Whitehaven Coal has won state approval to develop its most valuable project, the $651 million Maules Creek mine, and now just needs federal clearance.
Whitehaven aims to start operations at the mine in mid-2013, ramping up to produce more than 10 million tonnes a year of mostly high quality semi-soft coking coal, used to make steel, from fiscal 2016.
The approval relieves some pressure on Whitehaven, whose shares have plunged 43 per cent from a high of $5.62 this year due to a coal price slump, worries about delays at Maules Creek and fears its top shareholder Nathan Tinkler may be forced to dump his stake.
The approval also comes on the same day that Whitehaven announced that it plans to suspend operations at its Sunnyside mine indefinitely due to continuing declines in global coal prices, joining other producers who have made production cuts and delayed projects, including BHP Billiton, Rio Tinto and Xstrata.
Whitehaven is in a trading halt as the board faces threats from Mr Tinkler, who has a 19.4 per cent stake.
Whitehaven this morning announced New South Wales Planning Assessment Commission (PAC) had approved the Maules Creek Coal Project, subject to a series of stringent conditions, after a process lasting more than two years. Federal government approval is still outstanding.
Managing director Tony Haggarty said the project was “one of the best coal development projects in the world with a large reserve of high quality coal … relatively low capital development costs and very competitive operating costs, estimated to be $62.50 per tonne”.
Leaving the company?
Meanwhile, turmoil at the company continues amid unconfirmed reports Mr Haggarty will be replaced
Mr Haggarty’s statement this morning did not comment on a report in today's Australian Financial Review that he had told Whitehaven directors he wanted to leave the company and the board was recruiting a replacement.
Yesterday Whitehaven went into a trading halt after receiving a letter from Mr Tinkler giving the company two days to release updated financials, or else he would vote against all five directors up for re-election at next week’s annual meeting.
Whitehaven is expected to release its quarterly production report, and give an operational update, tomorrow morning, when it will come off the trading halt.
Sunnyside mine shut
The company this afternoon announced that it will close its Sunnyside mine indefinitely due to weak coal prices.
The mine, near Gunnedah in north-eastern NSW, currently employs 14 Whitehaven workers and 23 external contractors.
All Whitehaven employees would be offered positions in other Whitehaven operations and Whitehaven management will continue to consult with them in relation to this, the company said.
The site would be placed on care and maintenance, with the decision taken as a result of the continued decline in global coal prices.
Funds still available
Commenting on the battle between Whitehaven's board and it's largest shareholder, Octa Phillip resources analyst Lawrence Grech yesterday said the company ownership was in transition.
He expected Mr Tinkler and his affiliates were not going to be the long-term ‘‘backbone’’ shareholders of the company. He said this week’s $18 million-plus settlement with Mirvac was extremely significant as it showed Mr Tinkler still had funds available.
He would not comment on why Mr Tinkler would seek to vote against the board.
‘‘I can’t hope to understanding everything he says. I just want to follow what he does and then assess that," he said.
"I just don’t understand why you would want to replace a performing management team with high credibility, strong and deep relationships with the customer base, and a demonstrated ability to develop mines cost-effectively and also make shareholders good returns.’’