Despite recording coal sales worth more than $28 million for the six month period, the company’s directors were forced to book an abnormal loss of $18.2 million due to the need to adjust the value of the company’s foreign exchange contracts to US59.86c – a price more reflective of the prevailing market exchange rate.

Austral said its bottom line was also hurt by the impact of a longwall changeover completed in late June which restricted production in May and June; an average 5% reduction in the price received for its coal compared to last year; and relatively low first half shipping volumes which are consistent with normal shipping patterns.

Austral Coal was spawned five years ago with a business plan of developing smaller, lower capital cost projects. It got its head of speed two years later when it raised $31.25 million via a public offer and institutional placements to buy the Tahmoor colliery.

Tahmoor is an underground mine in New South Wales’s southern coalfields, about 70km south-west of Sydney. It annually produces more than 2 million tonnes of run-of-mine coal using a 225m -wide longwall and continuous miner development units.

In June the company completed its longwall changeover from panel 17 to 18 at Tahmoor in a record time of less than four weeks. ROM coal was restricted for a week due to the need for preparatory roof bolting and another week was lost due to equipment re-commissioning.

Austral used the opportunity to put on a new longwall shearer, longwall chock supports and replace more than 6700m of conveyor belting. The capital cost for this upgrade was $3 million.

Austral is taking a chin-up approach to the loss saying that productivity during July and August has exceeded 10,000t per man year.

“Directors are confident of maintaining this level of productivity which, together with a significant shipping shedule and the ability to book revenue at the adjusted exchange rate of US59.86c, will significantly improve profitability in the second half,” the company said.

“Directors expect net operating profit before tax to exceed $5 million for the second half.”

Austral is also hoping that an improving demand and tightening supply equation will lift coal prices and hence profitability in the next contract year.