Gloucester's outlook promising despite obstacles

ADDRESSING company shareholders this week, Gloucester Coal's chairman and CEO said while the company's financials have suffered some setbacks, production is on the up and is only going to get better as mining starts on the Clareval seam.
Gloucester's outlook promising despite obstacles Gloucester's outlook promising despite obstacles Gloucester's outlook promising despite obstacles Gloucester's outlook promising despite obstacles Gloucester's outlook promising despite obstacles

Courtesy Gloucester Coal

Staff Reporter

Chairman Andy Hogendijk said factors outside the company's control - namely port restraints, demurrage charges and foreign exchange rates - were to blame for an expected reduction in annual profits.

However, he said the facilities expansion program currently being undertaken at the company's washery will accommodate 4 million tonnes per annum of product - up from 3.2Mtpa - and be completed in time to handle the additional production from the Clareval seam.

Hogendijk said the discovery of the Clareval seam was a major boost for the company that is pivotal to the planned 40% production increase expected by the company during the 2009-2010 financial year.

New CEO Rob Lord - having joined Gloucester Coal in August this year - shared Hogendijk's sentiment and said the company's financials will strengthen.

"The company's financial performance in the 2007-08 financial year is not expected to reach last year's levels with current projects having been revised down; but this is dependent on a number of factors including the current higher foreign exchange rates, ongoing port congestion and demurrage costs," Lord said.

"The company will not be able to benefit in the short term from the recent increases in coal prices, as existing contracts remain in place largely until the middle of the 2008 calendar year.

"However, on a positive note, we will soon commence re-negotiating coking coal contracts for delivery from April 2008."

After shareholders voted against Xstrata's proposed scheme of arrangement earlier in the year, Hogendijk said the company will continue to investigate opportunities for long-term growth with a focus on exploring outside the Gloucester Basin.

Lord said the company will capitalise on the market in the coming years, particularly with the availability of more port infrastructure from early 2010.

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