Shares of Peabody Energy Corporation (OTC:BTU) tumbled more than 10% by 2:30 p.m. EDT on Friday after the company gave two updates on the North Goonyella mine in Australia.
Peabody Energy initially provided investors with a brief update on the conditions at its North Goonyella mine following reports of elevated gas levels at the mine after some scheduled work earlier in the month. The company stated that mine personnel recently reported that they saw smoke coming from the mine, which indicated a fire.
The company followed that update with another one later in the day stating that all employees were outside the area at the time of the reported fire. Further, because of these incidences, Peabody said that it doesn't expect any production from the mine in the fourth quarter of this year and it only has a small amount of coal in inventory to ship.
While Peabody said that it's too early to assess the financial impact of this issue, the company expects to meet its production guidance for the year due to the strong performance of its other mines. Meanwhile, the company noted that it does have $125 million of insurance above its $50 million deductible.
Peabody Energy had expected maintenance work at the North Goonyella mine to wrap up in the third quarter, which would enable it to earn higher margins in 2018's last quarter. However, with that mine potentially remaining offline for at least another quarter, the company's profitability will be impacted. That's another reason why investors should steer clear of Peabody Energy's stock. Those who want to own a coal miner might want to consider this one instead.