Arch Resources, Inc. this week revised its full year 2023 guidance for coking coal sales downward to 8.6 to 8.9 million tons from 8.9 to 9.7 million tons, due primarily to ongoing challenges with mining conditions in the first longwall district at its Leer South mine.

“While we remain enthusiastic about Leer South’s long-term outlook, the conditions in the first longwall district – which, as previously discussed, represented the most capital-efficient access point for the Lower Kittanning reserve base – continue to constrain advance rates,” said Paul A. Lang, president and CEO, Arch Resources. “In light of these conditions, we are moderating our volume and cost expectations for the balance of the year, even as we continue to benefit from a strengthening coking coal price environment.” Despite underperforming relative to initial expectations, Lang said Leer South has now generated approximately $470 million in segment-level adjusted EBITDA since its startup, versus an initial capital investment of approximately $400 million.

Arch now expects adjusted EBITDA for the Q3 2023 to be approximately 10% lower than the total reported for the Q2 2023. Arch expects discretionary cash flow for Q3 2023 to be more than half the total of $150.7 million achieved in Q2 2023, which included a working capital reduction of $62.5 million. These amounts are estimates, actual Q3 2023 financial results will be released on October 26.