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Financial difficulties prompt Bounty Mining to close Cook mine in Queensland

Australia's Bounty Mining Ltd. said late Dec. 17 that its Cook mine in central Queensland, which produced a record 174,951 tonnes of coal in the July-to-September quarter, has been closed due to financial difficulties caused by falling metallurgical coal prices.

The Sydney-based company went into administration late Dec. 17, citing "depressed coking coal prices" and "production shortfalls in the wake of the previously announced roof falls."

The company's administrator, PwC, said in a statement, "We intend to transition the Cook Colliery's operations into care and maintenance whilst we undertake an urgent assessment of the business and explore all options to sell and/or restructure the business for the future."

The Cook mine in the Bowen Basin produced 406,000 tonnes of mid-vol hard coking coal in the fiscal year to June 30. Bounty Mining had been planning to expand the mine's total coal capacity to more than 2 million tonnes per year.

However, after losing 23,000 tonnes of run-of-mine output due to a rock fall in October, Bounty warned of a potential loss of 150,000 tonnes in the current fiscal year ending June 30, 2020. The company said at the time that about 135,000 tonnes of coal reserves would be lost due to changes in mining operations, which would impact future production levels.

The producer acquired the Cook mine in December 2017 from Calendon, which itself went into liquidation, but has struggled to raise enough funds to generate working capital to cover operating losses.

In its July-to-September quarter report, Bounty Mining said it had "railed" 113,000 tonnes of coking coal in the quarter, which was sold to XCoal Energy & Resources LLC under "prepaid sales agreements."

The company produces a mid-vol hard coking coal and references the S&P Global Platts HCC 64 price in its operations reports. The average price for this product over July to September was $179.91/tonne CFR Jingtang, but it fell to $159.41/tonne over October to November, Platts data showed.

On its website, Bounty Mining said its 2019 coal resource estimate was 210 million tonnes for the Cook Colliery and the adjoining Cook North project.

Coal from Cook Colliery is trucked 14 kilometers to a train-loading facility linked to the Blackwater network and travels about 290 kilometers from there to Gladstone port for export.

S&P Global Platts and S&P Global Market Intelligence are owned by S&P Global Inc.