Whitehaven share price dives 9% as floods hit guidance

The Whitehaven Coal Ltd (ASX: WHC) share price is down 9.35% in early afternoon trade on Monday amid flooding from La Niña events hampering production at its open-cut mines in the Gunnedah Basin in New South Wales.

Shares in the prominent coal producer currently trade for $8.53.

The S&P/ASX 200 Energy Index (ASX: XEJ) is also almost flat at a 0.46% gain for the day.

Crucially, flooding at the Gunnedah Basin was said to have changed its outlook and guidance for the financial year 2023. Let’s cover the highlights.

Flooding changes Whitehaven’s FY23 guidance

The following changes to Whitehaven’s guidance for FY23 were announced:

• Managed ROM [run-of-mine] production down: 19-20.4 Mt
• Maules Creek production down: 10.3-11 Mt
• Narrabri production up: 5.6-6 Mt
• Gunnedah O/C production down: 3.1-3.4 Mt
• Managed coal sales down: 16.5-18 Mt
• Equity coal sales down: 13.1-14.4 Mt
• Unit cost per coal up: 95-102 $/t

Whitehaven notes that flooding has not been directly observed on site, but that it is expected to affect run-of-mine (ROM) production, particularly at its Maules Creek and Tarrawonga sites.

Meanwhile, the company expects stronger production at Narrabri along with a higher unit cost per coal moving forward.

Flooding has reportedly reduced access to needed haulage and transportation roads, while also changing the moisture profile of the soil at Gunnedah Basin. It has also elevated water levels at its dams and river systems.

The effect of floods put a damper on operations at all three open-cut mines in September, and this wet weather has persisted into October and now November.

The International Monetary Fund (IMF) notes that climate change is likely playing a part in increasing the frequency and severity of natural disasters, such as floods. It expects these events to become more common by the end of the century as temperatures rise.

Whitehaven Coal share price snapshot

The Whitehaven Coal share price is up 226% year to date. That’s beating the S&P/ASX 200 Index (ASX: XJO) by a huge margin as it’s down 6% for the same period.

The company’s market capitalisation is around $8.75 billion.

The post Whitehaven share price dives 9% as floods hit guidance appeared first on The Motley Fool Australia.

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Motley Fool contributor Matthew Farley 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 Scott Phillips.

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