Why the Whitehaven Coal (ASX:WHC) share price is surging 5% this morning

The Whitehaven share price is trading higher this morning, erasing yesterday’s loss, after a company update on its Winchester South mine.
The post Why the Whitehaven Coal (ASX:WHC) share price is surging 5% this morning appeared first on The Motley Fool Australia. –

miner's hard hat on pile of coal

The Whitehaven Coal Ltd (ASX: WHC) share price has surged up 4.61% this morning, reclaiming most of yesterday’s loss, after the miner announced an upgrade to its coal resources.

At the time of writing, the Whitehaven share price is trading 7 cents higher at $1.59.

What’s moving the Whitehaven share price?

Whithaven advised today that its Winchester South’s metallurgical coal mine has been upgraded to 1,100Mt from 530Mt.

The company says the 1,100Mt figure includes 665Mt of measured and indicated resources, which has resulted in Whitehaven Coal’s total resources increasing 12% since August. In addition, Whitehaven’s total coal reserves have seen a 26% boost since August 2020. 

Winchester South is located approximately 30km southwest of Moranbah within the Northern Bowen Basin in Central Queensland, and is 100% owned by Whitehaven Coal. 

The mine life is approximately 20 years, with up to 15 million tonnes per annum (Mtpa) ROM capacity production. The total capital expenditure for the mine was $980 million, including biodiversity offsets and contingencies.

Whitehaven Coal managing director and CEO, Paul Flynn, said today’s declaration on Winchester South was an important milestone, providing “further confidence around resource definition and the various options to ensure the company maximises returns to shareholders from the project”.

Latest China coal ban

Today’s announcement is a welcome relief for the company which may be affected by China’s latest ban on Australian coal. 

Although still unofficial, Chinese media has reported that its top economic planner was allowing the country’s power plants to import coal without clearance restrictions from several countries, “except for Australia”.

This would seem to effectively ban Australia’s $13.7 billion exports to China indefinitely.

The Whitehaven share price dropped 6% on that news yesterday, along with other coal mining shares.

About the Whitehaven share price in 2020

The Whitehaven share price has fallen by around 40% in 2020 as the Australia-China geopolitical spat continued to unfold, in addition to weak global demand for coal as a result of the coronavirus pandemic.

The share price is a long way off from its 52-week high of $2.73.

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Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why the Whitehaven Coal (ASX:WHC) share price is surging 5% this morning appeared first on The Motley Fool Australia.

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