Whitehaven Coal Confirms Participation in Acquisition of BHP’s Daunia and Blackwater Coal Mines

Whitehaven Coal has officially announced its involvement in the acquisition process of BHP’s Daunia and Blackwater coal mines in Queensland. The confirmation came after allegations were made by a major investor, Bell Rock Capital Management, claiming that Whitehaven had selectively briefed some shareholders, leading to misinformation in the market.

In response, Whitehaven released a statement confirming its participation in the sale process and informing investors that it had suspended its share buyback program while considering acquisitions, including the Daunia and Blackwater mines. The company stated that it would make a decision regarding the resumption of the share buyback program at an appropriate time.

The Daunia coal mine, along with the Blackwater mine, is being put up for sale by BHP and its partner, Mitsubishi. The auction is being conducted by Macquarie. These proposed acquisitions and the status of Whitehaven’s share buyback program were the focal points of complaints made by Bell Rock Capital Management in a letter to Whitehaven’s board.

Bell Rock, which holds just under 5% of Whitehaven shares, requested urgent clarification about the resumption of the share buyback program, as the company had allegedly informed investors that it would be delayed if it successfully acquired the Daunia and Blackwater mines.

If Bell Rock’s understanding of the situation is accurate, it believes that this information could have a material effect on the price or value of Whitehaven shares, and therefore it should be disclosed immediately. Failure to do so could create a false market in Whitehaven shares due to the uncertainty surrounding these media reports and the selective disclosure that may have been made to some shareholders but not all.

While Whitehaven has not officially confirmed its participation in the sales process until now, there have been reports of its interest in the two mines. Other parties rumored to be bidding for one or both mines include Stanmore Resources, Coronado Global Resources, and BUMA Australia.

According to UBS analysts, the Blackwater mine is valued at $3.9 billion and Daunia at $800 million. These estimates are subject to uncertainty due to the estimation of rehabilitation liabilities, with $250 million assumed for Daunia and $1 billion for Blackwater. The broker notes that potential upside for a buyer lies in cost savings from a leaner operating model compared to BHP, but synergies in the region are limited.

Whitehaven’s shares were trading slightly higher at $6.72, giving the company a market capitalization of $5.6 billion.

Definitions:
– Share buyback: A share buyback is when a company repurchases some of its outstanding shares from investors.
– Coking coal: A type of coal that is used to produce coke, which is an important material in the production of steel.
– Auction: A competitive process where potential buyers bid for an item or property.
– Rehabilitation liabilities: The estimated costs associated with restoring the land or environment after mining activities have ceased.