Whitehaven Coal Limited · ASX:WHC
Whitehaven Coal — Deutsche Bank 23rd Annual Leveraged Finance Conference 2015
30 slides from Whitehaven Coal's conference presentation, Sep 30, 2015
Slide 1: Whitehaven Coal Limited – Deutsche Bank 23rd Annual Leveraged Finance Conference
For personal use only Whitehaven Coal Limited DEUTSCHE BANK 23RD ANNUAL LEVERAGED FINANCE CONFERENCE PHOENIX, ARIZONA 28 -30 SEPTEMBER 2015
Slide 2: Disclosure
Disclosure For personal use only 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 PROJEC
Slide 3: Agenda
Agenda For personal use only About Whitehaven Coal Low cost producer and margin analysis Benchmarking Whitehaven against US peers Whitehaven’s markets High quality coal Operational performance Community contribution Summary financials Outlook 3 // 2015 DB LEVERAGED FINANCE CONFEREN
Slide 4: About Whitehaven Coal
About Whitehaven Coal For personal use only LOW COST MINES PRODUCING HIGH QUALITY COAL ASX Code: WHC Shareholders – 1,026 million shares on issue – Farallon 16.6% – Market Cap $A1.0 billion – AMCI Group 14.7% – Trading 90 million shares per month – Eastspring 10.1% Whitehaven Operations – Manning &
Slide 5: Where we operate
Where we operate For personal use only LOW CASH COST PRODUCER OF HIGH QUALITY METALLURGICAL AND PREMIUM THERMAL COAL Maules Creek (75%) Tier One Mine – Reserves: ~ 30 years, Permitted & Planned 13Mtpa – SSCC, PCI and high energy thermal Narrabri (70%) Tier One Mine – Reserves: ~ 25 years, Permitted
Slide 6: Management has a strong recent track record of delivering on targets
Management has a strong recent track record of delivering on recent targets For personal use only DELIVERED ON KEY FY14 AND FY15 TARGETS Targets Outcomes Aiming for ongoing improvement in safety Outstanding safety performance with TRIFR performance at all operations falling by 35% in FY15 Ensuring
Slide 7: Whitehaven is a low cost, high quality coal producer
Whitehaven is a low cost, high quality coal producer For personal use only DELIVERING SUSTAINABLE COST REDUCTIONS AND INCREASED MARGINS ASP, Costs and Margin (A$/t) – Unit costs down 24% from H1 FY2013 to A$60/t in H2 FY2015 $85 $80 – Whitehaven increased margins in second $75 half of FY2015 to A$15
Slide 8: Unparalleled productivity metrics
Unparalleled productivity metrics For personal use only WHITEHAVEN PRODUCTIVITY CONTINUES TO IMPROVE NSW and Whitehaven Mine Productivity 25.0 Maules Creek ramped 20.0 – Productivity at Whitehaven’s Maules Creek and Narrabri mines 15.0 ensures that productivity remains well above the NSW average 10.
Slide 9: Whitehaven benchmarked against US coal companies
Whitehaven benchmarked against US coal companies For personal use only HIGH QUALITY COAL AND LOW COST OPERATIONS GENERATE HIGH MARGINS Gearing Versus Cash Margin First Half CY1512 – Whitehaven generates significant EBITDA margin per short ton in the current coal market $25 – This is due to its low c
Slide 10: Whitehaven benchmarked against US coal companies (continued)
Whitehaven benchmarked against US coal companies (continued) For personal use only EXPOSED TO GROWING COAL DEMAND IN THE PACIFIC BASIN % of Sales by Region Global coal demand Company N. America3 Pacific Atlantic Other – 100% of WHC’s coal sales are to Asia Pacific customers Whitehaven1 100% – Annual
Slide 11: Our coal goes to premium Asia (ex China) market
Our coal goes to premium Asia (ex China) market For personal use only COAL SALES TO PREMIUM PAN-ASIAN MARKETS / MET COAL MIX INCREASING TO > 35% Thermal Coal Sales 3% 9% – Over 82% of thermal coal sold into premium Japan 3% Asian markets 3% Korea 39% 5% Taiwan SE Asia – Sales mix 84% thermal and 16%
Slide 12: Whitehaven's Asian markets
Whitehaven’s Asian markets For personal use only STRONG REGIONAL GROWTH FOR HIGH QUALITY COAL New Coal Fired Generation Capacity (GW) 20 – All countries in Whitehaven’s key 15 market region are adding new supercritical and ultra-supercritical coal 10 fired generating capacity 5 0 – Over 70 GW of new
Slide 13: Coal's role in Asian emission reductions
Coal’s role in Asian emission reductions For personal use only USING HIGH QUALITY COAL REDUCES CARBON EMISSIONS Higher quality coals like Gunnedah Basin coals required for the new power stations – Power station efficiency drives efficiency 35% CO2 =100 carbon emissions 5.39 Mt subcritical – Utilisin
Slide 14: Whitehaven redefining Asian coal quality
Whitehaven redefining Asian coal quality For personal use only Thermal Coal - Ash vs Sulphur Ash (% a.d,) High Quality Coal 20.0 18.0 16.0 14.0 12.0 10.0 8.0 0.20 – Whitehaven produces some of 0.30 the highest quality coals sold in Whitehaven the Asian region 0.40 Premium Hunter 0.50 – As countries
Slide 15: Narrabri – a case in point
