Whitehaven Coal has shrugged off worries about two years of weak coal prices by declaring its expansions are on track and that it plans to sell a stake in its Vickery project.
The NSW miner’s shares shot up on Tuesday after it said it sold 22 per cent more coal in 2013/14 than the previous year and hit better-than-expected record production levels.
The stock climbed 7.5 cents, or five per cent, to $1.55.
In a blow to the fierce protest campaign to stop its Maules Creek project in NSW, Whitehaven said it was tracking ahead of schedule.
Chief executive Paul Flynn said Maules Creek, which would more than double Whitehaven’s current production with 13 million tonnes a year, was more than half complete and on track to be delivered within its $767 million budget.
Whitehaven agreed in June to stop clearing operations in the Leard State Forest ahead of a civil case hearing next month brought by the NSW Environmental Defenders Office.
Mr Flynn also flagged the sale of a 20 to 30 per cent stake in its nearby Gunnedah Basin Vickery mining project within the next 12 months.
Chief executive Paul Flynn said as soon as the 4.5 million tonne a year project was approved, Whitehaven would hold formal discussions with joint venture partners.
NSW government approval has been delayed, but Mr Flynn said he expected it to be granted in the September quarter.
A Japanese partner would be likely, with Whitehaven recently opening an office in Tokyo and employing a local representative to market Maules Creek’s coal.
“That market seems to like Gunnedah Basin coal,” Mr Flynn told an investor briefing.
“The creation of a (Vickery) joint venture would be ideal for us and we are mindful of the fact that a number of parties out there would like to be involved.
“Conditions in the market are such that those discussions aren’t as vigorous as they were 12 months ago, then again that’s tempered by the fact that we are very close to an approval.”
However the persistently weak coal thermal coal prices of the past two years were expected to continue in an over-supplied market.
He said he was hopeful the bottom of the pricing cycle might have been reached and demand for both thermal and metallurgical coal remained strong.
About 19 million tonnes of metallurgical coal output had been removed with more cuts likely and with closures also starting to occur in thermal coal.
Whitehaven gets most of its earnings from thermal coal but the importance of metallurgical will increase when Maules Creek is operating.
Its sales of 10.84 million tonnes in the year to June were about 22 per cent higher than the previous 12 months.
Whitehaven increased annual production of saleable coal by 26 per cent to a record 10.3 million tonnes.