Coal hard cash: Here’s why the Whitehaven share price just hit a multi-year high

The Whitehaven share price hit a new 52-week high on open this morning.

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Key points

  • The Whitehaven share price is soaring this morning after a 6% jump on open to a new multi-year high
  • This follows the release of the coal producer's March 2022 quarterly production report
  • The report revealed a record average coal price for the quarter, contributing to a net cash position of $161 million 

The Whitehaven Coal Ltd (ASX: WHC) share price is soaring this morning, opening at $4.94 — a new multi-year high — following the release of the coal producer’s March 2022 quarterly production report.

The opening price represented a 6% jump for Whitehaven shares on yesterday’s closing price of $4.66. They haven’t traded at this level since 2018. However, the share price made a quick retreat in the first hour of trading to $4.72 at the time of writing — up 1.29%.

Record average coal price lifts Whitehaven share price

Whitehaven revealed a record average coal price for the quarter at $315 per tonne, up from $101 in the prior corresponding period (pcp) and $204 over the first half of 2022. Rising commodity prices — largely the result of the Russia-Ukraine conflict — have led to a cash bonanza for Whitehaven.

Even after paying out $80 million in dividends and spending $67 million on share buybacks during the March quarter, the coal producer reported a net cash position of $161 million as of 19 April.

The company says it is on track to deliver its FY22 production guidance. Other highlights include:

  • Run-of-mine (ROM) production of 5.2Mt, up 62% on the December quarter and down 5% on pcp
  • Saleable coal production of 4.5Mt, up 50% on the December quarter and up 5% on pcp
  • Sales of produced coal of 4.4Mt, up 5% on pcp
  • Equity sales of produced coal of 3.5Mt, up 3% on pcp
  • Managed coal stocks of 2.1Mt at 31 March, in line with 2.1Mt at 31 December 2022.

The strong production results came despite COVID-19 continuing to cause labour shortages. The company noted that rising case numbers during the quarter meant more workers had to self-isolate.

What did management say?

In its statement, Whitehaven said it expected to increase its June quarter ROM production to between 5.4Mt and 6.9Mt (relative to 5.4Mt in the June 2021 quarter and 5.2Mt in the March 2022 quarter). It said the Maules Creek and Narrabri mines should contribute significantly to the lift in ROM production.

Whitehaven managing director and CEO Paul Flynn said:

Coal prices increased to record levels during the March quarter and remain very well supported in an environment of strong demand and constrained supply. As the developed world re-focuses on the critical importance of energy security, Whitehaven presents a compelling investment thesis.

What else is happening at Whitehaven?

Also this morning, Whitehaven released an update on its Winchester South Coal project in central Queensland’s Bowen Basin.

Whitehaven says there is more coal at the site than originally thought, with JORC Reserves upgraded from 350Mt to 380Mt and JORC Proved Reserves upgraded from 140Mt to 270Mt.

The open cut mine is expected to have 20 years or more of life. The company has a ROM production target of 15 million tonnes per annum. It is 100% owned by Whitehaven.

Whitehaven said the mine “continues to progress through the Queensland Government’s Coordinated Project approval process”.

Whitehaven share price snapshot

The Whitehaven share price has soared by 76% in the year to date. It is up 237% over the past 12 months.

Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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