Whitehaven Coal Limited · ASX:WHC
Whitehaven Coal — H1 FY2011 Earnings Presentation
42 slides from Whitehaven Coal's earnings presentation, Feb 22, 2011
Slide 1: Delivering Growth: Half Year Results - December 2010
Whitehaven Coal Limited Delivering Growth Half Year Results - December 2010 22 February 2011
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: Qualifications and Statement
Qualifications and Statement Information in this report that relates to Coal Resources and Reserves is based on and accurately reflects reports prepared by the Competent Person named beside the respective information. All these persons are consultants for Whitehaven Coal Limited. Mr Colin Coxhead is
Slide 4: Contents
Co n te n ts ► Highlights ► Operating and financial results ► Status of growth plans ► Outlook 3 First Half Results FY 2011
Slide 5: Financial highlights – H1 2011
Fin a n c ia l h ig h lig h ts – H1 2011 ► Underlying NPAT (excluding Significant Items) of $32.9 million, up 21% ► Net loss after tax (NPAT) of $35.1 million1 ► Final fully franked dividend of 3.3 cents per share2 ► Average cost of sales per tonne consistent with FY 2010 ► EBITDA of $68.2 million ►
Slide 6: Operating highlights – 1HY 2011
Op e ra tin g h ig h lig h ts – 1HY 2011 ► Coal sales up 49% (equity basis). ► Saleable coal production up 10% (equity basis). ► Good operational safety, environmental management, production and cost control performance despite the impact of wet weather. ► Saleable coal production adversely affected
Slide 7: Business development highlights – 1HY 2011
Bu s in e s s d e ve lo p m e n t h ig h lig h ts – 1HY 2011 ► Coal Resources (JORC) up 116.8 Mt (7%) to 1,749.7 Mt. ► Marketable Coal Reserves (JORC) up 47.6 Mt (15%) to 365.7 Mt. ► Opencut resources in the combined Vickery area (Vickery, Merton, Bluevale and Canyon Extended) of 405.0 Mt. ► An init
Slide 8: Contents
Co n te n ts ► Highlights ► Operating and financial results ► Status of growth plans ► Outlook 7 First Half Results FY 2011
Slide 9: First half coal sales – 1HY 2011
Firs t h a lf c o a l s a le s – 1HY 2011 Equity Basis – 000t H1 - FY 2010 H1 - FY 2011 Change Gunnedah Operations 1,556 2,414 +55% Werris Creek 541 678 +25% Narrabri - 41 - Whitehaven Total 2,097 3,133 +49% 100% Basis – 000t H1 - FY 2010 H1 - FY 2011 Change Gunnedah Operations 1,786 2,686 +50% Werr
Slide 10: First half saleable coal production – 1HY 2011
Firs t h a lf s a le a b le c o a l p ro d u c tio n – 1HY 2011 Equity Basis – 000t H1 - FY 2010 H1 - FY 2011 Change Gunnedah Operations 1,155 1,163 +1% Werris Creek 570 675 +18% Narrabri - 57 - Whitehaven Total 1,725 1,895 +10% 100% Basis – 000t H1 - FY 2010 H1 - FY 2010 Change Gunnedah Operations
Slide 11: Half year profitability – 1HY 2011
Ha lf ye a r p ro fita b ility – 1HY 2011 Reported Financial Performance - A$ millions H1 - FY 2010 H1 - FY 2011 Re ve n u e 198.5 318.3 NPAT b e fo re S ig n ific a n t Ite m s 27.1 32.9 NPAT 83.5 (35.1) Ea rn in g s p e r s h a re be fo re S ig n ific a n t Ite m s (c e n ts p e r s h a re - d ilu
Slide 12: Half-year cost of sales in line with last year
Ha lf-ye a r c o s t o f s a le s in lin e with la s t ye a r A$/t FOB H1 - FY 2010 H1 - FY 2011 Coal Sales - 000t (equity basis, excl. purchased coal) 1,649 1,948 Average revenue - (excl. purchased coal & net of NSW royalties) 95.15 98.73 Average cost of sales 59.25 61.81 EBITDA 35.9 36.92 EBITDA M
Slide 13: First half cash flow – 1HY 2011
Firs t h a lf c a s h flo w – 1HY 2011 A$ millions H1 - FY 2010 H1 - FY 2011 Cash generated from operations 36.1 16.7 Interest and tax payments (89.0) (34.2) Net cash provided by/(used) in operating activities (52.9) (17.5) Proceeds from sale of assets 86.1 178.9 Capital investment (112.1) (123.3) O
Slide 14: 31 December financial position
31 De c e m b e r fin a n c ia l p o s itio n A$ millions June 30 - 2010 December 31 – 2010 Cash 141.0 192.1 Current receivables 289.2 116.9 Other current assets 72.0 149.7 Current assets 502.2 458.7 Non-current receivables 37.1 1.2 Other non-current assets 812.0 932.2 Total assets 1,351.3 1,392.1 C
Slide 15: Contents
Co n te n ts ► Highlights ► Operating and financial results ► Status of growth plans ► Outlook 14 First Half Results FY 2011
Slide 16: Expansion of opencut mines to 5.5 Mtpa in place
