The deficit compares with a $3 million loss for the six months to December 31, 2007.

Eastern attributed the reduced loss to positive results from the company’s New Zealand operations, estimating the operations would record a profit in the six months to December 31, 2008 of $175,000. Eastern will confirm the figures in its March results.

At its Cascade mine on New Zealand’s South Island, Eastern has negotiated a take or pay contract with local cement manufacturer Holcim for 90% of the mine’s production.

At the Takitimu project Eastern has outlayed start-up costs and the mine is moving into its first year of full production with global dairy producer Fonterra as the major contracted customer.

“The increasing cash flow from both operations is more than adequate to meet the repayments of the debt facilities established locally to fund the development of the southern mine and will also enable the NZ subsidiaries to commence repayment of the parent company loans during the next six months,” Eastern said.

The company is seeking future funding by way of sale of its Broughton coking coal project in central Queensland, and the disposal of the Whareatea West coking coal project on New Zealand’s west coast.

Eastern shares were trading down 8.7% yesterday at 21c.