Located 30 kilometres east of its Moorvale mine, the Codrilla open cut project is targeting 3.2 million tonnes per annum of low volatile pulverised coal injection (PCI) coal – which is highly sought after by overseas steelmakers.

The project hosts 50Mt of recoverable reserves and Macarthur plans to export through its existing contracted capacity at the Dalrymple Bay Coal Terminal.

While the company’s Vermont East-Willunga project holds 170Mt of measured resources, Macarthur chief executive officer Nicole Hollows said the Codrilla project could benefit from existing infrastructure at Moorvale.

She added the Codrilla project would underpin Macarthur’s objective to produce 9.2Mtpa by 2014.

Macarthur also decided to sell a 13.76% stake of the Codrilla project to the other member companies of the Coppabella and Moorvale joint venture for $74.88 million.

This will lower Macarthur’s stake in the project to 73.3%, the same as its stake in the Coppabella Moorvale Joint Venture.

The extra funds led Macarthur to lift its current financial year profit guidance from $185-205 million to a range of $240-260 million.

“Developing a fourth mine from our portfolio of exploration tenements allows Macarthur to grow returns to shareholders by taking advantage of continuing growth in demand for our low volatile PCI coal product,” Hollows said.

“The outlook for the international LV PCI market remains strong and the development of the Codrilla project will ensure that we maintain our leading market position in this area.”

The other members of the CMJV include Japanese trading houses Marubeni Corporation and Sojitz Corporation (7% each), China’s CITIC Resources (7%), JFE Shoji Trade Corporation (3.7%) and NS Trading Company (2%).

The profit guidance and Codrilla transaction hinge on Foreign Investment Review Board approval.

Macarthur shares closed up 1c at $11.43 yesterday.