The environmental watchdog announced on Friday that Mach Energy Australia received the penalty after the blast at its Mount Pleasant mine on June 15 last year.

Nearby residents raised the alarm over the blast "which could be seen and smelt within the vicinity", with some alleging they needed to seek shelter "from the noxious fume released by the blast".

EPA acting director operations Brett Nudd said the investigation covered several issues.

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"Blast fumes from mine sites must be contained within the mine boundary, as they contain oxides of nitrogen that may be harmful to human health at high concentrations", Mr Nudd said.

"This alleged blast happened under weather conditions that resulted in blast fume going beyond the mine site and dispersing across neighbouring properties".

"In addition, MACH Energy Australia failed to warn their neighbours of the potential of exposure to blast fume, and members of the community were either exposed or sought shelter to avoid the blast fume".

"This incident was predictable and preventable, and the community should not have been impacted in this way".

Gases produced in blasting normally dissipate quickly within the site, but under certain conditions they can persist and affect other properties.

Mr Nudd said mines "must carry out blasts so that they do not cause harm or interfere with the comfort of the community".

ACM reported in July that the EPA was investigating a blast at the site.

Wendy Wales of the Denman Aberdeen Muswellbrook Scone Healthy Environment Group said at the time that the mine's position upwind of the township in prevailing northwesterly winds was a factor in air quality issues.

"Mount Pleasant is a significant change for us," she said at the time.