Whitehaven Coal Limited · ASX:WHC
Whitehaven Coal — FY2014 Earnings Presentation
42 slides from Whitehaven Coal's earnings presentation, Aug 27, 2014
Slide 1: Full Year Results FY2014
Whitehaven Coal Limited Full Year Results FY2014 A year of delivering on targets Sydney, Australia 27 August 2014
Slide 2: Disclaimer
Disclaimer Statements contained in this material, particularly those regarding the possible or assumed future performance, costs, dividends, returns, production levels or rates, prices, reserves, potential growth of Whitehaven Coal Limited, industry growth or other trend projections and any estimate
Slide 3: Agenda
Agenda Key Themes and Target Delivery Safety Coal in the World Summary Financials Operations Growth Projects Infrastructure Community Contribution Conclusion Appendices FY2014 Results 3
Slide 4: Key focus areas
Key focus areas Further improvements of safety performance across all assets remains a priority Delivering on mine production targets over the next year Focus on cost reductions and productivity improvements Ensuring Maules Creek project is delivered on time and on budget Demand for high quality coa
Slide 5: Delivering on targets
Delivering on targets TARGETS FY2014 OUTCOME Improved safety performance across all mines - lowest Improve safety performance at all operations group TRIFR rate in 5 years Ensure current operations are performing to Record production at Narrabri, Tarrawonga and Werris plan Creek Reduce costs Fully a
Slide 6: Safety performance
Safety performance Introduction of Whitehaven’s “Safehaven Rules” during the year is delivering improved safety performance as evidenced by a 30% decline in the TRIFR and a 40% reduction in the LTIFR from the previous year Achieved lowest group wide TRIFR rate for 5 years of 14.06 below the NSW aver
Slide 7: Coal’s growing role in global energy
Coal’s growing role in global energy Nearly 3.5 billion people in the world have limited World Primary Energy Demand (Btce) or no access to electricity and coal is the lowest Excluding Oil cost source of electricity 18.0 16.0 The IEA expects global energy demand to 14.0 increase by one third by 2035
Slide 8: Coal’s contribution to Australia
Coal’s contribution to Australia Australian Electricity Generation 2012/13 2% 1% 3% 7% Black Coal 2% 1% Brown Coal Coal accounts for 64% of electricity generation in Australia Gas and with rising east coast gas prices the contribution is set to 45% 20% Oil increase in the future as coal plants are r
Slide 9: Financial highlights
Financial highlights Headlines FY2014 FY2013 Comment Increased sales volumes delivered from owned EBITDA before significant items ($’m) 90.4 17.1 mines, cost control and productivity gains Impacted by provisions for care and EBITDA including significant items ($’m) 76.1 (12.6) maintenance costs
Slide 10: FY2014 profitability
FY2014 profitability Financial Performance - A$ millions FY2014 FY2013 Revenue 755.4 622.2 Other income 8.5 12.4 Operating expenses (including coal purchases) (407.2) (405.0) Selling and distribution expenses (including NSW Govt. royalties) (243.9) (196.2) Admin and other expenses (including net FX
Slide 11: Costs continue to be driven down
Costs continue to be driven down H2 H1 FY2014 FY2014 (1) FY2014 FY2013 (1) (2) Average revenue per tonne was flat with coal price reduction offset by weakening in the A$ Coal Sales (equity basis, excl. purchased '000t 3,913 4,302 8,215 5,994 (3) coal) Average revenue (excl. purchased coal & net Full
Slide 12: Capital allocation
Capital allocation Capital Investment (equity share) - $ Million FY2014 FY2013 Sustaining capex Mine Sustaining Capital Sustaining capex at Narrabri includes the costs of developing the main roads Open Cuts 8.1 10.3 Sustaining capex at the mines has been maintained at (1) Narrabri 27.1 37.2 minimum
Slide 13: Balance sheet and capital management
Balance sheet and capital management Corporate debt facility realigned with first testing due after 31 December 2015 30 Jun 2014 30 Jun 2013 $’m $’m Increase in interest bearing liabilities comprise: Cash on hand 103.2 110.5 • Drawings of $180 million from the corporate debt facility to fund Maules
