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.
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.