Coking coal prices have almost doubled during the past year to $US225 ($NZ294) a tonne, with analysts picking prices in the year ahead of $US300 to as much as $US500.
Bathurst, which holds a West Coast tenement on the Denniston plateau, north of Westport, with potentially 90 million tonnes of coking coal, is yet to begin mining in New Zealand but its shares have spiked more than 50% from 84c in early December to $1.30 - similarly boosting its market capitalisation to almost $NZ794 million.
In the first two hours of trading yesterday, more than 1 million Bathurst shares changed hands, ending the day up 4% at $1.30.
The devastating Australian flood disaster has seen many mines closed by force majeure, including the three largest providers of coking coal - a key ingredient in steelmaking.
Aside from normal global demand for coking coal, Asian and Indian mills are at present clamouring for coking coal to fuel growth in their their emerging economies.
The widespread shortage was exemplified by mining giant and the world's largest coking coal producer BHP Billiton saying yesterday Queensland coking coal production was down 30% during the past quarter, and warning operations would be affected for the rest of the year, Craigs Investment Partners broker Peter McIntyre said.
"Bathurst has about 50% market share of the New Zealand coking coal sector," he said.
Since the Australian rains started in early December, investors had recognised the position Bathurst held in developing an accessible, open cast mining operation, having successfully raised capital and got the necessary resource consents to begin mining.
Australian-based Bathurst's foray into New Zealand has been relatively seamless.
Since its late-November listing on the New Zealand stock exchange, it has raised a total of $A186 million ($NZ242 million) - $A110 million from a rights issue and $A76 million placement.
Mr McIntyre said with global coking coal prices and worldwide demand for steel both up, Bathurst was "very well positioned" with a "high-quality asset" in the Buller resource.
"Many of the hurdles associated with getting a mine from development to production are out of the way; Bathurst's ready to go," he said.
Of the $A110 million rights issue, $A18 million is for working capital, $A35 million for the acquisition of the field from L&M Group and $57 million for capital expenditure on the Buller project, which is targeting total exploration of 60 to 90 million tonnes.
Last year, Bathurst said production was set to begin in mid-to-late 2012, but there are hopes the mine could be operating by the end of the year.
The escarpment area will be targeted first, where there is an estimated 7.3 million tonnes of coal, with the Deep Creek prospect potentially holding almost 11 million tonnes.
Bathurst announced last December it had signed a memorandum with Stemcor Australia Pty Ltd, a subsidiary of Stemcor Holdings Ltd, which included a supply agreement and Stemcor's agreement to provide an up to $US50 million coal-financing facility to help develop the Buller resource.
Stemcor is the world's largest independent steel trader, with turnover of more than $US5.5 billion. It trades about 15 million tonnes of steel and steelmaking raw materials annually.
The memorandum said Stemcor would take 45% of the first 1 million tonnes of production, plus 30% of any further production above 1 million tonnes per annum.
Elsewhere, Bathurst is assessing production from the small Cascade thermal coal mine near Westport, which has been delivering up to 45,000 tonnes annually, mainly to Holcim cement, and investigating two potential new deposits that sit in the tenement.
It also owns the larger Takitimu sub-bituminous coal mine in the Ohai-Nightcaps area in Southland, which supplies about 160,000 tonnes per year, mostly to Fonterra, but could handle producing a further 40,000 tonnes to other buyers in the South.
• Additional reporting: NZResources.com.
