Sources familiar with the transaction reportedly said the target was over-valued and some of the 20 potential bidders had withdrawn from the process, with the indicative bid deadline reached on Wednesday.

"There are obviously not a lot of bidders. It is fully priced. That is both a blessing and a curse for the major shareholders. They have done a great job getting the share price up but how do they get out?" Reuters quoted one source as saying.

Whitehaven, which is one of the few remaining independent coal miners in Australia, is facing a $38-43 million net loss for the last half of 2010 as wet weather forced it to buy coal to meet contract obligations.

To meet fixed-price legacy contracts struck with trading companies back in 2005-06, Whitehaven lost $25 million through purchased coal and cash settlements.

The Gunnedah Basin miner purchased about 1.18 million tonnes of thermal coal in the last half of calendar year 2010, while 715,000t of thermal contracts were cash settled.

One suitor, Alpha Natural Resources, dropped out of contention last week after announcing it would buy rival US coal group Massey Energy for $US7.1 billion.

Speculation is now centred on a Chinese or Korean group making an offer to secure a foothold in the coal-rich Narrabri region of NSW.

Korea Resources Corporation is Whitehaven’s joint venture partner in its first Narrabri longwall, which remains on track for December despite recruitment difficulties.

Whitehaven, which launched a formal process to find a buyer in October, last month signed confidentiality agreements with interested parties ahead of Wednesday’s deadline.

Its share price was 5c lower at $7.11 this morning.