Slide 14: Financing – current and future
Financing – current and future Current $1.2b facility is a combination of term loan, revolver and guarantee facility Current Facility Existing facility expires on 21 December 2016 (over 2 years) Aim to arrange flexible debt structure – longer tenor and covenant light Future Financing Supporting crit
Slide 15: Coal sales
Coal sales Total equity sales of 8.7Mt (8.2Mt excluding purchased coal) and managed sales of 10.8Mt for the year - new company records Purchases of coal continued to decline in line with improved business performance Equity Basis – 000t FY2014 FY2013 Change Open Cuts (including purchased coal) 5,124
Slide 16: Sales destination
Sales destination Thermal Coal Sales 2014 8% 8% Thermal coal sales in FY2014 were 8.9Mt (100% basis) Japan including purchased coal with most sold into the premium 47% Korea Asian markets China 37% Other Metallurgical coal sales totalled 2.0Mt (100% basis) in FY2014 with PCI and SSCC coal sourced fr
Slide 17: Saleable coal production – new record
Saleable coal production – new record Excellent performance at Narrabri increased Whitehaven’s managed production by 26% for the year Record production from the open cut mines as Werris Creek ramped up and Tarrawonga performed strongly Managed Basis – 000t FY2014 FY2013 Change Open Cuts 5,061 4,729
Slide 18: Narrabri gathering momentum
Narrabri gathering momentum Narrabri Saleable Coal Prod (000's t) 6,000 Record ROM coal and saleable coal production of 5,000 5.7Mt and 5.2Mt respectively for the full year (100% basis) 4,000 3,000 Productivity of about 17,000t/m/y (ROM basis) 2,000 achieved in FY2014 placing the mine amongst the mo
Slide 19: Narrabri in FY2015 and beyond
Narrabri in FY2015 and beyond Increased panel lengths will lead to less changeouts in the future, usually only one in each year ROM production is forecast to increase to 6.5Mt and costs will be in the range of $59/t to $62/t in FY2015 Top Coal Caving assessment has been completed and is inferior to
Slide 20: Maules Creek construction 55% complete
Maules Creek construction 55% complete Tier 1 World Class Mine Mine Infrastructure Simple and well understood geology with multiple seams, no major faulting and a low strip ratio High quality resource of PCI, SSCC and high energy thermal coal Maules Creek Rail Loop Situated close to existing infrast
Slide 21: Construction progress
Construction progress % Complete at End July Area Contractor Risk Profile 2014 Rail Leighton 55% Minor rock volume risk remaining Bulk Earthworks Ditchfield 42% Minimal risk as elements handed to contractors CHPP Design and Procurement Sedgman 100% Fixed price contract completed – no risk CHPP Const
Slide 22: Project “S” curve
Project “S” curve The blue line represents the costs of the project incurred to the end of July Revenue will begin to accrue to the project for coal sales from March 2015, several months before construction activity is completed Note: “S” curve profile as at 31 July 2014 Construction advancing on sc
Slide 23: Maules Creek mining
Maules Creek mining Whitehaven will owner/operate the mine Mining with first phase of staff and operator Model recruitment completed, mining commenced Low cost funding secured for new ultra class mining equipment via an operating Funding & lease with a five year tenor. Mining Equipment equipment suf
Slide 24: Maules Creek – Namoi River crossing
Maules Creek – Namoi River crossing FY2014 Results 24
Slide 25: Maules Creek – rail cutting
Maules Creek – rail cutting FY2014 Results 25
Slide 26: Maules Creek – Mine infrastructure
Maules Creek – Mine infrastructure Rail Loop Train Load out Bin CHPP Coal Stockyards FY2014 Results 26
Slide 27: Maules Creek – Mine infrastructure
Maules Creek – Mine infrastructure ROM Pad Train Loadout Bin FY2014 Results 27
Slide 28: Vickery approval update
Vickery approval update Approval anticipated by NSW Government in the current quarter Vickery Project Key Elements Details Location About 25kms north of Gunnedah Resources and Reserves Reserves of 204Mt contained within a Resource of 508Mt Whitehaven 100%. Will consider the formation of a Joint Vent
