As a result of the further deterioration of mining conditions and ongoing losses at the Munmorah continuous miner operation, Centennial last week made the decision to close the mine, effective August 2005.

As a result of Munmorah’s losses and closure costs totaling $A22 million, the company said 2005 financial year net profit after tax would be significantly less than in 2004.

Centennial revised its financial year 2005 profit to between $A36-42 million.

For the quarter ending March 31, ROM production was 35% above the 2004 March quarter, primarily because of the expansion of output at Angus Place, Clarence, Charbon and Springvale, and the first longwall coal from Mandalong.

For the full year, equity coal production is forecast at around 15Mt, about 30% above financial year 2004.

Angus Place produced 683,000t during the quarter, in contrast to its disappointing 2004 March quarter when the mine experienced problems during the installation of its new conveyor systems.

Both Clarence and Charbon had expanded production and targeted the export market as planned, following the equity raising in March 2004.

Clarence experienced some equipment issues and uncharacteristic geological problems during the quarter; however, the panel has now been relocated and output has lifted. The mine remains on track for a record year.

Springvale has benefited from the widening of its longwall block following a successful longwall move. Centennial said development remained on track to facilitate the smooth transition to the 3.6km-long and 305m-wide 411 Panel, containing approximately 5Mt.

At Mandalong, longwall production began on schedule in January 2005 with initial production comfortably meeting expectations in the early ramp-up phase through to the end of February.

However, production during March was restricted when the new 9km northern conveyor from the underground bin to the surface was being commissioned and not able to meet the longwall’s production capability. Production consistency subsequently improved in April.

Several mines experienced quality control issues and delays in equipment delivery from suppliers as a by-product of the strong increase in demand for mining equipment and services, disrupting planned maintenance scheduling, leading to an increase in repair and maintenance costs and machine downtime.

Centennial has now gained operational control of Austral Coal’s Tahmoor mine and currently holds 82.5% of the company. On the back of the acquisition, Centennial said approximately 50% of its sales revenue in financial year 2006 was expected to be from the export market, with 35% of revenue derived from the higher margin coking coal.

Centennial said Austral’s well-known problems, including its carry-over tonnage, current high cost of mining and restructuring costs, may have a negative affect in its June 2005 quarter.