Mining in the new stage three area started in the middle of June, marking a significant milestone for the company, majority-owned by longwall topcoal caving specialist Yanzhou.

The Chinese giant is seeking to buy out the 22% of shares in the ASX-listed Yancoal it does not already own.

“Mining conditions remain difficult in the new area however when all the associated infrastructure, including the underground storage bin and the ventilation shaft, is completed later this year, mining conditions are expected to improve significantly and production rates should increase,” the company said in its June quarterly statement.

Austar’s run-of-mine coal production for the quarter was 149,000 tonnes and saleable production was 116,000t.

The introduction of the “LEAN” business improvement process at the mine continued during the quarter, with intensive training conducted.

“It is expected that the benefits of the program will accrue across the operation over the next year,” Yancoal said.

“The initial focus is on improving development rates in all the gate roads and mains so that a positive development float can be created for future longwall panel changeovers.”

Overall, the company produced 6.4Mt for the quarter, which is 12% higher than the previous corresponding period. Saleable production was 4.6Mt, an 18% improvement on last year’s June quarter.

“The challenges for the coal industry in Australia and other parts of the world have intensified over the past three months as both metallurgical and thermal coal prices have fallen. In Australia, the weakening of the Australian dollar has helped producers but not entirely offset the decline in prices,” Yamcoal said.

“All of the Yancoal mines, except the two underground mines, which were in the process of moving longwalls, performed strongly in the June quarter.”