Eastern announced during the quarter that it would not proceed with the development of the Broughton coal resource as a stand-alone project in the near future.

The Broughton project has a 30 million tonne coal resource contained in two seams and is a joint venture with Mitsui Coal Holdings, which holds a 10% interest.

“The joint venture will continue to review development options for the project, including development in conjunction with adjoining tenement holders to maximise economics based on an expanded operation,” Eastern said.

“It is also actively engaged in exploring options to increase the available product tonnes from the resource through mining by underground methods; production of a higher ash metallurgical product; and/or other blending options to increase coal yields.”

Mitsui has confirmed its intention to maintain its current 10% interest in the project and retains the right to increase its interest by a further 20% if project feasibility is established.

Also during the quarter, a new coal supply contract was secured for the newly acquired Takitimu opencut mine on New Zealand’s South Island.

Under the contract Eastern will supply Fonterra’s Clandeboye plant approximately 130,000 tonnes of coal each year from September 2008.

“Resulting cash flow will enable the NZ operations to be cash positive and to contribute to further development and expansion of operations within the country,” Eastern said.

Meanwhile, the Cascade opencut mine on the west coast of New Zealand’s South Island performed as expected, with production and sales down slightly from the previous quarter.

Coal produced from both Cascade and Takitimu totalled 10,090t for the quarter, with sales of 9208t.

“The outlook for coal sales from both Cascade and Takitimu mines is expected to improve significantly for the next quarter with increased demand due to climatic conditions,” the company said.