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While the broader market appears to be on the mend this Thursday, Coronado Global Resources Inc (ASX:CRN) is grappling with a dramatic downturn. In morning trade, the ASX 200 mining stock plummeted by a staggering 19%, hitting a new multi-year low of 88.5 cents per share. This sharp decline underscores investor unease following a concerning update from the coal miner regarding its fiscal 2024 guidance.
The steep drop in Coronado's share price was triggered by a release detailing significant operational disruptions at the company's Curragh Complex. According to the update, August was particularly challenging for Coronado due to mechanical issues with the overland conveyor and unprecedented rainfall. The rainfall, which exceeded the 10-year monthly average by more than three times, exacerbated operational difficulties, resulting in substantial delays. These setbacks have forced Coronado to push some of its coal production into FY 2025.
Adding to the woes, the Australian Bureau of Meteorology’s forecast of a La Nina weather pattern—often associated with increased rainfall—has prompted the company to adopt a more conservative outlook for the fourth quarter of FY 2024. Coronado anticipates that the weather-related disruptions will continue to affect production, leading to a cautious estimate of higher-than-expected rainfall for the remainder of the year.
To address these challenges and curb rising costs, Coronado plans to temporarily idle a portion of its fleet at the Curragh Complex in October. This includes a Shovel, a fleet of T282 trucks, and ancillary equipment totaling 14 pieces of machinery that are less efficient during heavy rainfall. By reducing operational capacity, the company aims to manage expenses more effectively in light of the adverse weather conditions.
The revised guidance reflects a downward adjustment in production expectations. Coronado now estimates its saleable production for FY 2024 will range between 15.4 million tonnes and 16 million tonnes, compared to the previous range of 16.4 million tonnes to 17.2 million tonnes. Concurrently, the company has revised its cost estimates upwards, with the average mining cost per tonne now projected to be between $105 and $110, an increase from the earlier forecast of AU$95 to AU$99.
Investors are clearly concerned about the implications of these developments, as evidenced by the dramatic decline in Coronado's share price. The company's ability to navigate these operational challenges and mitigate cost pressures will be crucial in determining its performance in the coming months.
