The market may be rebounding on Thursday, but the same cannot be said for Coronado Global Resources Inc (ASX: CRN) shares.
In morning trade, the ASX 200 mining stock crashed 19% to a new multi-year low of 88.5 cents.
Why is this ASX 200 mining stock sinking today?
Investors have been rushing to the exits today after the coal miner released an update on its guidance for FY 2024.
As you might have guessed from the share price reaction, the update was not a positive one.
According to the release, during the month of August, the ASX 200 mining stock's Curragh Complex was negatively impacted by mechanical repairs to the overland conveyor and subsequent rainfall levels. The latter were more than three times the 10-year monthly average for the area.
Management notes that the impacts of this rain were well in excess of forecast. The subsequent delay to pre-strip activities has resulted in some coal production being deferred into FY 2025.
In light of this and the Australian Bureau of Meteorology's expectations of a La Nina weather pattern, Coronado now expects more conservative production for the fourth quarter of FY 2024. This assumes above mean rainfall levels for the remainder of the year.
To mitigate the weather impacts to production, the company plans to temporarily idle an additional fleet at the Curragh Complex to reduce costs in October. The planned idled fleet consists of a company owned Shovel, fleet of T282 trucks, and ancillary equipment totalling 14 pieces of equipment that are less productive and cost effective when operating in elevated rainfall periods.
Guidance downgrade
The ASX 200 mining stock's saleable production is now expected to be 15.4MMt to 16MMt for FY 2024. This is down from 16.4MMt to 17.2MMt previously.
Heading in the other direction are its costs. Coronado now expects its average mining cost per tonne sold to be $105 to $110. This is up from its previous guidance of $95 to $99.
The company's managing director and CEO, Douglas Thompson, commented:
Today we advise the market of changes to production and cost guidance for FY24. The impacts from wet weather and subsequent deferral of production to FY 2025 do not derail our short-term strategic objectives which remain on target, to complete our organic growth projects at Buchanan and the Mammoth Underground at Curragh. These projects we expect will deliver substantially higher production rates from FY 2025 and will significantly de-risk our operations against weather impacts, mechanical issues and bottlenecks in the future.
