Whitehaven Coal Shares Down on September Quarterly (ASX:WHC)

Whitehaven Coal Ltd [ASX:WHC] will use rising coal thermal coal prices to pay down debt and move into net cash position in 2022.

WHC CEO Paul Flynn said the recent high thermal coal prices will be reflected in ‘significant cash generation over the coming months.

However, Whitehaven also reported a 4% drop in saleable coal production, hit primarily by falling sales in its Narrabri Mine in New South Wales, attributed to shipping delays amid adverse weather.

Whitehaven Coal Ltd [ASX:WHC] shares are currently exchanging hands at $3.24 per share, a drop of 1.8%.

ASX WHC - White Haven Coal Share Price Chart

Source: Tradingview.com

Amid an energy crunch and rising commodity prices this year, Whitehaven has staged a dramatic turnaround following a protracted slide.

Over the last 12 months, the WHC share price gained 240%, having traded as low as 85 cents in early September 2020.

Whitehaven’s September quarter

Here are WHC’s September quarter highlights.

  • September quarter managed run-of-mine (ROM) production of 5.2Mt
  • September quarter managed saleable coal production of 4.7Mt
  • September quarter total managed coal sales 4.6Mt, managed own coal sales 4.2Mt, total equity coal sales 3.9Mt and equity sales of own coal 3.4Mt
  • Managed coal stocks of 3.2Mt as at 30 September
  • No known cases of COVID-19 at any of our sites to date and operations remain largely unaffected but for distancing and hygiene measures

Whitehaven also reported that equity coal sales for the quarter, including purchased coal, were 3.9Mt — 23% below the prior comparable period.

The energy company further noted that the gC NEWC (6,000 CV) index averaged US$167.52/t for the September quarter, up 54% on the June quarter.

WHC said the surging index price reflected strong demand for fossil fuels in a supply-constrained market.

During the quarter, Whitehaven achieved a realized average thermal coal sale price of US$142/t — a 15% discount to the September quarter gC NEWC index average of US$167.52/t.

Apart from this, the total managed cost sales stood at 4.6Mt, while managing own coal sales of 4.2Mt.

Total equity coal sales came in at 3.9Mt and equity sales of own coal were reported at 3.4Mt.

Whitehaven Manage Tools

Source: Whitehaven Coal

Flynn, said:

During recent weeks, thermal coal prices reached record highs which we will see reflected in significant cash generation over the coming months.

We continue to pay down our senior debt facility; we expect to fully repay the debt facility early in CY22 and be in a net cash position in the March 2022 quarter.

After a challenging period at Narrabri, we are readying for the longwall changeout ahead of a more productive second half.

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Whitehaven Coal outlook

Whitehaven’s September quarterly came with no changes to FY22 production or sales guidance.

This may have surprised some investors expecting a boost in sales amid a global energy crunch.

Whitehaven itself provided as good a summary as any about the ongoing situation:

Industrial activity has increased markedly as governments seek to drive economic growth to counter the impacts COVID-19 has had on their economies. The economic rebound has driven a rapid increase in the demand for high energy coal for both power generation and industrial processes. Meanwhile, disruptions across multiple supply chains, including the Newcastle coal supply chain, have tightened coal supply.

The energy company said despite registering an average thermal coal price 15% lower than the gC NEWC index average this quarter, Whitehaven expects price realisations for its thermal coal to return to a premium to the gC NEWC index in the second half of the financial year.

Whitehaven also noted that the gC NEWC and API5 indices continue to set all-time monthly average highs.

WHC expects both thermal and metallurgical coal prices to remain well supported due to strong demand and continuing supply tightness.

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Kiryll Prakapenka,

For The Rum Rebellion

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