Slide 29: Infrastructure positioning
Infrastructure positioning Port Capacity v Export Saleable Production 25.0 Excess port capacity was caused by 21 approval delays for the Maules 20 20.0 19 19 Creek project 17 15.0 Whitehaven will require additional million's tonnes 13 port capacity from FY2017 with 12 10 capacity available from othe
Slide 30: Community contribution
Community contribution Whitehaven currently employs over 655 people with 74% living in the region around its operating mines Wages paid to employees in the region were over $80 million in FY2014 and will increase in FY2015 First phase recruitment for Maules Creek has been completed with over 1,800 a
Slide 31: Aboriginal engagement
Aboriginal engagement Whitehaven has developed an Aboriginal Engagement Strategy to build on and enhance relationships with the Aboriginal community in which it operates During FY2014 Whitehaven employed a dedicated Aboriginal Community Relations Officer At the Maules Creek project the company worke
Slide 32: Investment proposition – low cost growth
Investment proposition – low cost growth Saleable Coal Production by Mine (Mt) 25.0 Production is expected to more than double by FY2018 as Maules Creek 125% Growth ramps up to its full capacity 20.0 15.0 Saleable production in FY2015 is 110% Growth expected to be 13.6Mt on a 100% 10.0 basis (includ
Slide 33: The focus for FY2015
The focus for FY2015 Aiming for ongoing improvement in safety performance at all operations Ensuring construction of Maules Creek remains ahead of schedule and under budget Developing long term markets and sales contracts for all Maules Creek production Recruiting and training the workforce to opera
Slide 34: Thank you
Thank you www.whitehavencoal.com.au
Slide 35: Appendices
Appendices FY2014 Results 35
Slide 36: Where we operate
Where we operate Maules Creek (75%) • Reserves to support ~ 30 years • Permitted & Planned : 13 Mtpa ROM • SSCC, PCI and high energy thermal Narrabri North (70%) • Reserves to support ~ 25 years • Permitted : 8 Mtpa ROM • Planned : 6 Mtpa ROM • PCI & low ash thermal coals Tarrawonga (70%) • Reserves
Slide 37: Reconciliation - NPAT to Operating EBITDA
Reconciliation - NPAT to Operating EBITDA A$ millions FY2014 FY2013 Net loss for the period attributable to members (38.4) (88.7) Add back: Significant items after tax 10.0 21.5 Net loss before significant items (28.4) (67.2) Loss before tax (56.3) (124.4) Add back: Net interest expense 52.8 47.1 Ad
Slide 38: Significant Items
Significant Items A$ millions FY2014 FY2013 Included within the balances presented on the face of the Consolidated Statement of Comprehensive Income: Operating expenses: Suspension of mining activities and office closures (5.5) (25.9) Operating / Admin expenses: Redundancy and restructure costs (1.0
Slide 39: Balance sheet at 30 June
Balance sheet at 30 June A$ millions 30 June - 2014 30 June - 2013 Cash 103.2 110.5 Current receivables 70.3 87.3 Other current assets 61.1 58.4 Current assets 234.6 256.2 Non-current receivables 29.7 37.8 Other non-current assets 4,018.2 3,806.8 Total assets 4,282.5 4,100.8 Current payables 155.7 1
Slide 40: Full year cash flow
Full year cash flow A$ millions FY2014 FY2013 Cash from / (used in) operations 125.4 (19.7) Interest and tax payments (16.8) (12.6) Net cash from / (used in) operating activities 108.6 (32.3) Capital investment (313.7) (288.2) Other investing activities (including cash from acquisition of subsidiari
Slide 41: Resources
Resources WHITEHAVEN COAL LIMITED - COAL RESOURCES - AUGUST 2014 Measured Indicated Inferred Total Competent Report Tenement Resource Resource Resource Resources Person Date CL316/EL4699/ Vickery Opencut 148 184 176 508 1 Feb-13 EL7407 Vickery Underground CL316 - - 29 29 1 Feb-13 Rocglen Opencut M L
Slide 42: Reserves
Reserves WHITEHAVEN COAL LIMITED - COAL RESERVES - AUGUST 2014 Recoverable Reserves Marketable Reserves Competent Report Tenement Proved Probable Total Proved Probable Total Person Date Vickery Opencut CL316/EL4699/EL7407 – 204 204 – 180 180 1 Apr-14 Rocglen Opencut M L1620 4.8 0.9 5.8 3.7 0.7 4.4 1