Whitehaven Coal has responded to speculation that chief executive Tony Haggarty wants to quit by confirming a succession plan has started but no date has been set for him to leave.
The statement came in response to media reports yesterday that a recruitment process was underway to replace Mr Haggarty, including external candidates, amid uncertainty over the company's ownership with entrepreneur Nathan Tinkler launching and failing in a $5.25 billion bid.
“In recent months, with the implementation of the new Whitehaven organisation structure, succession planning has been refocused,” Mr Vaile said.
“This process is in its early stages … Mr Haggarty has not advised the board of a particular date for relinquishing his executive responsibilities and continues to lead Whitehaven’s operations, development projects and assessment of various attractive strategic opportunities,” Mr Vaile said.
“I am confident that, whatever the outcome of succession planning considerations, Mr Haggarty will continue to have a significant involvement in the affairs of the company. Mr Haggarty has confirmed this to me.”
Careful on earnings outlook
In its quarterly production report this morning Whitehaven said its own earnings expectations for 2012-13 were in line with market expectations for sales tonnages and costs, but a "wide range" of financial outcomes were possible depending on coal prices for the remainder of the financial year.
If current weak spot prices were assumed for the rest of the year, the company's earnings before interest tax depreciation and amortisation could fall from $185 million in 2012-13, to just $50 million.
Whitehaven shares fell 12 cents, or 3.1 per cent, to $3.08 in early trade after coming out of a trading halt.
Whitehaven noted export coal prices had dropped substantially over the last six months and, after rallying mildly in July-August, hit new lows over the last few weeks.
The benchmark price of Whitehaven’s metallurgical product, Newcastle semi-soft coking coal had fallen from around $US140/tonne in the September quarter to around $USS115 per tonne in the December quarter, with further discounts being sought by buyers in secondary markets.
Similarly, the monthly index price of standard Newcastle thermal coal had fallen from over $US90 per tonne in July to less than $US80/t in October.
Whitehaven said after allowing for approximately 8 per cent NSW royalty and 3 per cent exchange rate loss, "the net revenue for spot thermal coal is currently at or below the ...cash cost per tonne of many producers".
Whitehaven said in the current market for its semi-soft coking coal product, "winning new business at reasonable prices is very difficult" and confirmed speculation that its was increasingly the majority of its thermal coal product at spot market prices.
"It is clearly difficult to have a high degree of confidence in predicting future coal prices for 2012-13, particularly at this stage of the financial year. There is currently little sign of a market rebound, although forward markets are showing improving prices and there is the prospect of renewed demand growth from China in early 2013."
Whitehaven confirmed it expected first coal sales from the Maules Creek mine, approved by the NSW government yesterday but still subject to federal government approval, in the first quarter of 2014.
The ramp-up of its Narrabri longwall was going well, the company said, with production of 512,000 tonnes in the quarter, but noted ongoing issues including with the Caterpillar machinery, excessive moisture in the thermal coal product and non-metallic contamination which was being addressed with contractor Sedgman.
Whitehaven’s total run-of-mine coal production during the September quarter was 1.9 million
tonnes (Mt) up 42 per cent on the previous corresponding period, with saleable coal production of 1.6 Mt, up 21 per cent.
Whitehavens trading halt was called after Mr Tinkler, the largest shareholder, threatened to vote against all five directors standing for re-election at next Thursday’s annual meeting, including Mr Vaile.