Equity share saleable coal production for the September quarter was 4.8 million tonnes, up 20% on the previous quarter and up 33% year-on-year.

“Production and sales volumes were solid for the quarter with Yancoal expecting a stronger second half of 2013 versus the first half,” the company said.

“Full-year guidance for equity share saleable production is 16Mt.

“Yancoal is broadly on course to deliver a 2013 objective of a 15% sustainable reduction in mine level cash costs per tonne of product.

“The major ongoing cost challenge is to manage the take-or-pay logistics component of the cost equation.”

But its Stratford, Duralie and Donaldson mines continue to be challenged by current market conditions and the company is working to improve their productivity, it said.

“The [Stratford] operation remains under pressure in a weak price environment and was downsized during the quarter with the completion of the Roseville West Pit at Stratford and reduced rosters at Duralie, plus the CHPP to six and five days per week respectively.

“Yancoal is working to align the total cost base and financial exposure with current market conditions. From the December quarter onwards a net annualised ROM production rate of 3.4Mt/year is anticipated.

“Approvals for the Stratford Extension Project are expected in the December quarter.”

The company has warned that its growth projects are under review in the current cash flow and capital constrained environment. Regulatory approvals for major expansion projects at Moolarben are pending.

“Market conditions [for thermal coal] were weak, more so for the lower qualities. Prices decreased and the average prices for Yancoal were down on the prior quarter,” the company said.

“There was some improvement in market conditions [for metallurgical coal]. Spot prices picked up from August onwards although the sustainability of the increases is uncertain and the impact for Yancoal is lagging.”