The Whitehaven Coal Ltd (ASX: WHC) share price has come under pressure on Wednesday.
In morning trade, the coal miner's shares are down 7% to $9.67.
Image source: Getty Images
Why is the Whitehaven Coal share price falling?
Investors have been selling down the Whitehaven Coal share price in response to the company's first quarter update.
According to the release, the company's first quarter managed run-of-mine (ROM) production came in at 4Mt. This was down 37% on the June quarter and 22% on the prior corresponding period.
Management advised that this reflects a strong operational performance at the Narrabri underground mine, which was offset by significant wet weather and flood impacts on its open cut operations.
This weak production is particularly disappointing given that Whitehaven Coal was commanding a record average coal price of $581 per tonne for the quarter. It also meant that first quarter managed sales of produced coal were down 31% to 3.7Mt.
Nevertheless, the company still generated material cash of $1.55 billion during the quarter. This took its net cash position to $1.93 billion at the end of September.
Management commentary
Whitehaven Coal's CEO, Paul Flynn, commented:
With demand for high quality coal continuing to outstrip global supply, coal prices set another record in the September quarter and continue to be well supported.
We delivered strong operational performance in the September quarter at our Narrabri underground mine but our open cut operations were impacted by wet weather and flood related road closures in September. With La Niña forecast to be a feature through the Spring season, we have been working constructively with councils and developing measures to minimise the impacts of weather delays and flood related road closures as much as possible.
Whitehaven generated $1.55 billion of cash in the September quarter and we have a net cash position of $1.93 billion at 30 September. The Company is performing well for the benefit of all of our stakeholders, and Whitehaven is extremely well placed to continue to support energy security for our customers and to deliver strong returns for our shareholders.
Outlook
Pleasingly, despite La Niña impacts and labour constraints, management notes that the company remains on track to deliver within the range of its production, sales, and cost guidance for FY 2023.
This is thanks largely to mine sequencing plans which allow for opportunities to lift volumes throughout the year.
Management ROM production guidance remains 20Mt to 22Mt, wiwth managed coal sales of 17.5Mt to 18.5Mt, and unit costs of $86 to $96 per tonne.
