Early in June 1801 an Expedition to the Coal River was undertaken. The expedition was led by Lieut-Colonel Paterson who was accompanied by Lieut. James Grant, J. Murray, R.N., Ensign Barralier, George Cayley and Dr. John Harris. They set sail on the Lady Nelson and the Francis on 10th of June. There were also a number of workmen and labourers, for the purpose of cutting and sawing timber, digging and loading coals, and other necessary works. On his return Lieutenant-Colonel Paterson informed Governor King of the potential for mining the coal at Nobbys and at Collier's Point........
Lieutenant-Colonel Paterson to Governor King
25 June 1801
The northern point of land, which I have call'd 'Colliers' Point,'is composed of two stratas in sight and one which is bare at low water mark only. This is by much the best coal, which you will see by the specimen I desired might be kept apart from the other, which is the middle strata, about 16in. deep; that below is 22 in; the distance between them is about 20ft.
The upper strata is too near the surface to be worth working. Upon the island, which I have named 'Coal Island', the stratas are the same as on the mainland. The bed of coal at low water mark is rather better than at Collier's Point, and might be got very quick, as the anchoring place is close to the coal; but, if the coal work is to be permanent, I should sujest the mines to be on the main which might be sunk with very little trouble, and I have no doubt but that in a very short time Government would find their advantage in it - Platt, the collier, and his party have done wonders in getting the coals for the schooner so soon. I shall keep them going on, and get the coals laid in a situation where the tide cannot reach them.
If they are to continue here they will want more picks and baskets 
The collier John Platt mentioned above was a convict who had been tried in Lancaster on 18 August 1798 and transported on the Royal Admiral in 1800.
Governor King later wrote to Sir Joseph Banks:
Unfortunately we have only one miner in the country, who is a convict for life. He is very clever, and is now boring over a seam of coal at the head of George's River, which is on the south-west side of Botany Bay. I send a small sample of the coal procured there in the box, which appears to be much superior to that found to the northward. As the miner is intelligent and master of his business, I hope we shall get at that article.
Early in 1801 King again wrote regarding Platt - If he should in the end fail here (at George's River) I shall remove him and his men to the northward of the rivers' (i.e., to the Coal River).
First Settlement at Coal River
In August 1801 Governor King informed the Duke of Portland that he had established a small settlement consisting of a trusty non-commissioned officer and eight privates, with twelve prisoners to collect coals for such Government vessels as can go for them. Since the Lady Nelson went there, two Government vessels have brought 50 tons of coal which has been bartered with the master of the Cornwallis for articles for the public use. This being the first natural produce of the colony that has tended to any advantage, I have enclosed the Commissary's statement of that exchange, being more a matter of curiosity than of consequence. At present several boats are employed getting coals for the Cornwallis and a private brig belonging to an individual, is now at the Coal Harbour lading with coals and timber for the Cape of Good Hope* 
*This was the brig Anna Josepha, a prize to the whaler Betsey, under the command of Hugh Meehan, and owned by Lord and Meehan. She was of 170 tons burthen, and carried a crew of twenty eight men with two guns. 
On 4th October 1801, the Earl Cornwallis departed Port Jackson bound for India taking with her 150 tons of Newcastle coals which was the first cargo of coal brought from the Coal River in a Government vessel (the Francis) '