Stanmore Coal (ASX:SMR), the Australian miner that earlier this year snapped up an unwanted and mothballed coal mine from Vale (NYSE:VALE) and Sumitomo, is ready to reopen it by April next year.
The Isaac Plains coking coal mine in central North Queensland, which Stanmore bought for just $1, was closed down last year as the owners said it was no longer viable in light of weak coal prices.
Despite prices for the commodity remain close to multi-year lows, Stanmore Coal said the mine is on track for its first shipment next year, adding it has awarded a three-year contract to Golding Contractors.
The deal paves the way for the production of 1.1 million tonnes of coking coal a year, Stanmore said.
“Challenging commodity markets have presented an exceptional opportunity for Stanmore and in early 2016 we will become an independent producer of high quality coking coal for export to the steel industry in the region,” Stanmore Coal managing director, Nick Jorss, said in a statement.
Jorss added the firm planned to hire about 150 workers and pay about $5 million (A$7 million) in annual royalties when output resumes at an annual rate of 1.1 million tonnes a year.
Stanmore, with a market capitalization of A$30.4 million after its stock soared almost 13% on Thursday, has also assumed a A$32 million obligation to rehabilitate the mine site once it runs out of coal.