A lease extension has been awarded to Ulan colliery in New South Wales near Mudgee, some three years after the application was first filed. The new lease containing recoverable resources of around 160 Mt, will provide coal for at least 21 years of production. It will also enable Ulan to increase production from its underground operations as open cut reserves decrease.

The newly granted lease area is the logical extension of the resource and mining has progressively moved north towards it. The lease was granted with less than a year remaining

before development entries cross the boundary of the new area. If the lease had not been granted Ulan would have had to develop less suitable geological areas within the current lease.

Ulan began evaluating the area in the early 1990s. Some $7 million has been spent on exploration drilling, land acquisition, fees and other special studies to support the application for the extension.

Commenting on the development Ulan's general manager, Jim Hand said, "In the current business environment coal miners have to look pretty hard to find good news, but today there is some good news for Ulan. This lease provides a solid base for future operations at Ulan and we are naturally very pleased.

"The granting of this lease by the Department of Mineral Resources is an important event for Ulan and its employees, the local communities and the state of New South Wales."

Of the mine's annual output of 5.5 million tonnes, about 2 Mt of thermal coal is mined by the open-cut operation. The open-cut supplies coal under a long term contract to the Eraring power station that expires in 2007. The longwall produces about 3.5 Mtpa of export quality coal. Hand said that when the contract with Eraring expires the open cut operations would most likely be wound down with output being replaced by underground production.

This means that annual underground output will need to increase from 3.5 Mt to around 6 Mt. Hand said a range of options had been examined including running two simultaneous longwalls or two alternating longwalls. The current plan is to run a single, and wider longwall face and higher capacity coal clearance systems. Consideration is being given to face widths of up to 380m versus the current face width at Ulan of 250m. Finalisation of these and other technical issues would be subject to shareholder support and risk assessment studies Hand said. Mains development into the new lease area will occur in mid 2001 with mining of the first longwall panel expected to begin in early 2002.

Hand warned however that any expansion would be dependent on being able to place coal into the export market at reasonable prices. He added that Ulan was positioning itself to capitalise on the demand growth being predicted for coal.

"It has been a long road to get to this point, so it is particularly satisfying for those who have put in the hard work over the past several years to make this possible," he said.

Ulan is a joint venture between US energy giant Exxon (36%), Mitsubishi Development (49%), and Deutsche Asset Management (15%).