Exp a n s io n o f o p e n c u t m in e s to 5.5 Mtp a in p la c e ► Werris Creek Mine (WHC 100%) Reserves to support 15 – 20 year LOM Permitted to 2.0 Mtpa PCI and thermal coals Saleable coal yield 100% Own crushing and rail load-out ► Ta rra wo n g a Min e (WHC 70%) Reserves to support
Slide 17: Gunnedah CHPP and load-out upgrade almost complete
Gu n n e d a h CHP P a n d lo a d -o u t u p g ra d e a lm o s t c o m p le te ► Gu n n e d a h CHP P a n d ra il lo a d - o u t (WHC 100%) ► Permitted to handle and rail 4.0 Mtpa saleable coal ► CHPP upgraded to handle planned 3.5 Mtpa saleable production from Tarrawonga, Rocglen & Sunnyside ► Rema
Slide 18: Narrabri underground mine – a world class asset
Na rra b ri u n d e rg ro u n d m in e – a wo rld c la s s a s s e t ► Coal resources of 854 Mt in a single seam of 8-9 metres thick ► Current marketable reserves of 199.9 Mt based on extracting the bottom 4.2 metre section of the seam only ► Low ash, high energy, low sulphur PCI and thermal coals f
Slide 19: Narrabri Stage 1 now producing
Na rra b ri S ta g e 1 n o w p ro d u c in g ► First CM production 28 June 2010 ► Second and third continuous miners commissioned during the half-year ► Total of 81 Kt of saleable coal produced to date ► All CMs deployed on development for longwall installation, due end 2011 ► Gas drainage successfu
Slide 20: Narrabri mining conditions continue to be good
Na rra b ri m in in g c o n d itio n s c o n tin u e to b e g o o d Development roadway dimensions 5.4m wide x 3.5m high Overcast site within the coal seam, which is 9m high 19 First Half Results FY 2011
Slide 21: Narrabri development for longwall #1
Na rra b ri d e ve lo p m e n t fo r lo n g wa ll #1 ► Underground mining conditions continue to be good ► Gas drainage working well, mining and surface equipment working well ► Gas drainage drilling along LW#1 has not identified any geological features ► More than 700 people have applied for jobs,
Slide 22: Narrabri Stage 2 progressing well
Na rra b ri S ta g e 2 p ro g re s s in g we ll ► Stage 2 approval granted by the NSW Government in August ► Longwall ordered in September 2009, delivery is 86% complete ► Ventilation shaft, CHPP and other key Stage 2 facilities well advanced ► Stage 2 capital estimate of ~$300 million (100% basis)
Slide 23: Pre-drainage of gas using SIS and UIS methods
P re -d ra in a g e o f g a s u s in g S IS a n d UIS m e th o d s in a d va n c e o f lo n g wa ll d e ve lo p m e n t a n d e xtra c tio n ► Combination of surface to in-seam (SIS) and underground in-seam (UIS) drill holes are being employed to drain LW development roads and panels ► This will con
Slide 24: Narrabri can produce PCI coal, up to 40% of ROM
Na rra b ri c a n p ro d u c e P CI c o a l, u p to 40% o f ROM ► Coal quality and washability analyses of large diameter bore-cores from Narrabri indicate potential to produce substantial quantities of PCI coal ► By adding a dense-medium cyclone (DMC) to the planned Stage 2 CHPP, indications are th
Slide 25: Future potential for top coal caving
Fu tu re p o te n tia l fo r to p c o a l c a vin g ► First 2 longwall panels will mine 4.2 metre bottom section & will provide experience of caving & geo-tech characteristics ► Potential thereafter for top coal caving (TCC) which could: ► Recover most of the 8-9 metre coal seam; increase resource r
Slide 26: Coal Resources up 7%, Marketable Reserves up 15%
Co a l Re s o u rc e s u p 7%, Ma rke ta b le Re s e rve s u p 15% COAL RESOURCES - February 2011 Measured Indicated Inferred Total Million tonnes Resource Resource Resource Resources Vickery Combined Area Opencut 38.79 157.26 209.0 405.0 Tarrawonga Opencut 17.44 41.57 19.1 78.1 Rocglen Opencut 11.7
Slide 27: The addition of Vickery provides more options
Th e a d d itio n o f Vic ke ry p ro vid e s m o re o p tio n s The Vickery area comprising: • Vickery, • Merton, • Bluevale and • Canyon Extended provides 405 Mt of open cut Resources, with an initial open cut Reserve of 56.7 Mt Recoverable and 47.6 Mt Marketable. There are also substantial undergr
Slide 28: Vickery has a large resource of high quality coal
Vic ke ry h a s a la rg e re s o u rc e o f h ig h q u a lity c o a l ► Coal seams at Vickery contain a range of semi-soft coking and high quality thermal coals ► Previous coal quality analysis indicates a +80% yield of mainly metallurgical saleable coal ► Work at Vickery focussed on defining a mine
