Whitehaven a left-field buyer for coal Daunia and Blackwater mines

Whitehaven was said to be focused on Daunia but could also snap up Blackwater. Picture: Bloomberg

There is speculation in the market that the Australian-listed Whitehaven Coal could now emerge as the buyer of both the Daunia and Blackwater coal mines, as contest favourite Yancoal is now out of the $US3bn-plus race.

DataRoom understands that Yancoal has failed to secure clearance from its Hong Kong-based parent to acquire the portfolio, despite the understanding that the local management team put forward the highest and perhaps only offer for both mines together.

Earlier, the talk was that Whitehaven’s focus was on Daunia, but now some believe it could also snap up Blackwater if it is good buying value.

With Blackwater producing the unloved thermal coal as well as the metallurgical variety, it was less in favour with suitors. Despite being more valuable because of the amount of the commodity it produced, it comes with an expensive clean-up bill at the end of its life.

Whitehaven’s boss, Paul Flynn, dropped some hints of his intentions at his result presentation on Thursday, despite failing to discuss the assets specifically.

He suspended his share buyback, perhaps a signal he is preserving cash for a big acquisition, and said that the company would consider mergers and acquisition opportunities such as growing metallurgical coal if compelling opportunities arise.

It has $2.65bn of cash on the balance sheet, $500m of debt it could use and could then tap the market for a small amount of the total cheque or use more debt if it wanted to buy both mines which are likely to sell for just over $US3bn.

Other groups that have lobbed final offers in the Macquarie Capital-run contest are Stanmore Coal, BUMA and Peabody Energy, and one may come from left field to win the race.

Some have suspected that Daunia could be sold first, given it was the more popular asset.

Daunia is close to Whitehaven’s Winchester South mine project in Queensland’s Bowen Basin.

The two Bowen Basin assets are part of a 50-50 joint venture between BHP and Mitsubishi.

Meanwhile, South32 boss Graham Kerr said on its $1bn Illawarra Coal business that “everything’s for sale at the right price”, but that he was not actively running a sale process on Thursday while delivering results.

Mr Kerr said there was currently a limited number of buyers in the market when asked whether the group would wait until the BHP coal sale had concluded.

The responses were in the context of speculation in the market that South32 may once again be weighing a sale.