THE incoming managing director of Whitehaven Coal, Paul Flynn, has reiterated his independence from the company's largest shareholder, the former billionaire Nathan Tinkler, who once employed him.
At Whitehaven's interim results briefing on Tuesday, the chief mining analyst at UBS, Glyn Lawcock, questioned the appointment of Mr Flynn, a non-executive director who previously ran Mr Tinkler's Aston Resources, to replace the retiring managing director, Tony Haggarty.
Mr Flynn, who joined the Whitehaven board at the time of last year's merger with Aston, said he was employed by Mr Tinkler until September 29 and since that time he had "no employment or other relationship with Tinkler Group".
He repeated comments he made at Whitehaven's annual meeting last November - when Mr Tinkler voted his 19.4 per cent stake against all resolutions put, including the re-election of Mr Flynn, his own nominee to the board - to the effect that he served as an independent in the interest of all shareholders.
Whitehaven reported a net loss of $47 million in the December half when it was hit by a combination of weaker coal prices, the continuing high dollar, and a series of setbacks including a train derailment at Boggabri and delays to the approval of its controversial Maules Creek project in the Gunnedah Basin. For the previous corresponding period, the company had reported a net profit of $19.9 million.
Shares in Whitehaven closed down 3 per cent at $2.91 on Tuesday.
Mr Haggarty did not say when he believed coal prices would recover.
Under present market conditions, he said the second half would deliver a "very similar" earnings outcome.
The company's average realised coal prices fell to $US92 a tonne from $US108 in the previous corresponding period.
Mr Haggarty said high take-or-pay charges - for ports and rail services- would be "with us for some time" and would probably increase in the short term.
Peter O'Connor, a mining analyst at Merrill Lynch, called Whitehaven's profits "woeful" and said they would need to rise above $300 million a year to justify the present share price.
Deutsche Bank's Paul Young said Whitehaven's valuation was "extremely stretched" using multiples of short-term earnings, but based on a discounted cash flow, and given its asset quality, the company was "extremely undervalued".
Looking through the commodity cycle, Mr Young said once Narrabri was in full production, and the Maules Creek project was operational from 2014-15, the earnings potential of Whitehaven's asset base would be "very high".