Peabody mine fire raises financial impact concerns, says B. Riley

Peabody Energy confirmed that a fire occurred at its Shoal Creek Mine in Alabama and reported that all mine personnel have been safely evacuated, B. Riley the analyst tells investors in a research note. The incident raises concerns around the financial impact of lost production and possible remediation costs, says the firm. Based on its estimates, Shoal Creek would account for 8.5% of Peabody’s 2023 EBITDA and 6.4% of 2023 revenues. In the event of an extended closure, Riley believes fixed costs and remediation efforts would make the financial hit "somewhat greater than these ratios." As a general rule of thumb, if the fire is not exhausted immediately, an extended closure and remediation effort of at least one quarter becomes the most likely outcome, the firm says. It is keeping its estimates unchanged pending further details and has a Buy rating on Peabody Energy with a $39 price target.