Peabody receives North Goonyella insurance pay-out

PEABODY Energy has reached an agreement on its North Goonyella insurance settlement and received the maximum allowable claim of US$125 million after a fire at the longwall mine last September stopped production and destroyed underground equipment.
Peabody receives North Goonyella insurance pay-out Peabody receives North Goonyella insurance pay-out Peabody receives North Goonyella insurance pay-out Peabody receives North Goonyella insurance pay-out Peabody receives North Goonyella insurance pay-out

Peabody Energy's North Goonyella mine in Queensland.

Production is still stopped at the mine.


Of this, $33.9 million countered ongoing recovery costs and was recorded as a benefit to adjusted earnings.


The remaining $91.1 million of the insurance claim related to equipment losses from current and prior quarters.


A further charge of $24.7 million in the company's accounts relates to additional losses identified at North Goonyella in the first quarter and represents the best estimate of potential loss on assessments to date. 


The company has completed segmenting the North Goonyella mine into multiple zones to aud a phased reventilation and re-entry. 


Peabody chief financial officer Amy Schwetz told an analysts' briefing that all physical activities in advance of reventilating the first segment of the mine had been completed.


"Gas ratings are at acceptable levels and we're currently complying with the directives concerning documentation from the Queensland Mines Inspectorate, following a thorough review," she said.


"This has resulted in a multi-week delay to the initial project plan. Should our reventilation and re-entry plan now progress as originally contemplated, we would expect to produce approximately 2 million tons from North Goonyella in 2020.


"If further delays occur, we will re-evaluate our plans, including longwall production targets, quarterly project costs and capital expenditures."


First quarter 2019 revenues totalled $1.25 billion on 40.5 million short tons of coal sales, compared to $1.46 billion in revenues and 48.3st of coal sales in the prior year, reflecting the impact of a challenged coal industry logistics chain.


Compared to the prior year, adjusted earnings before interest tax depreciation and amortisation for the March quarter declined $110 million to $253.9 million primarily due to lower seaborne metallurgical coal volumes, costs associated with the North Goonyella incident and lower Powder River Basin shipments.


That was partially offset by $33.1 million of higher seaborne thermal adjusted EBITDA driven by increased volumes and elevated pricing.


First quarter North Goonyella results include $36.9 million in project costs that were more than offset by comparable insurance benefit of $33.9 million and $4.3 million in adjusted EBITDA related to the sale of North Goonyella inventory.