The decision was made in closed session at Monday night's ordinary general meeting,  with an announcement made to the public gallery after the decision was taken.

General Manager Steve McDonald told the meeting, on a motion of Crs Rush and Ward, it was resolved to award the tender contract to Alpall Pty Limited Builders, subject to a satisfactory due diligence assessment and financial checks of the proposed successful tenderer.

It was also resolved the General Manager be authorised to sign and seal the contract and that a budgetary allocation of $886,000 be made for construction of the new building.

The meeting was told the $886,000 is comprised of funding from four sources.

The first is a $98,000 component, being the residual monies left over from a Mangoola contribution to Muswellbrook Shire Council about seven or eight years ago for another project.

A further $204,000 comes from Council's Parks and Facilities Reserve Fund set up specifically for the Denman recreation area.

A capital contingency reserve of $30,000 has also been set aside by Council to go towards the project.

The lion's share of the money is a $554,000 contribution.

General Manager Steve McDonald said this sum has resulted from additional contributions paid to Muswellbrook Shire Council by Mangoola following a new modification to its mine.

Mr McDonald said these additional funds will be allocated to the Denman project for two years and are part of Mangoola's Voluntary Planning Agreement with Council.

After the decision was taken, Mayor Martin Rush told the media the project includes residual lighting and electrical upgrades at the site in addition to the build of the amenities block.

Work will not start on the Denman recreation amenities building until routine financial checks on the successful tenderer have been completed.