Resource Pacific listed on the ASX in November 2004 with plans for either a base case to install a 2.4 million tonne per annum longwall using leased second-hand equipment, or the higher-profit expanded case at its Newpac (formerly Nardell) bord and pillar operation.
Managing director Paul Jury said recent coal prices, together with the mine development running to plan, had provided the confidence to pursue the expanded case. The company now views the base case as a fall back option.
A bankable feasibility study of the company’s expanded case to increase production to 4Mtpa is being reviewed by project finance banks for the debt funding. Following credit approval, a decision will be taken on the need for any additional equity.
“Steel maker demand for semi-soft coking coal is increasing and price settlements over the past six months have shown that it has broken the nexus between semi-soft and thermal coal prices. We expect semi-soft pricing to be more aligned with that for hard coking coal for the foreseeable future,” Jury said.
Semi-soft prices had traditionally been set some 12% above thermal coal price levels, but the latest contracts had been settled at a premium of approximately 45% to thermal coal.
Prices achieved by the company are currently close to $US80 per tonne, compared to average prices of approximately $US58/t for contracted sales during the year to June 2005, and approximately $US68/t for contracted sales during the year to June 2006.
After IPO and associated restructuring costs, Resource Pacific recorded a $330,000 loss for the half year. The company said it expected full year results to be profitable, with earnings before interest and tax rising from $290,000 in the first half to approximately $700,000 to $1 million in the second half.
