Coal news and updates

Whitehaven Coal Ltd sees no need to raise equity, its chairman said on Monday, in response to speculation the miner may require fresh funds in the face of weak coal prices that have pushed its shares to four-and-a-half-year lows.

 

Whitehaven, Australia's second-largest independent coal miner, is facing delays over its key growth project, Maules Creek, and has been in talks with lenders about restructuring a debt facility.

 

"We are not looking at a placement or any capital raising in the equity markets at the moment," Chairman Mark Vaile told shareholders at the group's annual meeting.

 

Whitehaven's development pipeline was fully funded from its Australian banking syndicate, which has provided A$1.2 billion ($1.1 billion) in project financing for Maules Creek, he said.

 

The meeting was the first for Whitehaven since coal tycoon Nathan Tinkler was forced to give up his one-fifth stake in the company to settle most of a $634 million debt.

 

Vaile told Reuters battered coal markets were showing renewed signs of life on stronger demand from China, providing a more positive outlook for the company.

 

"Generally we have seen some improvement in the metallurgical coal side of the equation for us, and that's 20 percent of our production this coming year," he said.

 

Thermal coal prices had also recovered over the last couple of months to around $84 a tonne after declining steadily to below $80 a tonne in the second quarter.

 

Weak coal prices and difficulties at the flagship Maules Creek mine project, which is also facing objections from environmental groups, have combined to slice nearly a fifth off Whitehaven's market value in October alone.

 

This has left its biggest shareholder, Farallon Capital Management, which took half of Tinkler's stake, in the red, raising fears it may not want to support an equity raising.

 

Farallon's Asia chief, Raymond Zage, who was appointed to Whitehaven's board in August, has thrown his support behind Whitehaven's blueprint for a turnaround.

 

"The Maules Creek opportunity for its metallurgical and thermal coal prospects, we still think is a very interesting story and are a believer in the project," Zage told shareholders.

 

Zage later declined to answer questions from the media. Vaile said he considered Farallon a long-term shareholder.

 

Whitehaven's stock fell 3.4 percent to A$1.55 in afternoon trading against more modest losses in the wider Australian market.

 

"The market has the view that the thermal coal price is going to struggle," said UBS analyst Glyn Lawcock.

 

The main worry is how Whitehaven manages its debt while building the A$767 million Maules Creek mine, now expected to start exporting coal only in the first quarter of 2015.

 

"That (timing) is looking increasingly ambitious as time ticks over and significant development at Maules Creek hasn't commenced," said Michael Evans, an analyst at CIMB.

 

Whitehaven is confident the Federal Court in New South Wales will knock down a challenge by an environmental group, but has to wait until December for a decision.

 

The company posted a loss of A$82 million for the 2013 financial year, but is expected to post a much smaller loss of A$3 million for the year to June 2014.

 

Source: Reuters