Centennial has had a big year having provided a return of $A2.09 per share to shareholders on the back of $1.1 billion in asset sales from the Anvil Hill project and its 86% stake in Austral Coal, along with higher coal sales revenue.

In his address during today’s annual general meeting, Centennial Coal chairman Kenneth Moss updated investors on progress with its recently announced 20-year, 1.8 million tonne per annum Airly mine development and the planned longwall mine at Awaba East, both in New South Wales.

“Contracts for Airly’s construction are expected to be signed in the next few days,” he said.

“Longer term, a feasibility study and a drilling program are already underway as we evaluate the prospect of a 3.2 million saleable tonne longwall mine at Awaba East.

“Early drilling results continue to be encouraging, with at least 25 per cent of the mine’s production estimated to be a high quality semi-soft coal.”

Moss said the company was upgrading export facilities at Lidsdale Siding, adjacent to Springvale, and constructing a haul road linking its Mandalong longwall mine to its Newstan mine’s export facilities.

He said the infrastructure upgrades would enable increased export capacity to take advantage of market opportunities.

Given that commodity prices have significantly changed in the past couple of months, Moss said the company was flexible to deal with the changing coal market.

Noting that more than 80% of thermal coal is used for electricity generation, he said coal buyers and discussions with key customers reaffirmed the importance of supply security.

“From a Centennial perspective, the company continues to receive enquiries for coal to be shipped via Port Kembla, with many of these enquiries seeking additional coal over and above already contracted levels as buyers seek to ensure security of supply,” Moss said.

“As a preferred independent supplier, shipping through Port Kembla, we remain confident that any economic slowdown will have a limited effect on forecast export sales.

“Given our geographical proximity to the state’s electricity generators, we remain the largest supplier of thermal coal to the domestic power market from a suite of mines uniquely placed to serve the state’s growing energy needs.

“As these domestic contracts expire, they are likely to be replaced with a new generation of domestic contracts – providing a regular low-risk cash flow stream and free from the vagaries of the Australian/US dollar exchange rate.”

Moss said the company’s gearing level was around 20% and that Centennial had regular monthly cash flow from its domestic contracts to NSW power generators.

He made the point that the fundamentals of thermal coal meant it should be more resilient despite the global financial crisis and said that so far in the 2009 financial year the company had not seen evidence of demand weakness.

Centennial was trading up 9.4% mid-morning today at $2.68.