Centennial completed the deal with BHPB subsidiary Hunter Valley Energy Coal yesterday, which will see transfer of part of an exploration licence A405 currently held by the Wyong Areas Coal Joint Venture to Centennial Mandalong.

Mandalong, located in New South Wales near Newcastle, will commence operation of its longwall during January next year.

The mine will initially supply the Eraring Power Station and has long term contracts totalling 3.3 million tonnes per annum to Eraring and Delta Electricity’s Vales Point Power Station.

Centennial said the additional resources will provide potential to expand production and the life of its domestic contracts.

“Centennial’s inherent flexibility due to its other mines in the region and existing infrastructure provides a range of alternatives for such expanded production,” Centennial said.

“Higher production levels at Mandalong may, for example, be exported directly or be able to replace domestic contracted tonnage form the nearby Newstan mine, allowing Newstan to increase exports of its highly valued semi-soft coking coal.”

The licence transfer is subject to approval.

Centennial shares hit a year high of A$4.30 during trading yesterday and closed at $4.20.