This cost is forecast to decline towards $80/t in the second half of FY17 for an average operating unit cost including sustaining capital expenditure of $83/t in FY17.

“While ground conditions at the Appin Area 9 longwall have stabilised, additional work is being undertaken to recondition the maingate roadway to ensure the safe extraction of the 901 panel,” the company said.

“At Appin Area 7, production continues to be progressively ramped-up to ensure safe levels of gas are maintained.

“As a result, Illawarra Metallurgical Coal sales of 8.1Mt are now anticipated in FY17, while our average realised hard coking coal sales price will continue to reflect the premium low volatile index on a prior months basis.”

With the completion of the 901 panel and the associated release of ground stresses, a strong improvement in longwall availability and cutting rates is anticipated in FY18 with total saleable production forecast to exceed 9.0 million tonnes, according to the company.

“Consequently, operating unit costs (including sustaining capital expenditure) are forecast to decline towards approximately US$77/t given the operation’s high fixed cost base,” the company said.

Restated FY17 production guidance incorporates a longwall move for each of the March and June 2017 quarters.

To allow comparison to prior guidance, the various unit cost estimates do not take account of currently elevated coal prices, which increase royalty rates, and changes in the Australian dollar to US dollar rate, which has remained persistently above 72c.

 

“FY17 operating unit cost, including sustaining capital expenditure, guidance for our upstream operations will be updated when we report H1 FY17 financial results and will incorporate revised foreign exchange rate and price assumptions,” the company said.