Eastern revives coking coal project

SMALL Kiwi thermal coal producer and Queensland coal seam gas explorer Eastern Corporation could restart drilling at the Whareatea West coking coal project with the help of a joint venture partner.
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Courtesy Eastern Corporation Limited.

Blair Price

Eastern’s wholly owned project covers about 820 hectares on the Denniston plateau near Westport on the west coast of New Zealand’s South Island, near the company’s Cascade mine.

The general area was first mined for coal in the late 19th Century, mainly using underground methods.

In the company’s December quarterly report, Eastern managing director Campbell Smith said discussions had progressed with a potential JV partner to further explore Whareatea West.

With only 40% of the permit explored, Eastern said planning was underway for exploration this year, subject to environmental approval.

Meanwhile, Eastern’s Cascade and Takitimu mines produced a total of 118.040 tonnes of thermal coal for 2009, generating $NZ8.91 million ($US9.88 million) to help fund the company’s other activities.

Takitimu is also expected to increase production in accordance with a 10-year agreement Eastern inked with dairy industry customer Fonterra during the recent quarter.

Over to Queensland, the put and call option agreement made last year with private mining company Resource Portfolio Partners to divest Eastern’s 90% interest in the Broughton Coal Joint Venture ends in March.

Consideration for the Broughton tenement next to Rio Tinto’s Hail Creek mine is in the range of $A8.5-12.0 million, with the permit holding a 30 million tonne coal resource contained in two seams.

In other energy exploration, Eastern’s 68%-owned subsidiary Galilee Energy is poised to benefit from a farm-in deal with AGL Energy, with the larger energy company spending $37 million in exploration to establish initial 2P (proved and probable) reserves late this year in ATP 529P.

Eastern said AGL completed seismic acquisition for the Galilee Basin permit in November and drilled two core holes before year-end.

Eastern ended the December quarter with $A5.58 million cash, $1.5 million less than the previous quarter.

Shares in Eastern closed down 4.6% to 31c yesterday.