0.6c.

Wollongong says only 280 hectares are necessary for coal mining operations and the rest would be suitable for sub-division redevelopment to reduce debt which is heading towards $200 million.

Wollongong’s June quarterly report showed the company had withdrawn $177 million of a drawdown facility from its major shareholder Jindal Steel and Power (Mauritius) Limited.

“These proceeds could then be used to reduce WLC’s financial indebtedness which would substantially improve WLC’s financial position and also be used to cover its operational cost,” Wollongong said.

The sale of the non-operational land would not impact on its core mining operations.

Wollongong plans to test the market with an initial parcel of 33 lots adjacent to land that has already been developed and sold by third parties.

Current zoning allows for residential subdivision but development would be subject to council’s development application approval.

The move to diversify comes as Wollongong’s coal assets have lagged in production. Wongawilli Colliery stopped in May after its contract operator went into administration and work at Russell Vale Colliery has been suspended since September 2015 with the lapse of mining approvals.