The net profit result was 59% lower than the first half, but Gloucester chief executive officer Barry Tudor was pleased given the economic environment.

“Although the sales price of our semi-hard coking coal fell by over 60 per cent from last year, the company was able to maintain healthy volumes and solid margins,” he said.

After the year-end Gloucester entered into a seven-year, $US33million Chattel mortgage facility to help finance a new fleet of Caterpillar 785C XQ dump trucks and provide working capital.

Eight of the trucks were acquired in the December half using $A26.5 million cash on hand, while the other three are expected to be commissioned by June 2010.

The company’s coal handling and preparation plant upgrade to 4.3 million tonnes per annum is scheduled for completion by December, while an environmental assessment has been lodged with the New South Wales government for the Duralie mine extension project to lift output to 2.8 million tonnes per annum.

Ongoing exploration is aimed at defining more resources at the Clareval and Weismantel seams, with an update to reserves scheduled to be announced by the beginning of the March quarter.

Gloucester also took on a “portfolio” of 10-year ship-or-pay contracts with Port Waratah Coal Services under the new Hunter export framework, which kicked off this year.

Gloucester signed on to 2.05Mt of export capacity through Newcastle’s port in 2010, which will increase to 3.12Mt in 2012.

“Additional contracts are expected to be sought to provide for capacity in line with the expansion expectations,” Gloucester said.

Following a strategic review, Gloucester is setting its sights on a ramp-up to 3.5Mtpa of production.

“The current expansion to increase production to 2.8 million tonnes per annum is currently well advanced and expected for completion by late 2010,” the company said.

“In addition, the company has adjusted plans to mine at higher strip ratios to access more economic reserves and extend the mine life.

“New strategic markets are being identified to diversify sales of thermal and coking coal and provide new markets for the increase in production to 3.5 million tonnes per annum.”

Gloucester ended 2009 with a $4.42 million cash position.

Macarthur takeover offer

Gloucester is forecasting its shareholders will receive Macarthur Coal’s bidder’s statement in early March with the offer to close in May, but subject to extension.

Macarthur aims to acquire all Gloucester shares for 0.84 Macarthur shares for each Gloucester share or for $8 in cash.

Commodities trader Noble Group bought up an 87.8% stake in Gloucester with its $7 cash takeover last year.

In January Macquarie Research analysts predicted Noble to eventually to launch a full takeover play for Macarthur.

Gloucester shares are up 4c to $8.96 this morning.