Deutsche branded Excel a “production growth story” in the wake of the news the company would lift production from 5.7 million tonnes per annum in financial year 2006 to 14.3Mtpa in 2010.

Production expansion will come from development of the Wilpinjong mine and expansions at current operations Wambo and Metropolitan.

“Particularly compelling is the diversification inherent in Excel’s earnings growth, with near 30% of long-term earnings driven by the lower risk domestic long-term coal contracts associated with the Wilpinjong project,” Deutsche analysts said.

They said the current price and outlook for export thermal coal was the main retractor for Excel but the strength of the coking coal market was a positive.

Deutsche set its Excel target price at $A9/share.

While the news on Excel was chiefly positive, Deutsche set a “hold” rating on Centennial Coal as the miner continued to experience problems at its Newstan longwall.

The bank was positive on Centennial’s ability to get out of its current situation and predicted the mine would resume operations within several weeks as the longwall moved to more stable ground.

Centennial blamed poor ground conditions and vandalism on the production shortfall at Newstan.

Deutsche analysts said Newstan was forecast to contribute 27% of Centennial’s earnings before interest and tax in 2006. The loss of 450,000 tonnes will result in around a 7% reduction in the bank’s net profit after tax forecast.