Investigation of a water inflow into Wongawilli Mine in the Southern Coalfield of New South Wales included algal analysis. The determination of algae in the water suggested an external water source. An alternative hypothesis proposed that algae are inherent in a coal mine environment. Investigations to determine the validity of these hypotheses and provide information on the viability and longevity of algae under adverse conditions were conducted in the mine and the laboratory. Results indicated that a mine environment is not natural to algae and is not conducive to their growth. These findings support the hypothesis of introduction of surface water to the mine workings. They indicate that, in the absence of other available techniques, algae can be an effective tracer for use in the determination of a water source.