Low coal prices no deterrent

An artist's impression of the conveyor belt Bathurst wants to use to get coal off the Denniston...
An artist's impression of the conveyor belt Bathurst wants to use to get coal off the Denniston Plateau to its depot near Westport. Photo supplied.

A plunge in global coking coal prices has not deterred Bathurst Resources from plans to increase its West Coast operations, following two years of litigation and subsequent delays.

Also back on the agenda is an aerial conveyor belt to take coal off the Denniston Plateau towards Westport.

The system could be operational in two to three years; replacing truck transport.

Following a year of average coal prices around $US150 ($NZ179) a tonne, the price is now sitting at $US122, with Bathurst expecting a positive upward correction.

Coal peaked at $US350 a tonne in 2008.

Bathurst has recently secured consents from two West Coast councils to begin mining on the Denniston Plateau, above Westport, having spent more than $300 million on acquisition and developments, but having only existing boutique coal mines providing light cashflow.

Extra capital-raising last October secured almost $25 million, which had since dwindled to $10 million, and with a recent $1 million nursery purchase near Denniston, that was now ''just below'' $9 million yesterday, Bathurst chief executive Hamish Bohannan said when contacted in Australia.

He said while Bathurst could ''sit and wait'' out any prolonged low prices, it remained ''100% committed'' to go ahead with plans to increase coal production.

The company has about 30 staff at present but in a year it plans to have 225. Mr Bohannan noted Asian demand for iron ore was strong at present and many steel mills were at capacity while China's stockpiles of the specialist hard coking coal were low.

Other than the general decline in Australia's mining boom, there was no other reason for the depressed $US122 price, he said.

It was not the first time in recent years Bathurst's war chest has dwindled, but Mr Bohannan was confident, when asked about any need for capital-raising in the near future, that coal extraction operations would begin within three to four months.

''We should be OK to squeak through [without capital-raising],'' he said.

While coal prices at $US122 left ''not much [profit] margin in it'', he was expecting an upward correction.

Mr Bohannan said while Bathurst had permits to sluice coal in a pipeline towards Westport, the company would have to apply for permits for the footprint of towers to carry the belt.

Estimates on proved coal reserves have risen from 11.3 million tonnes to 13.1 million tonnes, Bathurst has said.

The overall Escarpment project is targeting initial production of 500,000 tonnes, with the adjacent Cascade mine expanding production from 45,000 tonnes to 150,000 tonnes.

Bathurst expects its Takitimu mine, at Nightcaps in Southland, to produce 200,000 tonnes of coal annually for domestic supplies, while the recently purchased Canterbury Coal mine, west of Christchurch, will produce about 35,000 tonnes for dairy processing plants.

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