What’s weighing on the Whitehaven Coal (ASX: WHC) share price today?

Summary

  • Whitehaven Coal shares dropped over 9% in opening deals to AU$1.845.
  • The coal producer has lowered FY21 production guidance to 20.4 million tonnes.
  • The company has reaffirmed its managed coal sales and unit costs guidance within its previous range.

Shares of Whitehaven Coal Limited (ASX:WHC) tumbled over 9% in opening deal on Thursday after the company cut production guidance for the second time for the current financial year 2020-21 (FY21). Australia’s largest independent coal producer, however, reaffirmed its managed coal sales and unit costs guidance within its previous range.

The mining stock declined as much as 9.55 per cent in opening deals to AU$1.845 on the Australian Securities Exchange (ASX). There was surge in volume trade as 6.61 million shares worth AU$12.48 million changed hands over the counter.

Source: © Kustovelexy | Megapixl.com

Whitehaven Coal has lowered run-of-mine (ROM) production estimates for FY21 to 20.4 million tonne (MT), from its previous guidance range of 20.6Mt-21.4Mt, the company said in an ASX filing on June 16.

Source: Whitehaven Coal ASX update on June 16

However, the company has reaffirmed managed coal sales guidance for current fiscal at 17.9Mt, in line with the previous estimated range of 17.8Mt to 18.3Mt.

Also Read: Whitehaven Coal (ASX:WHC) H1 reflects coal price impact, brighter H2 expected

The unit cost guidance for FY21 has been projected at AU$74 per tonne from a range of AU$73-AU$75 per tonne estimated earlier.

Earlier in April, the company had downgraded its managed ROM coal production guidance to 20.6Mt – 21.4Mt from 21.4Mt – 22.0Mt. The managed coal sales guidance was also lowered to 17.8Mt – 18.3Mt from the earlier estimate of 18.5Mt – 19.0Mt. The unit cost guidance for FY21 was pegged in the range of AU$73 - AU$75 per tonne as compared to the previous estimate of AU$69 - AU$72 per tonne.

                         

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As per the company, the cut in production guidance is attributed to recent geological challenges at the Narrabri underground mine as well as associated maintenance downtime due to acceleration of engineering works to support the longwall operations. The overhaul works on the longwall and machinery repairs are projected to be completed in the coming days, the company said.

Despite the odds, the managed ROM production at Narrabri has been revised down to 4.1Mt (4.0Mt on year-to-date basis), from a previously announced estimate of 4.5Mt – 4.9Mt.

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For the Maules Creek mine, Whitehaven Coal’s production guidance has been raised to 12.5Mt for the full year, from the previous estimates of 12.2Mt – 12.4Mt. This was attributed to continued stronger-than-expected production performance at the mine.

While the production output from the Gunnedah Open Cut mines has been affirmed at 3.8Mt for FY21, total open cut production is expected to deliver 16.3Mt.

Whitehaven Coal also stated that it has undertaken a program of geo-sensing drilling to provide confidence around the geological conditions in the remainder of the LW109 panel. However, the drilling has not identified any major geological features present in the balance of the LW109 block.

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