Production at Duralie was up 14% year on year to 457,000t ROM in the recent quarter, but the company aims to expand the mine to 3Mt per annum ROM.

Gloucester said the New South Wales Planning Department has essentially completed the Director-General’s assessment report under the Part 3A process.

But there could be more hold-ups under federal environmental law, as a local creek downstream of the mine’s current operations provides a habitat for the endangered giant barred frog.

Gloucester expects the federal environmental review to reach an outcome in December 2010, and to include a condition Gloucester implements a frog-monitoring program.

Meanwhile, Gloucester increased net sales volumes by 22% year on year to 515,000 tonnes for the September quarter.

Thermal coal sales increased 40% year on year to 405,000t but coking coal sales dipped 28% to 130,000t.

Gloucester said the lower coking coal sales were mainly due to shipping timing with 230,000t expected in the December quarter.

The company did not reveal the coking coal prices received during the recent quarter but said these softened in line with falls in the overall market.

Gloucester has also started visiting potential Asian buyers “outside of its traditional Japanese steel mill customer base” to take on a future increase in tonnages.

Aside from the Duralie expansion, Gloucester completed an acquisition of a 27.52% stake in the Macarthur Coal-led Middlemount Joint Venture in late September.

Under the $437.5 million deal, Gloucester also gained an option to pick up a further 2.48% share of the JV for $8 million, plus a separate option to acquire another 20% from Macarthur for $100 million.

The right to receive a 4% royalty on the free-on-board sales from the Queensland metallurgical coal mine was included in the deal.

By including anticipated production from Middlemount, Gloucester is forecasting metallurgical coal production to reach 4Mtpa by the 2015 financial year.

Gloucester shares are down 4c to $10.59 this morning.