Monsters of Rock: Whitehaven's proving that coal still has some legs

Whitehaven Coal increases output by 82%
Capricorn Metals rises on exploration numbers
Vulcan gets commissioning underway at lithium plant in Frankfurt

Shares in coal mining giant Whitehaven Coal (ASX:WHC) rallied this morning, gaining some 7%, on encouraging first quarter numbers that saw coal production jump 82% year-on-year.

The company’s biggest contributing segment was the Queensland operations, which WHC bought from BHP (ASX:BHP) in a bid to increase exposure to markets in Southeast Asia and India.

The Daunia and Blackwater metallurgical coal mines (acquired for US$3.2b), delivered 5.3Mt of ROM production, up 11% on the June quarter with sales of produced coal returning 3.6Mt, an increase of 13% quarter-on-quarter.

Over in NSW, the company’s operations delivered managed ROM production of 4.4Mt in the September, a drop of 12% quarter on quarter, reflecting the open cut planned mine sequence for FY25.

In line with ROM production, sales of produced coal – 3.5Mt – were also 16% lower.

The miner anticipates higher metallurgical coal prices on the back of expected structured shortfall in global metallurgical production, combined with increased seaborne demand from India.

“Whitehaven’s metallurgical coal portfolio is expected to benefit from these supply constrained market dynamics,” the company said in its September quarterly report.

“Subdued steel production and metallurgical coal demand in the September quarter brought on by an extended Indian monsoon and soft steel demand in China resulted in a softening of the metallurgical coal price indices.

“In October, the end of the Indian monsoon, combined with announcements of stimulus packages by China, lifted the PLV HCC index from its low in the September quarter,” it said.

“The demand for high CV thermal coal to fuel HELE (high-efficiency, low-emissions) power generation remains robust in Asia. The structural supply shortfall in seaborne high CV thermal coal, due to underinvestment in new supply and depletion of existing supply, continues to be supportive of high CV thermal coal prices.”

Total managed run of mine production for the group delivered 9.7Mt for the three month period ending in September, in line with the June quarter.

Shares in WHC rose as much as 7.8% to $6.92 marking their best session since mid-August.

Capricorn keeps on drilling on

Capricorn Metals is continuing to build confidence in its Mt Gibson gold project, drilling to prepare for a resource update as it moves the Mid-West gold project along as its key expansion asset outside the flagship Karlawinda gold mine.

A further 22,737 metres (92 holes) of resource extension, regional exploration and mine development drilling were completed across Capricorn Metals’ (ASX:CMM) Mt Gibson gold project (MGGP) during the September 2024 quarter.

Some standout assays received from 76 resource definition holes (13,676m) since the last update in July 2024 include 26m at 4.06g/t gold from 206 to 232m and 22m at 4.46g/t gold from 221 to 243m.

Drilling completed since this update will form the basis for another update to both the MRE and ore in Q2.

At Karlawinda, CMM is no doubt hoping that RC drilling it completed in Q1 across the Bibra and Berwick deposits, will help it get a start on replicating the 15% increase in ore reserves from drilling in FY2024.

The company completed 11 RC holes totalling 1380m over the two deposits during the quarter.

It also completed a 154 hole aircore drill program at the Mumbakine Well project area that identified a low-level gold anomaly along the Central Lode, extending the mineralised strike length to 2 kilometres.

Another 8500m of follow-up RC drilling started late in Q1 at Central Zone to extend significant mineralisation reported in Q2 FY24 both along strike and down dip.

Vulcan gets commissioning underway

And Vulcan Energy Resources (ASX:VUL) continued to make progress at the Central Lithium Electrolysis Optimisation Plant (CLEOP) where commissioning is underway, putting the company another step closer to producing Europe’s first fully domestically produced lithium hydroxide.

Progress was made on the financing of Phase One of Vulcan’s zero carbon lithium project in Germany’s Upper Rhine Valley with an updated debt package issued to the structuring group and a wider lending pool of other commercial banks.

“We are anticipating a strong end to calendar year 2024, with a number of pivotal commercial and operational developments including related Phase One financing and look forward to updating the market and our shareholders in due course,” VUL managing director and CEO Chris Moreno said.