JOHANNESBURG (miningweekly.com) – New South Wales-based miner Whitehaven Coal has increased its sales revenue by 39% year-on-year to $1.15-billion and its net profit after tax by 63% year-on-year to $257.2-million in the six months ended December 31, 2017.

Operating earnings before interest, taxes, depreciation and amortisation rose by 42% on higher coal prices to $460.6-million and cash generated from operations increased by 55% to $409.7-million in the period under review.

In its interim report, published on Friday, Whitehaven stated that prices had averaged at A$124/t in the first half of 2018, up from A$106/t in the first of the previous financial year.

In addition to higher prices, the miner also increased its sales volumes from 7.8-million tonnes to 9.2-million tonnes.

“The result represents the culmination of a growth strategy that has been in place for several years. Firstly, the development of the Narrabri underground mine set the company on a growth path. This was followed by the development of the Maules Creek opencut mine, which added significant production to the portfolio. At the same time, the successful reduction in costs across the entire Whitehaven business and recent higher coal prices have enable the company to generate this great result,” commented MD and CEO Paul Flynn.

The sales mix for the half-year comprised 68% high calorific value (CV) thermal coal, 17% low CV thermal coal and 15% metallurgical coal. The higher proportion of low CV coal in total sales was as a result of stock reductions, which had been built in the final quarter of the previous year.

Whitehaven reported that the increase in prices for thermal and metallurgical coal during the half year reflected China’s steady draw on the seaborne thermal coal market and strong Asian demand for high-quality coal, reflecting buoyant Asian economic conditions.

The miner reported free-on-board costs of $60/t, which were consistent with guidance for the half year. The costs were relatively flat compared with that of the prior half-year, but increased from A$56/t in the period up to December 31, 2016.

“The cost performance reflects the impact of changes in mix. Specifically, the relative contribution of Narrabri tonnes (Whitehaven’s lowest cost mine) to the group’s sales mix decreased owing to lower run-of-mine production volumes compared with the contribution from the opencut mines,” said Flynn.

At Maules Creek, costs have been affected by higher strip ratio and longer haul distances, while the Gunnedah opencuts have continued their strong cost performance.

Increased Maules Creek production has strengthened the portfolio, reducing the impact of Narrabri longwall change-outs while supporting further improvement in the utilisation of contracted infrastructure capacity on the rail and at the port.

The company has revised its full-year guidance for saleable coal production to the range of 20.5-million tonnes to 21-million tonnes, following reduced production from the Narrabri mine during the first half of the year.

Costs for the year are also likely to increase slightly as modestly higher costs at Narrabri are factored into the result.

“Marketing efforts will continue to focus on delivering contracted metallurgical coal sales while production from the smaller opencuts will continue at usual rates. Sales are likely to exceed production as coal stocks accumulated at the end of the previous financial year are sold,” concluded Flynn.