An Australian coal mine picked up for A$1 earlier this year...

An Australian coal mine picked up for A$1 earlier this year amid a sector downturn that has claimed thousands of jobs and billions of dollars in losses is set to reopen next year, the new owner said on Thursday.

Stanmore Coal (SMR) in July paid Vale and Sumitomo Corp <8053.T> the nominal sum for ownership of the Issac Plains coking coal mine in Queensland state.

"We are in (sales) negotiations now, mainly with former buyers and new buyers as well," said Stanmore Managing Director Nick Jorss, adding that he was hoping to sell to large steel mills in north Asia. The firm has not yet agreed any long-term supply contracts.

Several steel mills in Asia contacted by Reuters declined to comment on any negotiations they may be conducting with suppliers of the metallurgical coal they use to churn out steel.

The restart would come despite prices for coking coal plunging to less than a third of their $300 per tonne-plus peaks of 2011, reflecting a global supply glut and a slowdown in Chinese steel production.

Jorss said the firm planned to hire about 150 workers and pay about A$7 million ($5 million) in annual royalties when output resumes in April at an annual rate of 1.1 million tonnes a year.

Jorss said the company was fully funded to restart with existing cash reserves and a $42 million, two-year interest facility provided by sector fund manager Taurus Mining Finance Fund to cover financial guarantees and contingent working capital if needed.

Stanmore, with a market capitalisation of A$33.4 million after its stock climbed 12 percent to 12 Australian cents on Thursday, has also assumed a A$32 million obligation to rehabilitate the mine site once the coal reserves run out.

Some 4,000 jobs have been lost at Australian coal mines in the past two years.

Despite the slump in prices, the sector has been attracting investment in some quarters.

BHP Billiton (BHP) , the world's biggest exporter of metallurgical coal under a joint venture with Mitsubishi Corp <8058.T>, recently budgeted $2.5 billion to expand a coal port terminal in Queensland to allow for millions of tonnes more in exports annually to Asian steel mills. ($1 = 1.3933 Australian dollars)

Keyword AUSTRALIA COAL/