Narrabri – a case in point For personal use only IF JAPAN’S COAL FIRED GENERATING EFFICIENCY WAS ADOPTED ELSEWHERE2, CARBON DIOXIDE EMISSIONS WOULD REDUCE BY MORE THAN 1.5BT/Y1 – 39% of Whitehaven’s thermal coal is sold in Japan – The state of the art Isogo power station uses Narrabri coal and is cu
Slide 16: Improved safety = better performance
Improved safety = better performance For personal use only Whitehaven and NSW Coal Industry TRIFR 25 – Introduction of Whitehaven’s 20 “Safehaven Rules” in early 2014 is delivering improved 15 safety performance 10 – The TRIFR fell by 35% in Safehaven Rules FY2015 to end the year at 9.2 5 – Whitehav
Slide 17: Production growth from low risk expansions
Production growth from low risk expansions For personal use only ONGOING GROWTH FROM LOW COST HIGH MARGIN COAL Saleable Coal Production by Mine (Mt) 30.0 – Strong production growth to continue Forecast as Maules Creek ramps up to full 25.0 production in FY2019 20.0 – Saleable coal production for FY2
Slide 18: Maules Creek
Maules Creek For personal use only MINE DECLARED COMMERCIAL ON 1 JULY 2015 – Construction completed with capex $27 million less than original estimate of $767 million. ~$30m tail of capex left. – Operating at 6.0Mtpa in June 2015 quarter and increasing to 8.5Mtpa by December 2015 – Costs expected to
Slide 19: Narrabri - #1 LW mine in Australia
Narrabri - #1 LW mine in Australia For personal use only HIGHLY PRODUCTIVE LOW COST UNDERGROUND MINE – Record ROM and saleable coal Narrabri Saleable Coal Production (100%, 000's t) production in FY2015 8,000 7,000 – Record main and gate road 6,000 development of 19,800 metres ensures 5,000 longwall
Slide 20: Community contribution
Community contribution For personal use only MAJOR CONTRIBUTOR TO THE LOCAL COMMUNITY – Whitehaven has a policy of employing locally and over 75% of its employees live in the region around its mines and operations – The policy adopted for Maules Creek is to offer employment opportunities to local ab
Slide 21: Financial highlights
Financial highlights For personal use only SIGNIFICANT IMPROVEMENT IN OPERATIONAL OUTCOME AND CASH FLOW H2 H1 Profit and loss FY2015 FY2014 FY2015 FY2015 EBITDA before significant items 130.3 78.2 52.1 90.4 (A$’m) NPAT before significant items (10.7) 1.7 (12.4) (28.4) (A$m’s) Operating cash flow (A$
Slide 22: Outlook for next year
Outlook for next year For personal use only Improve safety performance Continue to ramp up and optimise performance of Maules Creek Further optimise Narrabri and complete development to support wider face Drive further cost reductions at each operation and return to profitability Begin to
Slide 23: Our goal
Our goal For personal use only To become Australia’s leading independent coal company 23 //2015 DB LEVERAGED FINANCE CONFERENCE
Slide 24: Thank you
For personal use only THANK YOU www.whitehavencoal.com.au
Slide 25: Appendices
For personal use only Appendices 25 //2015 DB LEVERAGED FINANCE CONFERENCE
Slide 26: Brief chronology
Brief chronology For personal use only WHITEHAVEN HAS GROWN THROUGH THE JUDICIOUS USE OF BOTH EQUITY AND DEBT Year Event 1999 Company Formed 2000 - 2006 Developed three small open cut coal mines 2007 Listed on the ASX 2007 Acquired Narrabri exploration tenement 2008 - 2009 Sold 30% JV interest in Na
Slide 27: Australian and US coal producers compared
Australian and US coal producers compared For personal use only Australian US – US coal exports into the Pacific Basin tend to be of lower coal Coal quality – Australia is a supplier of high quality bituminous coal quality than Australian exports into the basin – Almost all Australian coal exports a
Slide 28: Coal Resources - August 2015
WHITEHAVEN COAL LIMITED - COAL RESOURCES - AUGUST 2015 Measured Indicated Inferred Total Competent Report Tenement Resource Resource Resource Resources Person Date Resources Vickery Opencut Vickery Underground CL316/EL4699 EL5831/EL7407 EL8224/M L1464 M L1471 230 - 165 95 110 135 505 230 1 1 Jun-15
Slide 29: Reserves - Coal Reserves August 2015
Reserves For personal use only WHITEHAVEN COAL LIMITED - COAL RESERVES - AUGUST 2015 Recoverable Reserves Marketable Reserves Competent Report Tenement Proved Probable Total Proved Probable Total Person Date Vickery Opencut CL316/EL4699/EL7407 – 200 200 – 178 178 1 Mar-15 Rocglen Opencut M L1620 3.8
Slide 30: Vickery – Whitehaven's next project
Vickery – Whitehaven’s next project For personal use only WHICH IS BEING POSITIONED AS A ‘SHOVEL READY’ 8 MTPA PROJECT Approval granted by the NSW Government in September 2014 for a 4.5Mtpa open cut mine Location – About 25kms north of Gunnedah Resources and Reserves – Open cut Reserves of 200Mt wit
Whitehaven Coal — Deutsche Bank 23rd Annual Leveraged Finance Conference 2015 on 6ix