As the New South Wales (NSW) fire rages on, the Australian military on Saturday said it would investigate whether an explosive training on its land in Lithgow started the State Mine fire there. This comes after the NSW Rural Fire Service said the fire started on defence land. Meanwhile, reports say, the blaze has severely damaged the Lithgow's iconic Zig Zag Railway which was expected to restart operations soon.

In a statement to the press, the Australian Defence Force said it would investigate the circumstances of the fire near Lithgow, which began on its land.

"The fire started on 16 October, the same day that Defence personnel were conducting an explosive ordnance training activity," according to the statement.

"Defence is investigating if the two events are linked.

"The primary concern at this stage is for the safety of the communities in the vicinity of the fire, then the ongoing investigation which will review both the incident and Defence procedures.

"Our thoughts are with those who have lost property or whose property is threatened by these devastating fires," the statement added.

"Defence will work with the NSW Rural Fire Service to investigate the incident and Defence procedures, once the fire has been extinguished," the statement said.

On the other hand, NSW Premier Barry O'Farrell refused to speculate on the cause of the State Mine fire near Lithgow.

Addressing the media shortly after the military issued its statement, Mr O'Farrell said he was aware of the information, but would await the facts in the matter.

"Let's get the facts. I deal in facts," Mr O'Farrell remarked.

This comes as firefighters battled bushfires across New South Wales, which could take weeks to fully overcome, according to reports.

ABC News reports that the blaze has severely damaged Lithgow's iconic Zig Zag Railway. The damage bill could be as high as $4 million.

Zig Zag Railway is an Australian heritage railway was expected to restart operations this month, after being closed in June 2012 for an indefinite period following accreditation issues with the New South Wales Government.

It is what CEO Michael Forbes described as a feeling of being "bloody gobsmacked" after he toured the burnt facility on Saturday, reports Sydney Morning Herald.

Volunteers were devastated but were holding together as well as they can, he said.

It would take more than a year for the railway to recover, the report says.