The high moisture and consequential lower energy of Narrabri thermal coal, combined with reduced offtake, has required the sale of coal into lower-priced thermal coal markets.

These issues were expected to persist into the second half of the 2013 financial year, the company said in its latest quarterly report.

“First-half earnings before interest, tax, depreciation and amortisation is expected to be less than $10 million and second half expected to be similar if coal markets and the high Australian dollar remain unchanged,” Whitehaven said.

The Narrabri longwall, which was installed during the June quarter, is being ramped up to target capacity of 6 million tonnes per annum.

Based on current results and expectations, Whitehaven predicts Narrabri will produce approximately 4Mt of run of mine coal in FY2013.

Narrabri produced 1.06Mt during the December quarter, of which 939,000 tonnes was from the longwall.

Whitehaven’s ROM coal production during the December quarter was 2.37Mt on a 100% basis, up 96% on the previous corresponding period, with saleable coal production of 1.99Mt, up 79% on the previous corresponding period.

The company said most start-up engineering issues had been addressed in conjunction with the manufacturer, Caterpillar (Bucyrus).

“Overall, the longwall is performing well and is demonstrating its capacity to achieve high production rates,” it said.

“The best 8.5-hour shift so far has been around 15,000 tonnes and best 3-shift day so far around 30,000 tonnes.

“As with any installation of a new longwall into a new mining environment, there is a significant learning curve as experience is gained with the mining conditions and the machinery.

“The Narrabri management and workforce are responding very well and the focus now is on achieving consistent daily and weekly production at the targeted production rates.”

Early issues with cutting the relatively hard Narrabri coal have largely been resolved, according to Whitehaven.

“The faulty ‘hi-set’ and bypass hydraulic valves on the longwall shields have now been replaced and good progress has also been made with automation software, which was operational in December,” the company said.

“Operators are now training in bi-directional cutting to further increase cutting rates.”

On November 28 a train carrying Narrabri coal derailed near Boggabri, damaging a section of line and making the rail line impassable.

The Australian Rail Track Corporation undertook extensive emergency repairs to the line and it was reopened on December 20.

While stockpile capacity was extended at the mine, full capacity was reached during the rail closure period and longwall production stopped.

“Beneficial maintenance activities were undertaken on the longwall while it was not in operation, including removal and refurbishment of shearer cutter drums,” the company said.

“Longwall production recommenced on December 28.”

The longwall has retreated approximately 769m in total and roof caving is occurring as Whitehaven expected.

“Retreat has now occurred through the unconditioned roof area and caving continued to occur favourably, with some of the best production having been achieved in this area. This is very positive for future extraction without pre-conditioning,” it said.

The caving characteristics of the coal behind the longwall continue to be favourable for top coal caving, including under the unconditioned roof area.

Final feasibility studies are progressing to assess the technical and economic viability of retrofitting the longwall for TCC.

If technically feasible, this extraction method has the potential to increase the recoverable reserve at Narrabri by 50% and/or to increase annual production towards the approved rate of 8Mtpa.

Narrabri underground development continued during the December quarter with four continuous miners operating.

“Narrabri mining conditions remain excellent and main road development has advanced beyond longwall panel #3, with installation of the maingate conveyor for longwall panel #3 completed and development of LW panel 103 now underway,” Whitehaven said.

“Development of the maingate for longwall panel #2 is well underway and, at planned longwall extraction rates and development rates, longwall panel #2 is expected to be ready to accommodate the first longwall change.

“However, there is no surplus time in the schedule and development rates need to be maintained to avoid any delay.”