Wet weather affected production last year, but Macarthur said that even if the wet season quarters of December and March were affected by weather delays, the strong first-quarter performance had put the company in good stead.

Sales performance was higher than the corresponding period in 2004, principally due to the opportunity to ship a thermal coal product from the Moorvale mine in addition to PCI coal.

Coppabella saleable and ROM production was down 8.7% and 17.1% respectively, after damage to the coal preparation plant feed coal conveyor belt and planned production and stockpile scheduling issues.

Water supply remained a critical concern during the quarter, with insufficient rainfall at Coppabella and Moorvale to replenish dams. As a short-term solution, Macarthur has purchased a cattle property with access to an underlying alluvium aquifer. The company is still waiting on approval for the water to be used for industrial purposes.

In the long term, Macarthur will be entitled to water from the Burdekin pipeline and is negotiating a contract to purchase water from the Eungalla Dam.

Macarthur continued its active exploration and development program during the quarter, drilling at Monto, Moorvale West, Vermont East, West Rolleston and Capricorn tenements.

A mining lease application for the Olive Downs North opencut project will be lodged in November 2005. Macarthur expects operations to begin at Olive Downs North during the third quarter of calendar year 2006.

Macarthur Coal stocks closed at $A6.16 yesterday, up 4.23%.