Total sales for the quarter were 552,000 tonnes, down just 1% year-on-year. Coking coal sales fell 38% on the previous corresponding period, but thermal coal sales increased 19%.

Gloucester said the fall in coking coal sales was consistent with subdued demand.

“Recent discussions with the company’s customers indicate a slightly more positive outlook. In May 2009 the company successfully concluded negotiations with Japanese steel mill customers for new contracts covering the Japanese financial year ending March 2010,” Gloucester said.

During the quarter the company also agreed to a thermal coal contract in 2011 and 2012 fixed at a “historically high $A price”

Run-of-mine production was 625,000t, down 19% year-on-year as pit operations were affected by wet weather. The company was able to keep up its sales by drawing on stockpiles.

At the Duralie operation, Gloucester has applied to increase the pit area and has awarded Leighton Mining a $350 million seven-year extension of its contract at the mine.

Last month Gloucester ordered three new Cat 785C XQ haul trucks to be delivered in June next year, bringing the total on order to 11.

At the Stratford coal preparation plant, the upgrade and refurbishment works are on schedule to be finished in the middle of next year as Duralie brings additional tonnage online.

Gloucester said exploration continued to be a key focus, spending $1.34 million during the quarter to bring total spend this year to $3.7 million.

The exploration program was further expanded during the quarter with an additional drill rig and support equipment, which increased overall capacity and the ability to drill deeper open cut and underground targets.

Gloucester said it remained on track to meet its 2009 profit guidance of $88-95 million.

Gloucester was trading up 5.6% midday today at $5.70.