It's the $1 gamble that hit paydirt
A BOWEN Basin mine that made headlines after being bought for a $1 has earned its new owners $12.7 million.
Stanmore Coal purchased Isaac Plains complex from Vale SA in November 2015.
Stanmore released its annual report to the ASX Friday indicating that since May this year it has generated $12.7 million in revenue from the mine.
Despite the revenue boost, the company made a more than $19 million loss because of start-up costs in its first year.
Stanmore chairman Neville Sneddon said in the last 12 months the company had successfully moved from a exploration company to a operational miner.
"The combination of the strategic infrastructure of Isaac Plains East provided a strong platform for the company to recommence coal production at the mine that was placed in care and maintenance by the previous owner," Mr Sneddon wrote in the introduction of the annual report.
"The site infrastructure and good condition of the valuable dragline reduced the start-up working capital required by Stanmore to fast-track toward operating activities."
According to Mr Sneddon, securing strong contacts with steel companies and the increase in coal prices helped the company's performance.
When the company bought the mine the coking coal price was about $70 a tonne, on Thursday coking coal prices had increased to more than $210 a tonne.
"The sustained coal price downtrend over several years has led to a lack of project pipeline and capital expenditure in our industry," Mr Sneddon said.
"This recent price environment has held back development of the next generation of high quality coking coal assets which are required to replace continued depletion of today's coking coal mines and resulted in the recent spike in coking coal prices."
Company milestones this financial year:
September 2015 - Completion of the Isaac Plains East transaction
Novewmber 2015 - Completed purchase of Isaac Plains from Vale SA
June 2016 - Highwall mining started at Isaac Plains