Gloucester told the Australian Securities Exchange on Friday its planned buyback program would be completed within 12 months.

“[It] has been established to enable the company to repurchase shares on an opportunistic basis and to take advantage of current volatile market conditions,” the company said.

Gloucester said it would fund the buyback from its “very strong balance sheet” and “robust cash flows” generated from its production.

Last financial year the miner boosted its coking coal sales by 6% and posted a net profit after tax of $A23.4 million.

Based on Gloucester’s closing price last Wednesday the buyback will cost the company $A28 million.

Last week’s market woes hit coal stocks as dramatic share price drops in Gloucester Coal and Aquila Resources prompted the ASX to issue price queries to both companies.

Gloucester dropped by 13% last Wednesday to $A4.49, which was a far cry from its closing price the week before of $A7.26.

It told the ASX it had no explanation for the change other than “current volatility” affecting the markets.

Gloucester was up this morning by nearly 12% in mid-morning trade at $4.22.

On Friday it closed at $3.70, down 11%.