Centennial MD ready for a bumper year

A RESTRUCTURE of its northern assets and selling projects has left Centennial Coal cashed up and poised for production and financial growth going into the new year.

Staff Reporter

Addressing shareholders at the company's annual general meeting, Centennial managing director Bob Cameron explained the reasons behind the sale of its Anvil Hill project and share in the Tahmoor mine.

He said the offer extended for both properties by Xstrata allowed Centennial to "accelerate the realisation of returns" on a risk-free basis and formed part of its restructure of operations.

The restructure included the decision to cease production at the Newstan mine from mid-2008 and the transfer of equipment and personnel from the closing mine to Mandalong.

Cameron said the decision to close Newstan into care and maintenance came after the mine encountered a severely faulted zone within the existing area and had ongoing challenges with its longwall.

The first development crews from the Newstan mine have assumed their role at Mandalong, replacing contractors, and the remaining crew will be shortly transferred.

Cameron said the crew transfer was an important part of Mandalong's expansion plans that will see the mine raise production to 5 million tonnes per annum in the 2009 financial year.

Silencing critics of the company's decision to sell its lucrative Anvil Hill project, some who claimed Centennial had gone "ex-growth", Cameron said the $A1.1 billion gained by the company from the sale of Anvil Hill and its Tahmoor interests has resulted in a $350 million profit to support other projects and acquire assets.

Looking into the new year, Cameron said a combination of factors sees the company well positioned: the recent record production levels reached at Mandalong and Angus Place; the resumed, post-longwall move, production at Springvale; and Newstan - mining its final panel.

Stating "while demand continues to accelerate, supply is growing at a slower pace", Cameron agreed with the outlook of many analysts that coal prices will continue to increase, which he said indicates a strong year ahead.

Thanking shareholders for their support during 2007 - which he called "a particularly challenging year" - Cameron said the expansion at Mandalong, the two longwall changeovers scheduled for each half of Mandalong and the group's strong western operations would drive the company towards financial growth in the 2008 financial year.