A statewide audit of exploration licences in NSW has been ordered amid concerns some companies may have engaged in improper behaviour.
NSW Resources and Energy Minister Chris Hartcher ordered the audit of coal and coal seam gas licences following anecdotal accounts that some firms had hidden their discoveries until prices rose.
"That's what we're checking in the audit to make sure that those sort of things aren't happening - that all the information has been supplied so the department knows exactly what's going on," Mr Hartcher told AAP on Thursday.
Licence holders are required to report all mineral finds.
But Mr Hartcher said the government is concerned that some firms may have taken out exploration licences and are waiting for the price of specific minerals to rise and then on-selling the licence for a huge profit.
"If you've got such a huge area of the state covered, then the state's entitled to know exactly what's happening with all of these licences," Mr Hartcher said.
"If we don't know what's happening, if they're not giving us the information, that's what could be happening."
Approximately 70 per cent of NSW is covered by mining exploration licences that were issued by the previous state Labor government.
"Nobody knew what was happening because they were just handing them out, taking millions of dollars in payment for them," Mr Hartcher said.
The audit will also evaluate licence holders' ability to carry out exploration activity and whether they are complying with environmental and safety guidelines.
Minister for Western NSW Kevin Humphries warned the audit could result in further scrutiny.
"Inconsistencies or non-compliance with the terms of a licence may result in a licence holder being required to provide additional information and may prompt further investigation where necessary," Mr Humphries said in a statement on Thursday.
NSW Minerals Council deputy CEO Sue-Ern Tan said explorers were already subject to stringent reporting requirements.
But, she said, the minerals industry was not afraid of transparency.
"Explorers report annually to the NSW government on how they are performing against their exploration licence requirements, including details of their activities during the year and the results of their exploration program," Ms Tan said in a statement on Thursday.
"Exploration licence holders have a wide range of conditions that they must comply with, covering environmental management, geological reporting, and land access.
"When licences are renewed, explorers have to justify the renewal with detailed information about their work and results to date, and the work that they have planned."
The government already has the ability to cancel an exploration licence if licence conditions are not being met, she added.
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