Ivanhoe termination to hurt Bounty profit

THE early termination of Bounty subsidiary InCoal’s contract with Centennial Coal at its Ivanhoe mine in New South Wales has forced Bounty to downgrade its 2005-06 profit forecast.
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Bounty overhauls equipment at its Newcastle workshop

Angie Tomlinson

On November 4, Centennial announced it would terminate its contract with InCoal six months earlier than expected as a result of a lower than expected quality of export thermal coal at the Ivanhoe mine. InCoal will officially finish up at the mine on December 1.

Bounty said today that without redeployment of its workforce and equipment from Ivanhoe it expected fiscal year profit to be more than $A5 million, but under the $A6 million it predicted earlier.

Bounty said it intended to redeploy its equipment and workforce as soon as possible following the Ivanhoe cessation date.

It said it had several redeployment options, including another project with Centennial at another mine location, with Anglo Coal at German Creek in the Aquila seam or with Gujarat NRE Australia at the NRE No.1 Colliery in either the Balgownie or the Wongawilli seam.

A decision on relocation is expected soon.

“During the short period we have operated at Ivanhoe we have confirmed the commerciality of the thin seam mining technique with above industry production rates being consistently achieved,” Bounty chairman Colin Knox said.

“We remain confident that the German Creek mining assignment will further reinforce the technique as a real value add for the Australian coal mining industry.”

Bounty is continuing to cut coal at Anglo’s German Creek mine and expects to continue at least to the first quarter of calendar year 2006.

At the same time, Bounty will commence production for Anglo within German Creek’s Aquila seam towards the end of November. This assignment has an initial term of three years.

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