Profit plunge and Narrabri problems may have stymied Tinkler

WHITEHAVEN Coal’s 13% decline in annual net profit and problems in commissioning its Narrabri longwall may have proven insurmountable hurdles in Nathan Tinkler’s quest to obtain funding for his proposed $5.3 billion privatisation of the company.
Profit plunge and Narrabri problems may have stymied Tinkler Profit plunge and Narrabri problems may have stymied Tinkler Profit plunge and Narrabri problems may have stymied Tinkler Profit plunge and Narrabri problems may have stymied Tinkler Profit plunge and Narrabri problems may have stymied Tinkler

Tony Haggarty

Lou Caruana

Whitehaven revealed on Friday that Tinkler would not pursue the privatisation after a month long due diligence process on the company, which is still awaiting New South Wales government approval for its Maules Creek project.

Whitehaven managing director Tony Haggarty defended the company’s financial performance for the year to June 2012, which saw the NSW producer’s underlying net profit after tax fall to $57.8 million and revenues from coal sales rise by 2.6% to $448.4 million.

“The underlying result has remained broadly in line with the previous year, despite weather impacts, substantial growth and change in the organisation and a reduction in coal prices,” Haggarty said.

“Our open cut mines have recovered from the exceptional wet weather encountered in the first quarter, and are now operating at planned production levels.

“At Narrabri, we have completed the installation of the longwall. Production is steadily increasing and has so far reached a weekly rate equivalent to 4.0 million tonnes per annum.”

Haggarty said a focussed review of operating costs is currently underway to identify opportunities for reduction.

“Several vendor related (Caterpillar) issues remain unresolved with the equipment including full commissioning of the face automation, provision of a reliable supply of spare parts, installation of the high pressure set function of the shields and complete installation of the full longwall belt retraction system,” the company said.

“Whitehaven is working with Caterpillar to resolve these issues.

“Mining conditions underground remain excellent and development productivity is good. Main road development has advanced to longwall panel #3 and installation of the maingate conveyor for longwall panel #2 is completed, and maingate #2 development is well advanced.

Narrabri continues to drain in-seam gas (85% CO2) to levels below the threshold required for continuous mining. A program of surface to in-seam and underground in-seam drilling is continuing and a substantial inventory of drained coal is being established, with the development roadways for longwall panel #5 now being drained.

“As with the installation of any new longwall into a new seam not previously mined by this method, issues are anticipated during the ramp up phase, the company said.

“The operating team is actively monitoring for and addressing issues through rectification and modification works and developing operating practices.

On an equity basis, sales of more than 400Kt of Narrabri coal have now been made with coal stockpiling and handling systems working well and coal quality meeting expectations. Forecast production is approximately 4Mt of ROM coal for FY2013.

But the company still remains frustrated with NSW government approval times for its Maules Creek project in the Gunnedah Basin.

“NSW project approval for the Maules Creek project is still pending and has taken much longer than anticipated,” the company said.

“Latest indications are that approval will be received in the September quarter.

There are no apparent issues to be resolved and Whitehaven remains confident of a successful outcome. It is extremely difficult to predict the timing of approvals under the current NSW planning process, but Whitehaven is remaining optimistic that approval will be forthcoming in this timeframe.”

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