Making the announcement in its preliminary Half Year Announcement for the six months ended 31 December 2003, Centennial said it wanted to use the funds to expand the export capacity of existing mines by approximately 2 million tonnes per annum.

The company said strong market conditions had driven an extraordinary change in the dynamics of the export coal market over the past 12 months. This had been characterised by a strong demand from rising economic activity; a supply-side squeeze (largely driven by the Chinese Government’s decision to give priority to supplying China’s own rapidly growing energy demand rather than supplying international customers); and security of supply issues and a return by Asian buyers to seeking longer-term contracts.

“As a result, export spot coal prices have recovered from the low US$20s in the second quarter of calendar 2003 to US$43.35 (as measured by the Barlow Jonker Price Index) with a resultant increase in longer-term contract prices as buyers attempt to secure much needed tonnage,” Centennial said in a statement.

“Centennial’s over-riding philosophy continues to be to produce coal efficiently and cheaply to maximize margins and only produce to meet demand. Recent negotiations of term contracts with customers in Korea and Japan have heightened confidence in future sales and underpinned this expansion. These contracts already total over 1.4 mtpa, at prices substantially more favourable than those achieved during 2003,” the company added.

The focus of the expansions will be the bord and pillar operation, Clarence, planned to expand by 1.2Mt through installation of a third “super place change” unit. Expansion of Charbon’s southern open cut is expected to contribute 300,000tpa, while construction of a new drive and drift at Newstan/Awaba will yield another 500,000t.

The company said Mandalong remains on track for longwall commencement in January 2005, though the capital cost of the mine has been revised upwards to approximately $219 million.

This is as a result of higher than expected gas emissions during development of the Flank headings, requiring a modification of gas management systems. Deferred development costs are expected to increase by approximately $9 million. Quotes for the coal distribution network to the two power stations were higher than anticipated.

Centennial said the third quarter of financial year 2004 would be impacted by the longwall changeovers (the extended Angus Place north to south move and the now completed Springvale changeover), which would reduce the quarter’s overall production levels.

Once all three longwalls were at full production was expected to result in the company meeting its financial year 2004 Prospectus forecast.

The funds would also help with the continued development of the Anvil Hill open-cut coal mine project in the Upper Hunter Valley, with a reserve of 152 million tonnes of ROM coal. Centennial expects the low sulphur content levels of the Newcastle Coal Measures to be attractive to potential customers, both domestically and overseas.

Centennial’s managing director, Bob Cameron said: “Centennial has an outstanding opportunity to leverage its ability to undertake low cost brownfield

expansions to take advantage of the strong thermal coal export markets. This, together with the

opportunity offered by this capital raising to proceed with the further development of Anvil Hill,

maintains our momentum in continuing to build shareholder value.”