Under the deal, Poland will pay the Czech Republic EUR 45 million (around USD 51 million) in compensation for environmental damage caused by the expansion of the mine on the Polish side of the border, Czech Prime Minister Petr Fiala told reporters.
He said Poland would also build a protective underground barrier to prevent water levels from dropping.
Fiala added his country would withdraw a legal complaint against Poland over the mine from the European Court of Justice, the Reuters news agency reported.
Polish Prime Minister Mateusz Morawiecki hailed the deal as a strategic step that could help take bilateral relations to the next level.
"Today we are opening this new chapter," he declared at a joint news conference with Fiala in Prague, as quoted by public broadcaster Polish Radio’s IAR news agency.
The press conference took place in the Czech capital after the Polish government approved the terms of the deal the previous evening, Poland's PAP news agency reported.
Last month, Poland’s Environment Minister Anna Moskwa met with her Czech counterpart Anna Hubáčková in Warsaw, telling reporters afterward that progress had been made in talks with the Czech government and that a deal was in sight to end a stalemate over the disputed Polish brown-coal mine.
Earlier last month, the Polish government spokesman said that Warsaw was prepared to bear the cost of defending its Turów lignite mine after the European Commission urged Warsaw to pay its fines over the continued operation of the site.
The European Union's top court in September ruled that Poland must pay a EUR 500,000 daily fine to the European Commission, the EU’s executive arm, for defying an earlier order to halt operations at Turów, which is located near the border with the Czech Republic.
The Czech government last year filed for an injunction with the European Court of Justice, saying the Turów open-cast mine on the Polish-Czech border was draining groundwater away from surrounding areas and harming Czech citizens.
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Source: PAP, TVP Info, Reuters
Click on the audio player above for a report by Radio Poland's Elżbieta Krajewska.