Gujarat, which is 77%-owned by its Indian parent company, is planning to expand production of metallurgical coal from its two mines in the Illawarra from 1 million tonnes per annum this financial year to 6.2Mtpa in 2014-15.
“Our ‘buy’ rating is underpinned by the 29 per cent discount of the share price to our net present value, the strong growth in production and the 100 per cent exposure to the metallurgical coal market – which we view as having superior long term supply-demand dynamics and therefore pricing potential,” UBS said.
Gujarat was reviewing its management systems after the roof collapse at its NRE No.1 colliery trapped two miners for two hours.
“On 29 September 2010 a roof fall occurred in the section of NRE No. 1 Mine known as P8 Panel. The roof fall temporarily restricted (only for a brief period) the egress of two personnel,” Gujarat said in a statement.
“Emergency procedures at the mine were immediately initiated and two persons were safely evacuated via an alternative egress path within a couple of hours from the initial incident. No injuries were sustained to any personnel as a result of the roof fall or during the subsequent emergency response.
“Furthermore the above incident had no material impact on the company’s overall production/ operation as the incident only interrupted one of the five operating panels in the Bulli seam area of the mine for a few days. The total production loss due to the incident was estimated around 5000 tonnes.
“Necessary approvals were received on Friday 8 October 2010 and operations in the affected area have been resumed since then.
“The progress of developmental work at Wonga Mains including longwall setup in the Wongawilli seam area of the mine remains totally unaffected and is on schedule.”
It is believed more attention is required to changes in geological conditions, to make adjustments in the level of roof support in some areas.
Joy won the $A90 million contract to supply longwall equipment for the NRE No.1 Colliery in April.
Gujarat’s share price was down 1.5c to 0.615c.
