The operating opencut is 5km from Eastern’s existing exploration permit at Whareatea West, giving the company an ideal kick-start to mining in the area.

“The strategy driving the Cascade acquisition by Eastern is twofold. Firstly it enables the company to secure an existing operating coal mine in New Zealand’s main coking coal region and to establish its credentials, albeit on a relatively small scale, as a producer,” Eastern chief Paul Williams said.

“More importantly, the proximity of the Cascade operations to Eastern’s existing Whareatea exploration permit means the activities at Cascade over the next two to three years are an ideal lead-in to the future development of the significantly larger coal resource at Whareatea.”

The sale includes the Cascade mining plant, equipment, permits and related assets and approvals.

The mine produces low ash and sulphur coal with a high calorific value which Eastern said it planned to export to specialist lucrative niche markets that call for low tonnages at high prices.

The purchase will be financed by debt funding and existing cash reserves and is expected to be completed by June 30 2005.