The deformation and permeability of coal are largely affected by the presence and distribution of natural fractures such as cleats and bedding planes with orthogonal and abutting characteristics, resulting in distinct hydromechanical responses to stress loading during coal mining processes. In this research, a two-dimensional (2D) fracture network is constructed based on a real coal cleat trace data collected from the Fukang mine area, China. Realistic multi-stage stress loading is designed to sequentially mimic an initial equilibrium phase and a mining-induced perturbation phase involving an increase of axial stress and a decrease of confining stress. The geomechanical and hydrological behaviour of the fractured coal under various stress loading conditions is modelled using a finite element model, which can simulate the deformation of coal matrix, the shearing and dilatancy of coal cleats, the variation of cleat aperture induced by combined effects of closure/opening, and shear and tensile-induced damage. The influence of different excavation stress paths and directions of mining is further investigated. The simulation results illustrate correlated variations among the shear-induced cleat dilation, damage in coal matrix, and equivalent permeability of the fractured coal. Model results are compared with results of previous work based on conventional approaches in which natural fracture networks are not explicitly represented. In particular, the numerical model reproduces the evolution of equivalent permeability under the competing influence of the effective stress perpendicular to cleats and shear-induced cleat dilation and associated damage. Model results also indicate that coal mining at low stress rates is conducive to the stability of surrounding coal seams, and that coal mining in parallel to cleat directions is desirable. The research findings of this paper have important implications for efficient and safe exploitation of coal and coalbed methane resources.