Narrabri ramp-up helps Whitehaven profit

A 20% increase in saleable coal from Whitehaven Coal’s New South Wales underground and open cut operations has helped it increase net profit after tax by 33% year-on-year to $73.3 million before significant items.
Narrabri ramp-up helps Whitehaven profit Narrabri ramp-up helps Whitehaven profit Narrabri ramp-up helps Whitehaven profit Narrabri ramp-up helps Whitehaven profit Narrabri ramp-up helps Whitehaven profit

Whitehaven's Narrabri mine.

Lou Caruana

Whitehaven’s Narrabri underground mine production ramp-up is continuing with four continuous miners now operating in favourable underground mining conditions, but the company is still having difficulty recruiting skilled personnel for the operation, managing director Tony Haggarty says.

“At our new Narrabri mine we now have four continuous miners operating underground and the $130 million longwall is under construction. Our Narrabri CHPP [coal handling and preparation plant] commenced commissioning in August,” he said.

“Our key achievement this year has been to implement our growth plans and increase saleable production and margin while at the same time continuing to enhance our future growth profile.

“We now have an efficient and flexible open cut production base with significant growth coming from our Narrabri underground mine and the Vickery open cut beyond that.”

More than $225 million in new capital was invested in the business during the year, resulting in its open cut mines delivering a planned expansion to 5.5 million tonnes per annum, and in the June quarter surpassing this target to produce at a rate of almost 6Mtpa.

Continuing exploration and mine planning at Whitehaven’s Vickery Project has defined a 439Mt open cut coal resource, with preliminary work indicating an open cut mine plan for Vickery of 4.5Mtpa run of mine for at least 25 years with a stripping ratio of approximately 10:1.

Whitehaven’s annual net profit after tax and after signficant items for the year to June 2011 was impacted by a total $63.4 million of significant items after tax, including $45.8 million from losses incurred on legacy contracts from both purchased coal and financial settlements and a $11.4 million foreign exchange loss relating to the outstanding US dollars receivable from EdF for its Narrabri JV purchase.

“While the impact of legacy contracts on our earnings for the year has been disappointing, it is encouraging to note that we expect to have fulfilled all but 230,000 tonnes of these contracts by the end of the calendar year,” Haggarty said.

Annual revenue from coal sales of $427 million (net of purchased coal and excluding NSW royalty) was up 33% from financial year 2010.

Development of the Narrabri mine, which produced 143,000t of Whitehaven’s 4.168Mt of saleable coal for the 12 months to June 2011, is proceeding as planned with construction of Stage 2 facilities, and delivery of the longwall and other equipment on schedule and budget.

Pre-drainage of carbon dioxide from the coal seam is working well, with confidence in gas extraction methods and gas modelling continuing to grow as the inventory of drained coal grows.

Mining conditions underground are described by Whitehaven as “excellent” and development rates have improved as development has moved away from pit-bottom setup into main road and longwall gate road development.

Some delays continue to be experienced in development as a result of the difficulty in recruiting experienced underground mine workers. However, at current development rates, commencement of the longwall is scheduled for February 2012.

Development of the main gate and tail gate roads for the first longwall panel is on the critical path for commencement of longwall mining and progress against schedule is being monitored closely.