Eastern Establishes Foothold in Southland's Ohai Coal Fields

Queensland-based coal mining company Eastern Corporation has agreed to buy a coal mine in the Ohai coal fields of western Southland in the South Island.

Eastern said it had agreed to purchase the coal mining operations of Straith Industries in the Ohai-Nightcaps area.

The acquisition of the Straith sub-bituminous coal operations will give Eastern a second coal mine in New Zealand and secure an operation in an area of the South Island where considerable market opportunities may exist in the coming years, the company said.

Last year Eastern acquired the Cascade mine in the Buller coalfields on the west coast of the South Island. Eastern is also currently exploring 5 km north of Cascade at Whareatea West where it aims to prove up known coal resources for mine development.

The Straith operations are located in three separate areas within the Ohai- Nightcaps region, where open cut and underground coal mining operations have been conducted for over 50 years. The Straith coal is predominantly a sub-bituminous thermal coal, with potential application for use by domestic and industrial coal customers throughout the South Island.

Eastern said it is pursuing a strategy of coal mine development and expansion in New Zealand as well as Australia.

Eastern (through a wholly-owned subsidiary) will acquire the mining plant, equipment, permits and related assets and approvals associated with the Straith operations for a purchase price of NZ$2m. The deal is to be paid by Eastern out of existing cash reserves by 31 July 2006.

The purchase will also be subject to completing due diligence investigations on the mine assets, existing coal resources, and available markets plus acquisition of all needed statutory and resource consents.

Source: Eastern press release