Commitment to an expanded life of mine plan for the development has taken planned average production from an original estimate of 2.8 mtpa to 3.6mtpa. The expanded life of mine plan has resulted in an increase of the net present value of the project from $146 million to $199 million.

Austral initially commenced development of Tahmoor North in 2001 with a production scheduled for March 2004. Around $44 million of development funds has already been spent, with a further $25 million needed to achieve the increased capacity rate during the next six to 12 months.

A review by International Mining Consultants (IMC) of the mines infrastructure capacity and a more detailed understanding of the capacity of proposed coal conveying systems and the new longwall resulted in a revised life of mine plan.

The reviewed capacity and increased ROM coal production to 3.6 mtpa for an eight year period, will mean increased returns for the project.

The majority of the additional $13 million will be spent on upgrading the drift belt increasing coal haulage speed from 1,200 tonnes per hour to between 1,600-2,000 tph, upgrading surface conveyor belts into and out of the washery to accommodate the higher volumes delivered from the drift belt and increasing underground conveyor belt, structure and drives due to lengthening of longwall panels and a changed mine plan. It will also be shelled out to technology and design changes to the coal handling preparation plant to improve throughput capacity over the 650 tph previously proposed.

In addition, underground development rates and in seam drilling will require acceleration to permit higher longwall extraction rates and to compensate for the difficult development conditions experienced over the last six months. The additional cost to the original estimate will be about $12 million, bringing a total of $25 million in additional capital expenditure and development costs.

The $25 million will be sourced from Convertible Notes Issue (net of costs) raising $20.6 million and operating cash flow / working capital generating $4.4 million. The Convertible Note Issue is subject to shareholder approval with a meeting scheduled for September 30, 2003.

Meantime, the company has announced a net profit after tax of $2.1 million for the half year ended June 30, 2003, and said its full-year result is on target to exceed $10 million.

This was in line with expectations, which took into account the shutdown of the coal preparation plant while undergoing the upgrade associated Tahmoor expansion and an extended longwall changeover. Production of saleable coal has been interrupted since May due to the upgrade.