Companies: CDN   

New Australian coal producer Caledon Resources expects 100,000 tonnes monthly output by December after losing an interim £5.7 million.

AIM-quoted Caledon, which bought the Cook mine in Queensland from the giant Xtrata Group in a £20 million deal when it was on care and maintenance, has now re-commissioned it. Heat and other technical problems caused some delays, but production began in March and chairman Robert Alford is talking of production in the region of 1.8 million tonnes next year.

That will be a welcome development for the London-headquartered company, which was originally floated seven years ago as a China gold play. Caledon turned a £1.2 million profit into a £5.7 million loss in the six months to June, more than three times the company’s deficit for the whole of 2006, and its cash fell from £8 million to £1.2 million.

Caledon reckons Cook has a mineable reserve of 17 million tonnes of coking and thermal coal, ripe for export to steelmakers and other customers in China and India. The company cites a much larger industry ‘JORC-standard’ resource of 240 million tonnes at its neighbouring Minyango project.

Floated at 35p in 2000, shares in Caledon, whose broker and nominated adviser is Canaccord Adams, fell to 15p five years later before rising to 50p. After drifting back on technical delays, they are now perking up, with a 2p rise this morning to 32p, where they value the company at £79.4 million.

They might repay a bold punt.

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