Eastern's Cascade Coal Mine in Buller Lifts Output Substantially

The Cascade coal mine near Westport is expected to reach production of 65,000 tonnes for the year ending 30 June 2006. The new owners of the mine Brisbane-based Eastern Corporation Ltd stated in a report to the Australian Stock Exchange.

Gordon Smith chairman of Eastern, says in the report that this output was well above historical levels and the mine was now capable of meeting its production target going forward of 100,000 tonnes a year.

Cascade currently produces low ash, low sulphur, high vitrinite thermal coal for the domestic market.

Eastern says Cascade continues to build a strong customer base and work is continuing on a number of options to resolve the freight issues necessary to establish an ongoing export market.

Eastern attributes the slower sales to delays in gaining competitive access to port and rail facilities to achieve the forecast export revenues, and reduced local off take due to operational issues experienced by the mine’s largest domestic customer.

In spite of these difficulties, Cascade will record a profit before tax estimated at $350,000 for the year.

The operating profit will be lower than initial projections due to delays in the build up of production at the Cascade mine. This resulted in lower than expected earnings.

Expenditure in the second half of the 2005-2006 year will be higher than the first six months with the commencement of the drilling programme at Whareatea West, exploration drilling at Ohai, western Southland, as part of the due diligence study for the Straith Industries mine purchase option, and a feasibility for a Queensland mine.

The high coal inventories on hand at year end are expected to contribute to an improved result in the coming year.

Eastern says its full year net profit before tax for the whole company is anticipated to be in the range of $1.9 million to $2.1 million. Sources of revenue included the operating profit from the Cascade mine.

Mr Smith says Eastern believes its New Zealand strategy is progressing satisfactorily and that its policy of maintaining profitability and positive cash flows while simultaneously developing additional projects through acquisition and exploration remains appropriate.

In an earlier Eastern release Mike O’Brien, formerly the company’s group operations manager, has been appointed Eastern’s chief executive officer, following the resignation of Paul Williams as CEO.