Coal production for the 2006 financial year of 5.9 million tonnes was 18.7% above the previous corresponding period, reflecting the expansion of Wambo open cut and a substantial increase in production from the second production unit at Chain Valley.
Excel said development of the North Wambo underground mine continued during the quarter and remained on schedule to commence longwall production early 2007.
The new Wambo rail facilities were commissioned during the third quarter and officially opened in June. Regular railing of coal from Wambo to the port of Newcastle commenced from the first week of May with truck haulage ceasing during June.
At the company’s Wilpinjong project construction progressed on schedule with saleable coal production expected late this year.
At the Millennium CHPP the raw and clean coal handling systems were pre-commissioned, with first saleable coal railed to Dalrymple Bay on July 17.
The Millennium coal washing plant is expected to be completed during August with first washed coal sales planned for September. Sedgman will commission the CHPP and operate it under contract following commissioning. Excel expects to meet its sales target of 1.5Mt in the 2007 financial year with coking coal sales contracts now in place for 1.4Mtpa.
At the Excel’s established Metropolitan longwall mine production remained steady at 1.5Mtpa.
The company said contract coking coal prices for next year had generally been settled with all buyers, but over-commitments by many buyers in response to the severe coking coal shortages of 2005 had resulted in de-stocking during 2006, causing a fall in coking coal exports and some weakness in coking coal prices.
“As a new supplier to the market, Millennium has been affected more by this market softness than Metropolitan, which has a well-established market position,” Excel said.
“Looking forward, while coal prices are strong and the outlook in this regard generally remains positive, the industry continues to experience intense cost pressures across the board as well as significant competition for material, supplies and labour.”
Excel Coal expects to achieve previously advised guidance of $95-$100 million net profit for the 2006 financial year.
As previously reported, Excel Coal has entered into a merger implementation agreement with Peabody Energy. Under the Peabody offer, Excel shareholders will receive $A8.50 cash per Excel Coal share.
The deal is subject to Excel shareholder approval.
