Centennial Coal has announced a net profit before abnormals of $1 million and net profit after tax of $1.3 million on the back of a 6% improvement in cash costs per saleable tonne, which partially offset a 11% drop in sales revenue per tonne.
Centennial also reported a consortium it heads has nearly completed the purchase of the Springvale Colliery near Lithgow.
"Following further discussions with the company's Korean consortium partners (SK Corporation and KORES) it is now envisaged that they will acquire Samsung Development (Aust), owner of 50% of Springvale, and Centennial will directly own the other 50% interest in Springvale Colliery and become the operator on behalf of the consortium."
The company said the acquisition is expected to cost US$36 million and negotiations for a financial package were well advanced. This would include a small share placement, with completion scheduled for September 30, 2000.
Centennial said Springvale was strongly cash generative and was expected to make a significant contribution to profitability in 2000-01. The mine produced 1.8 million tonnes ROM coal for the year ended June 2000 with costs reportedly well contained, according to analysts.
On the company's financial results, Centennial said the largest single contributory factor to the reduction in profitability was the 11% reduction in average prices received, which was only partially offset by lower group distribution and production costs.
"However, the coal market is now looking brighter than at any time over the past four years with rising demand and tightening supply characterising the export coal market. Indeed, spot sale prices have increased by over US$6 (30%) since the low point at the beginning of 2000.
"This should form a solid basis for a healthy increase in contract prices at the next round of price negotiations with the revised KEPCO price effective from January 2001. Centennial, with 100% of its output contracted and spare capacity at Charbon and Clarence, should readily benefit from the anticipated upturn."
