Why the Whitehaven Coal Ltd share price is getting smashed today

The Whitehaven Coal Ltd (ASX:WHC) share price is falling following a market sensitive announcement.

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The Whitehaven Coal Ltd (ASX: WHC) share price is getting sold off today, down more than 4% at the time of writing. This follows the release of a market sensitive announcement this morning.

Source: Google Finance
Source: Google Finance

In an announcement to the ASX, Whitehaven, one of Australia's leading coal producers, said that geotechnical issues had forced it to lower its production guidance for the Narrabri mine in New South Wales.

In August 2016, Whitehaven set production guidance between 8 million tonnes and 8.3 million tonnes for its 2017 financial year. However, the company now expects the mine's production to be between 7.5 million tonnes and 7.8 million tonnes.

"The revised guidance arises from production impacts associated with safely managing a discrete area of adverse geotechnical conditions at the mine," the company said. "Notwithstanding this revision and production impacts caused by wet weather earlier in the year, Whitehaven remains on target to achieve its FY2017 saleable production guidance range."

Whitehaven expects its full-year production to be between 21 million tonnes and 22 million tonnes.

Should you buy?

The Whitehaven Coal share price has been on a wild ride over the past 12 months. Indeed, its share price rallied from under 40 cents a year ago to over $3 in November, as the prices of coking and thermal coal moved higher. However, prices of both commodities have since fallen and Whitehaven's share price currently sits at $2.66.

Looking ahead, the company is likely to continue paying down its pile of debt, which will impress investors. Larger rivals BHP Billiton Limited (ASX: BHP) and Rio Tinto Limited (ASX: RIO) have also taken advantage of buoyant commodity prices to pay down debt.

However, over the longer term, Whitehaven continues to face concerns around environmental issues and its profits are ultimately at the mercy of volatile commodity prices. For these reasons, I am not a buyer of Whitehaven Coal shares today.

Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any company mentioned. Owen welcomes -- and encourages -- your feedback on Google+, LinkedIn or you can follow him on Twitter @ASXinvest. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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