Higher costs won't stifle progress: Hillsborough

HIGHER production costs than expected last year will not stop it improving productivity this year, Canadian producer Hillsborough Resources says.

Donna Schmidt

“Although Quinsam had higher than forecast production costs through 2008, the mine is much better positioned to improve productivity, to meet production targets, and to reduce costs during 2009,” company officials said Thursday.

“New equipment has been added, the new workforce has become more experienced, and the mine plan has a good balance of development and depillar coal.”

Officials added that production costs would be reduced as those improvements are made.

Hillsborough said that although the downturn of the steel industry had made its mark on metallurgical coal demand – it noted the impacts on the company were being watched closely by its Peace River Coal management – positive sales contracts and “operational improvements” had positioned it well for 2009.

“Hillsborough has budgeted to produce 520,000 tonnes of Quinsam products during calendar year 2009, all of which has been contracted for,” it noted.

“Our upwardly revised projections for 2009 call for an average blended sales price of $C125 per tonne, which includes 300,000 tonnes into the international market at $US137 per tonne with an assumed average exchange rate of CDN to US of $0.838.”

Any production it sees that exceeds that amount, Hillsborough said, would be sold “readily” for market price.

As PRC continues to monitor the steel market environment, the company continues work on its Trend transition project.

“[It] is expected to bring PRC greater capital and management control as well as to deliver a reduced operating cost environment,” officials said.

“Options around optimal production will be assessed as more clarity emerges from the customers and market sector.”

Hillsborough also currently operates the Quinsam underground mine near Campbell River, is developing the Wapiti complex, and controls the Bingay Creek operation, all in British Columbia, Canada.

The company also serves as a limited partner in the Peace River Coal Partnership, which has significant properties in production and under development near Tumbler Ridge in the same province.

It is currently evaluating new mine development options for its Crossville operation in Tennessee, but for now that operation is in reclamation.

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