Whitehaven Coal (ASX:WHC)
Source: Whitehaven Coal
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  • Whitehaven Coal (WHC) has cut its earnings guidance for FY21 amid declines in run-of-mine production citing “ongoing geological challenges”
  • The ASX-lister revealed ROM coal production had fallen 29 per cent at its Narrabri Underground Longwall Mine and 33 per cent at its Gunnedah Open Cut Mines on the prior corresponding period
  • As a result, the company revised down production, sales and unit cost guidance for FY21, attributing the downgrade to a combination of flood-derived rail service disruptions and accompanying shiploader repairs
  • Looking ahead, Whitehaven said it is remaining “cautious” in allocating capital to the expansion of its three development projects amid a subdued coal market
  • Whitehaven Coal shares have dropped off 14.9 per cent following the announcement to trade at $1.57 per share

Whitehaven Coal (WHC) has cut its earnings guidance for FY21 amid declines in run-of-mine production citing “ongoing geological challenges”

Rain check

The company’s March production report revealed run-of-mine (ROM) coal production had fallen by 29 per cent at its Narrabri Underground Longwall Mine and 33 per cent at its Gunnedah Open Cut Mines on the prior corresponding period.

“Disappointingly, we have had to revise down our FY21 production, sales and unit cost guidance,” Whitehaven’s Chief Executive Officer and Managing Director Paul Flynn commented.

Managed ROM coal production has now been cut to 20.6 to 21.4 million tonnes compared to a previously forecast 21.4 to 22 million tonnes, with managed coal sales also downgraded to a 17.8 to 18.3 million tonnes guidance range from 18.5 to 19 million tonnes.

Unit costs were also increased from $69 to $72 per tonne to $73 to $75 per tonne.

Whitehaven attributed the downgrade to a combination of flood-derived rail service disruptions and accompanying shiploader repairs, which meant Whitehaven’s supply chain was disrupted for nearly two weeks in March.

In some respite for the company, the Maules Creek mine returned an increase in ROM production performance of some 3.7 million tonnes, 58 per cent above the prior corresponding period — despite heavy rain during the quarter.

Coal outlook

Looking ahead, Whitehaven said it is remaining “cautious” in allocating capital to the expansion of its three development projects: the Narrabri Underground Mine, the Vickery Extension Project and the Winchester South Metallurgical Coal Project.

Citing a subdued coal market, the company advised it has no plans to issue a final investment decision on these projects in this financial year.

Whitehaven acknowledged it continues to feel the sting of China’s tightened coal import restrictions, which continues to suppress Australian origin thermal and metallurgical coal prices.

Despite this, the ASX-lister affirmed high calorific value thermal coal demand had strengthened during the quarter with demand recovering to pre-COVID levels.

Whitehaven Coal shares have dropped off 14.9 per cent following the announcement to trade at $1.57 per share at 1:28 pm AEST.

WHC by the numbers
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