Bulk: Paringa ships another round of coal from Poplar Grove, says there's more to come

Dual-listed Paringa Resources (ASX:PNL,NASDAQ: PNRL) is shipping coal to a second customer in the US market.

The company has commenced sales to Ohio Valley Electric Corporation, a subsidiary of the $US46 billion ($67.8 billion) American Electric Power.

Paringa said it’s also ramping up sales to Louisville Gas and Electric Company, its cornerstone customer.

And it flagged a strong pipeline of future sales agreements from its operation at Poplar Grove, a thermal coal mine in Western Kentucky with annual capacity of 2.8 million tonnes per annum (mtpa).

None of that was enough to excite investors though, as Paringa shares fell by 4 per cent in morning trade to 6.5c.

Amid ongoing falls in coal prices, the stock has declined steadily from a 12-month high above 20c last October.

Booked out

Paringa says the latest sales agreements mean it will sell 100 per cent of coal produced at the mine in 2019.

Around 75 per cent of 2020 output and 50 per cent of forecast production over the next five years has also been pre-sold.

The company said it stands to benefit from recent moves by local competitor Alliance Resources, which has shut down two coal mines this year that have a combined capacity of 5.8mtpa.

“Consolidation in the western Kentucky market is positive for Paringa, which is now the only significant independent supplier of coal outside of Alliance Resource Partners and Murray Energy Corporation,” it said.

The company also flagged some cost benefits, after it received clearance from regulators to reduce the number of cable bolts required to support underground mining operations.

“This is anticipated to have a positive impact on both tons mined and cost by reducing roof bolting times and cable bolt spend,” Paringa said.

ALSO READ: Tribeca is taking a punt on thermal coal with an $80m loan to Paringa

In other ASX bulk metals news today:

In further evidence of how falling coal prices are influencing profit margins, mid-tier mining company Coronado Global Resources (ASX:CRN) issued a downgrade to FY19 guidance. The company said cost management and capex forecasts remain on target, however, “due to the current weakness in benchmark prices for metallurgical coal, Coronado has revised its EBITDA guidance range downwards to $US687m to $US737m”, the company said.

And junior explorer Strandline Resources (ASX:STA) said it’s made a “significant mineral sands discovery” at its fully-owned Tajiri project in Tanzania. The company said it’s now exporting samples for testing, which will be followed by a potential resource estimate. Shares in STA were unchanged at 10c.