It was love at first sight when artist Margaret Merritt saw Nant-y-Coy Mill, at Treffgarne. Tucked against a backdrop of woodland and sheer ragged rocks, this 150-year-old former corn mill presented an ideal location to realise her dream.

Margaret, a renowned artist who teaches across the UK, loves Pembrokeshire and wanted to do something for the county. She also loves water mills and lives at Bramley Mill in Surrey.

"A friend told her Nant-y-Coy Mill was up for sale and she came down to look at it. She put in an offer the very next day and it was accepted the day after. She fell instantly in love with the mill," said Nigel Card.

He and his son, Jamie, have been commissioned by Margaret to turn the mill into a quality Arts and Craft Centre.

With a background in tourism and leisure, he has run hotels and restaurants and created the successful Trapp Art and Craft Centre at Llandeilo.

"Margaret has a lot of contacts in the art world and the aim is to display works of regional, national and international artists, and there will be an area to hold art courses for small groups," he explained "We will also be setting up a shop specifically for quality crafts and there will be a small restaurant."

The picturesque mill is a listed building and restoration work is being carried out by Dorothea Restorations, run by another father and son team, Geoff and John Wallis of Bristol.

The firm provides a specialist traditional engineering service to those with engineering and architectural heritage in their care. Their skills have been used in the past at Scolton Manor, where they helped set up displays, and at Felin Newydd at Llanwrda.

At Nant-y-Coy, they have already moved the millstones for work to be carried out and have lifted the water wheel, which weighs between three to four tons.

"The bearings at each end of the wheel had loosened and we are going to renew them so that the wheel can turn safely," said Geoff.

His company will also be advising on the general restoration of the mill and he has been busy preparing drawings of the layout and identifying missing parts.

Jonathan Sommerfield of JHS Carpentry is undertaking all the timber restoration work on the waterwheel and also the mill's timbers.

There are some unusual features to the mill. Normally an upright shaft drives the millstones. At Nant-y-Coy there is a horizontal shaft. One of the millstones is also made of French burr. This soft stone was imported from just outside Paris and sections were fitted together and held by a strong iron band.

"These mill wheels produce lovely white flour," said Geoff. "That was why the stone was considered so important that it continued to be imported during the Napoleonic wars. Usually you find two such stones together. In this case there is only one and an ordinary mill stone, which would suggest the second French burr stone was worn out."

Margaret and Nigel are keen to ensure that the building will be environmentally friendly and they will be working towards a Green Dragon environmental standard. Wood pellet burning stoves and solar panels will be installed and they are looking at creating a hydro-electric scheme, using the same stream that powers the mill. But that is still in its infancy, said Nigel.

The mill has 30 acres of grounds, the majority of which is a Site of Special Scientific Interest (SSSI) and there is an Iron Age fort at the top of Treffgarne Rocks.

"We have been talking to the Countryside Council for Wales and Cadw about producing leaflets and interpretation boards and we will be targeting educational and school parties," said Nigel.

If everything goes according to plan, it is hoped that the Nant-y-Coy Art and Craft Centre will be open by the end of the summer.