Slide 29: Rail infrastructure to meet Whitehaven's growth
Ra il in fra s tru c tu re to m e e t Wh ite h a ve n ’s g ro wth ► Whitehaven (60%) and Idemitsu (40%) have sponsored RIC and ARTC investments which have increased rail track capacity north of Muswellbrook, to meet the needs of Whitehaven and Idemitsu. This program is continuing ► In return, Whiteh
Slide 30: Port infrastructure to meet Whitehaven growth
Port infrastructure to meet Whitehaven growth ► Existing PWCS Terminal ► Whitehaven has secured 3.6 Mtpa of existing PWCS capacity ► Newcastle Coal Infrastructure Group (“NCIG”) ► Whitehaven owns 11% of NCIG....Stage 1 was commissioned in March 2010. Stage 1 capacity of 30 Mtpa is available to NCIG
Slide 31: Whitehaven's existing port capacity entitlement
Whitehaven’s existing port capacity entitlement 1. These estimates relate to planned future events and expectations and as such involve known and unknown risks and uncertainties. Please refer to Disclaimer 30 First Half Results FY 2011
Slide 32: NCIG Stage 1 now fully operational, limited to Panamax ships
NCIG Stage 1 now fully operational, but limited to Panamax ships until late 2011 31 First Half Results FY 2011
Slide 33: Contents
Co n te n ts ► Highlights ► Operating and financial results ► Status of growth plans ► Outlook 32 First Half Results FY 2011
Slide 34: Low-risk open cut production base with substantial growth
Low-risk open cut production base with substantial growth from Narrabri UG and Vickery OC ► Four existing opencut mines expected to produce up to ~5.5 Mtpa1. More opencut SALEABLE PRODUCTION CAPACITY VS PORT capacity in future from existing resources CAPACITY (100% BASIS) 1. + Vickery 20.0 Tarrawong
Slide 35: Increasing percentage of metallurgical coal production
Increasing percentage of metallurgical coal production and close to 100% export sales MIX OF METALLURGICAL AND THERMAL COAL (100%) – UNCONSTRAINED BY PORT CAPACITY 20.0 Thermal Coal Saleable production capacity (Mtpa) 15.8 15.9 15.4 15.3 16.0 Metallurgical Coal 12.3 12.0 8.0 8.1 7.7 7.6 8.0 7.0 8.0
Slide 36: Fixed price coal contracts and fixed FX status
Fixed price coal contracts and fixed FX status ► “Legacy” thermal coal contracts of 3.724 Mt remain during FY 11 and FY 12 at an average price US$69.27/t. Otherwise, US$ coal prices are currently only fixed for the short term ► Whitehaven currently has a total FX fixed position of US$434m at an aver
Slide 37: Significant uncommitted tonnages in future years
Significant uncommitted tonnages in future years ► Even with the large off take commitments with Whitehaven’s Narrabri JV partners, there remains significant uncommitted tonnage based on future production. ► The Vickery project offers a good mix of metallurgical coal opportunities and will increase
Slide 38: Growth plans are well funded
Growth plans are well funded Capacity to fund new opportunities Major Cash Needs A$ million ► Major capital needs are more Narrabri Stage 2 104 than covered by cash on hand and proceeds from the sale of Open cut expansion 30 Narrabri JV interests Other 50 ► In addition, net cash flow from 184 operat
Slide 39: Outlook
Ou tlo o k ► Saleable coal production expected to increase significantly in the second half, subject to no further adverse weather conditions. ► While there remains uncertainty around coal prices and other variables, Whitehaven currently expects full year underlying NPAT to be in the range of $80 M
Slide 40: Looking further ahead
Lo o kin g fu rth e r a h e a d ► Strong fundamental growth in demand for coal remains (both metallurgical and thermal) ► Whitehaven is well positioned ► Large resources and reserves of high quality coal ► Mix of metallurgical and thermal coal products ► Efficient, flexible open cut mines, competiti
Slide 41: Possible corporate transaction
P o s s ib le c o rp o ra te tra n s a c tio n ► On 29 October 2010, Whitehaven Coal Limited (ASX:WHC) announced that it was commencing a formal process to enable selected interested parties to conduct due diligence and submit proposals for a potential corporate transaction with the company. ► White
Slide 42: Whitehaven Coal Limited: Delivering Growth
Whitehaven Coal Limited Delivering Growth Half Year results December 2010 22 February 2011