Warrior Met Coal Boosts Blue Creek Capacity

By Bobby Samwell • Sunday, February 23 15:15 • Permanent Link

Warrior Met Coal, Inc. (NYSE:HCC) has provided a comprehensive update on its Blue Creek steelmaking coal project, which has seen significant improvements in operational and financial metrics.

The company has increased the nameplate capacity of the Blue Creek project by 25% to 6.0 million short tons per year from the original production plan of 4.8 million short tons per year. This increase in capacity is expected to generate approximately $1.3 billion of incremental revenues, $735 million of incremental adjusted EBITDA, and $637 million of incremental free cash flows annually.

The net present value (NPV) of the Blue Creek project is approximately $5.4 billion with an internal rate of return (IRR) of 35% and a payback period of 2.3 years at the revised nameplate capacity.

Warrior has made several operational and technological improvements since the relaunch of the Blue Creek project in May 2022. These improvements have allowed the company to increase the overall nameplate capacity by 75%, from 8.0 million short tons per year to 14.0 million short tons per year.

The company expects the Blue Creek mine to generate approximately $1.3 billion of annual revenue, $735 million of incremental adjusted EBITDA, and $637 million of incremental free cash flows annually, assuming a long-term benchmark price of $250 per metric ton for the life of the mine.

Despite these enhancements, the project remains on budget, with total project capital expenditures expected to remain in the range of $995 million to $1.075 billion. The investments have been fully funded by cash flows generated from operations.

Warrior Met Coal, Inc. is a U.S.-based, environmentally and socially minded supplier to the global steel industry, dedicated entirely to mining non-thermal metallurgical (met) steelmaking coal. The company operates highly efficient longwall operations in its underground mines based in Alabama and is known for producing premium quality met coal with very low sulfur and strong coking properties. As a result of these announcements, the company's shares have moved -3.9% on the market, and are now trading at a price of $46.21. For more information, read the company's full 8-K submission here.

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