A significant drop in the price of shares in Coronado Global Resources (ASX:CRN) occurred on Thursday after the company announced it had reduced its full-year guidance due to issues at a key Queensland coking coal mine.
Due to the lower mining rate and production, the company also warned that costs per tonne will rise, even though it plans to reduce plant use at the Curragh mine in Central Queensland.
The problems are expected to push some production and sales into the early months of 2025 (the company follows a calendar financial year).
The shares slumped 15% at one point following the news, which came after heavy rainfall at its operations in August.
The company now expects saleable production to be between 15.4 million tonnes and 16 million tonnes, down from the previous guidance range of 16.4 to 17.2 million tonnes.
Average mining costs are now expected to be between $105 and $110 per tonne, up from a range of $95 to $99 per tonne.
"During August, the Company’s Curragh Complex was negatively impacted by required mechanical repairs to the overland conveyor, as previously reported, and subsequent rainfall levels exceeding three times the 10-year monthly average for the area. The impact of this rain was well above forecast levels," Coronado told the ASX.
"The delay in pre-strip activities has resulted in some coal production being deferred to FY 2025. Given the elevated rainfall experienced at Curragh in August and the Australian Bureau of Meteorology’s expectations of a La Niña weather pattern, Coronado is providing a more conservative production forecast for Q4 FY24, assuming above-average rainfall for the remainder of the year.
"To mitigate the weather impacts on production, the Company plans to temporarily idle an additional fleet at the Curragh Complex in October 2024 to reduce costs. This planned idle fleet consists of a Company-owned shovel, a fleet of T282 trucks, and ancillary equipment totaling 14 pieces of equipment that are less productive and cost-effective during elevated rainfall periods. If idled, the Curragh Complex will have removed six fleets from operation since April 2024," Coronado explained.
CEO Duncan Thompson stated, "The impacts from wet weather and the subsequent deferral of production to FY 2025 do not derail our short-term strategic objectives, which remain on target. We aim to complete our organic growth projects at Buchanan and the Mammoth Underground at Curragh."
“These projects are expected to deliver substantially higher production rates from FY 2025 and significantly de-risk our operations against weather impacts, mechanical issues, and bottlenecks in the future. As our Curragh Complex faces a period of anticipated adverse weather in Queensland, we have decided to temporarily idle an additional fleet to enhance the business unit's resilience to higher costs."
Coronado also noted that, due to large stockpiles as of June 30, it expects 2024 sales volumes to exceed saleable production.
