The Lake Phillipson coal deposits currently under consideration by Utah Development Company as a potential mine, are located in a remote and arid region of Australia. Surface water sources simply do not exist in this area and any development will have to depend on groundwater. A literature study, field reconnaissance and bore census carried out for this report have indicated that the area surrounding Lake Phillipson, and particularly to the north and west, is underlain by a Mesozoic aquifer system which appears to be adequately thick and sufficiently extensive to have yield and storage capacity capable of meeting high extraction rates. Five hydrogeological provinces have been defined, two of which have characteristics suggesting that large quantities of potable, or near potable, groundwater may be available. Naturally occurring salinity patterns, however, make it likely that if low salinity water is required, it may be necessary to establish the wellfield up to 75 km west of Lake Phillipson. Some sites having potential for low salinity water accumulation exist considerably closer, and these warrant testing, but the proximity of brackish waters to them and the probable reversals of flow which occur near them, suggest that their potential will be limited. The climate of the area and the intake relationships are such that any water supply development, unless it is very widespread, is bound to cause significant dewatering of the aquifer; however, in the long term, recharge should be able to balance these effects and it is only necessary to ensure that the environmental impact of such dewatering is acceptable. A two phase initial stage of investigation is recommended. The first phase is a regional drilling programme consisting of seven bores adequately sampled and tested. These bores will test the hypotheses on which the conclusions of this report are drawn, and along with some existing stratigraphic bores, will become groundwater control points for the second phase of investigation. The second phase will consist of electrical resistivity traversing and depth probing along lines between the various bores. In addition, some hydrological testing is considered necessary in the proposed mine area in order to evaluate the scope of the overburden dewatering problem, although the water from this area will be too saline for use.