Mother nature and coal chain troubles hit Cumnock profits

HOLD-ups in shipping queues at the Port of Newcastle, rail congestion and violent storms early in the year have been blamed for a 45.6% drop in profits announced by Cumnock Coal.

Staff Reporter

The company reported half-year revenues of $26.1 million and profit after tax of $A5.4 million compared to $49.6 million and $9.9 million respectively from the first half of 2006.

This represents a 47.3% decrease in revenue as the company handled 309,000 tonnes in sales for the period compared to 642,000t in the corresponding 2006 period.

Also on the decline was raw coal production from 716,000t to 686,000t, with 493,000t of this saleable.

The company cited lower raw coal production, lower yields and the impact of higher run-of-mine ash levels and altering the washing process as being responsible for the 6.5% decrease in saleable production.

Cumnock Coal also announced a merger bid by Xstrata Coal to acquire 100% of the shares in the company, pending approval by shareholders.

Xstrata's offer involves a payout of 57c per share or a transfer of shares to Xstrata on an equal value basis, effectively cancelling all Cumnock Coal shares from the market.

The merger will be discussed at a general meeting of Cumnock shareholders to be held on August 24.