But the Australian Securities Exchange-listed company also sounded a warning note about future coal prices, predicting that there could be a sustained downturn.

“Chinese demand has weakened and thermal coal prices and spot metallurgical coal prices have declined despite some supply disruption in Australia caused by heavy rain and supply disruptions in the Atlantic market affecting thermal coal,” it said.

“Both metallurgical and thermal coal markets remain oversupplied and prices are expected to remain under pressure for some time.”

The company sold 1.3Mt of metallurgical coal and 1.8Mt of thermal coal in the March quarter.

“The company priority remains on reducing costs and achieving the targets set late in 2012,” it said.

“Solid progress on the targets was made during the March quarter.”

Austar had a particularly bad quarter with its run of mine production of thermal coal plunging by 46% to 237,000t due to the longwall move.

Production was significantly lower than normal as mining in the final panel of the stage 2 area was completed in February.

The longwall is being recovered and maintained before being set up in the first panel of the stage 3 area of the mine.

Mining is scheduled to commence in the section in June.

Roadway development of 2564m during the quarter exceeded the target of 2220m despite the presence of significant amounts of water in the gate road development.

The coal handling and preparation plant was shut down during March for a major maintenance program to ensure it will be available when longwall mining commences in stage 3.

Several heavy rainfall events during the quarter caused two of the dams across the site to overflow as they could not accommodate the amount of water collected in the short period.