The Coronado Global Resources Inc (ASX: CRN) share price is being sold off on Monday.
In morning trade, the ASX 200 coal share is down 6% to $1.83.
Why is this ASX 200 coal share being sold off?
Investors have been hitting the sell button today after the company downgraded its guidance for FY 2023.
According to the release, the company made the move due to adverse operating conditions at its Buchanan mine, combined with unexpected downtime for repairs at the Curragh mining complex.
The adverse operating conditions at Buchanan saw mining activities temporarily impacted by geological conditions in the coal seam. This slowed production rates and impacted yield. Pleasingly, those adverse conditions have now been addressed and operations are returning to normal. Management aims to recover any lost tonnes in the fourth quarter of 2023 and the first quarter of 2024.
Over at Curragh, management revealed that one of the draglines experienced a mechanical failure in the propel unit. Repairs are already underway and are expected to be completed no later than the end of October. Until then, production from Curragh will be impacted due to the resulting delayed ability to move waste.
Management is revising its plans for the balance of 2023 and full year 2024 to mitigate as much as possible the impact from these dragline repairs.
What's the damage to guidance?
The ASX 200 coal share revealed that it now expects saleable production to be 16.2Mt to 16.4Mt for FY 2023. This is down from its previous guidance of 16.8Mt to 17.2Mt.
Unfortunately, costs are expected to jump for the year. Average mining costs per tonne sold are now forecast to be US$97 to US$102 per tonne. This is up from US$84 million to US$87 million.
One positive, though, is that capital expenditure efficiencies year to date have resulted in total capex forecast being below previous guidance. It has been revised from US$220 million to US$240 million from US$260 million to US$290 million.
The ASX 200 coal share's executive chair, Gerry Spindler, commented:
Notwithstanding these two short term non-recurring operational challenges, net of the efficiency gains in capital expenditures, we expect this to have a minimal impact on year-end cash on the balance sheet of a maximum US$10million reduction assuming none of the lost production can be recovered.