The narrow gauge train from Alicante to Denia existed from decades ago, with intermediate stops at Campello, Vilajoiosa, Benidorm, and Altea, among others.
In the last 10-15 years, the line is being restructured. It has been enlarged underground through downtown with two intermediate stations at MARQ (Archaeological Museum) and Mercat Central (Market). The opening of this work was a few weeks ago. It is planned to keep extending in that direction until reaching the Main Train Station, with an intermediate stop at Plaza Luceros. That are the works/plans Alicantebound.
In the other direction, the line was electrified and converted to double track from Alicante to Campello, and built a new branch to Cabo de Huertas, and it is served by train-tram vehicles, making it kind of a Metro service. The plans are to electrify and duplicate tracks from Campello up to Altea, and create an inner-Benidorm branch to serve the city.
More info at
http://www.fgvalicante.com/tram/html/home/home.asp (English version not available yet)