For the period ended June 2005, the company’s earnings before interest, tax, depreciation and amortisation (EBITDA) totalled $A2 million, with net profit of $A800,000. Produced coal was 385,000 tonnes, slightly above what the prospectus forecast.

The company’s longwall development project remains on schedule for a January 2007 start-up

Earlier, International Mining Consultants (IMC), which provided an Independent Technical Expert’s Report as part of the company’s fundraising activities, said geology at Newpac was typical of the Hunter Valley, and did not anticipate any major challenges.

The coal seams targeted for mining are the Lemington, Pikes Gully, Upper Liddell and Middle Liddell seams, under depth of cover of between 160-315m. IMC said there was variability in seam thickness over relatively short distances, but further exploration drilling would improve the predictability of these variances.

In laying out the mine plan for the Newpac longwall mine, planners have been assisted by overlying opencut workings. Geological structures have been delineated and used for hazard maps and mine planning.

Dykes encountered to date have been as expected in terms of opencut mapping, but there was a possibility of the dykes silling-out at lower seam levels. To ensure no silling has occurred in the panels between the gate-roads, the dykes will be pre-mined and backfilled ahead of the longwall face. IMC recommended aeromagnetic surveys to determine if any silling could be detected.

The most notable disturbance in the area is the Block Fault Zone (BFZ), characterised by a number of closely spaced faults. The main entries into the southern resource area will cross the BFZ in November, with both vertical and angled drilling being undertaken to better define this zone prior to the crossing.

This zone runs at an angle to the longwall orientation and could affect the first longwall panel in both the Pikes Gully and Upper Liddell seams. IMC feels the most likely consequence of this zone would be to shorten the length of the first panels, not expected to have a significant impact on mine economics.

Roof and floor conditions of the Pikes Gully seam were found to be generally excellent following some soft floor at shallow depth. Rib conditions down the mains headings appear to be deteriorating, believed to be associated with movement of stone bands from the lower third to upper third of the seam as the lower coal ply(s) thicken. Rib support is not being used but has been budgeted for in future operations.

Regarding hydrology, IMC do not anticipate a major threat from water inrush to Pikes Gully seam longwall workings from the surface or to the Liddell seam workings from the overlying Pikes Gully seam goaf, provided water levels in the Pikes Gully goaf are maintained in a semi-dewatered state.

The fact that longwall mining has taken place in adjacent areas in similar seams provides a reasonable level of confidence in Newpac’s geotechnical environment and no major geotechnical risks were identified according to IMC.

Seam gas is expected to be fairly low – under five cubic metres per tonne in all seams at depths from 150–220m. Regarding both roadway development and longwall mining, seam gas was regarded as a low risk.

For longwall operations, seam gas is ranked as low risk for Pikes Gully seam operations, but medium to high risk for Upper Liddell and Middle Liddell seam operations, due to the presence of several other coal seams above and below the working seam. A program of goaf gas drainage or capture may be required to mitigate the risk.

While Newpac’s seams are believed to have a low to medium propensity for spontaneous combustion, the mine is advised to be diligent in its management of spontaneous combustion.

The risk of spontaneous combustion developing is expected to be reduced by several factors. Full seam extraction is planned, with seam separation generally greater than 10-15m, limiting volumes of crushed and broken coal in the goaf. The ventilation system will be a U system with no bleeder roadway or back return shaft. The panel sequence is designed to be downdip, allowing goaf methane to migrate to the updip goaf and exclude oxygen.

Gate-roads are oriented favourably with respect to rib spall, and will assist in limiting loose coal spalling from goafed chain pillars

Panel length will be limited to less than 2km, allowing relatively fast panel sealing.

The mine plans to use two “supersections” for longwall development, alternating between mains development and gate-road development. The mains unit will target 1400 tonnes per day or an average 23m per shift and the gate-road unit will target 650tpd, averaging 10.8m/shift.

The longwall equipment, to be supplied by DBT, will be rated at 3000tph and will include automated shearer guidance and shield advance.

It will operate on a 250m-wide face in bi-directional mode, with maximum productivities of 8000 tonnes per shift and 17,500 tonnes per day.