Whitehaven Coal Limited · ASX:WHC
Whitehaven Coal — H1 FY2010 Earnings Presentation
42 slides from Whitehaven Coal's earnings presentation, Feb 24, 2010
Slide 1: ASX Company Announcement: Half Year Results Presentation
24 February 2010 Australian Stock Exchange Company Announcements HALF YEAR TO 31 DECEMBER 2009 – RESULTS PRESENTATION Please find attached WHC’s Half Year Results Presentation which will be delivered by the Managing Director to analysts and the media later this morning. Yours Faithfully Timothy Burt
Slide 2: Delivering Growth: First Half FY 2010 Results
Whitehaven Coal Limited Delivering Growth First Half FY 2010 Results Sydney, Australia 24 February 2010
Slide 3: 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 4: 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 5: Contents
Contents ► Highlights ► Operating and financial results ► Status of growth plans ► Outlook 3 Half Year Results - February 2010
Slide 6: First half financial highlights - FY 2010
First half financial highlights - FY 2010 ► Net profit after tax (NPAT) of $83.5 million1 ► Underlying NPAT (excluding Significant Items) of $27.1 million, up 35% ► Interim fully franked dividend of 2.8 cents per share2 ► Average cost of sales per tonne down 10% from last year ► EBITDA of $53.9 mill
Slide 7: First half operating highlights - FY 2010
First half operating highlights - FY 2010 ► Coal sales up 32% (equity basis) ► Saleable coal production up 50% (equity basis) ► All operations performed well in terms of safety, environmental management, production and cost control ► Expansion of saleable open-cut coal production to 5.5 Mtpa, by Q3
Slide 8: First half business development highlights - FY 2010
First half business development highlights - FY 2010 ► Coal Resources (JORC) increased by 56% to 1,190.4 Mt ► Marketable Coal Reserves (JORC) increased by 16% to 322.7 Mt ► Purchased the Vickery coal assets from Coal & Allied for $31.5 million plus 1,150 ha of land ► Accelerated exploration program
Slide 9: Contents
Contents ► Highlights ► Operating and financial results ► Status of growth plans ► Outlook 7 Half Year Results - February 2010
Slide 10: First half coal sales – FY 2010
First half coal sales – FY 2010 Equity Basis – 000t H1 - FY 2009 H1 - FY 2010 Change Gunnedah Operations 1,160 1,556 +34% Werris Creek 425 541 +27% Whitehaven Total 1,585 2,097 +32% 100% Basis – 000t H1 - FY 2009 H1 - FY 2010 Change Gunnedah Operations 1,400 1,786 +28% Werris Creek 425 541 +27% Whit
Slide 11: First half saleable coal production – FY 2010
First half saleable coal production – FY 2010 Equity Basis – 000t H1 - FY 2009 H1 - FY 2010 Change Gunnedah Operations 685 1,155 +69% Werris Creek 466 570 +22% Whitehaven Total 1,151 1,725 +50% 100% Basis – 000t H1 - FY 2009 H1 - FY 2010 Change Gunnedah Operations 949 1,394 +47% Werris Creek 466 570
Slide 12: First half profitability – FY 2010
First half profitability – FY 2010 Reported Financial Performance - A$ millions H1 - FY 2009 H1 - FY 2010 Revenue 275.7 198.5 NPAT before Significant Items 20.0 27.1 NPAT 201.5 83.5 Earnings per share (cents per share - diluted) 5.0 5.8 Interim dividend (cents per share - fully franked) 2.5 2.8 Unde
Slide 13: First half cost of sales down 10% from last year
First half cost of sales down 10% from last year A$/t FOB H1 - FY 2009 H1 - FY 2010 Coal Sales - 000t (equity basis, excl. purchased coal) 1,012 1,649 Average revenue - (excl. purchased coal & net of NSW royalties) 154.94 95.15 Average cost of sales 65.83 59.25 EBITDA 89.11 35.90 EBITDA Margin - % 5
Slide 14: First half cash flow – FY 2010
First half cash flow – FY 2010 A$ millions H1 - FY 2009 H1 - FY 2010 Cash generated from operations 31.4 36.1 Interest and tax payments (8.7) (89.0) Net cash provided by/(used) in operating activities 22.7 (52.9) Proceeds from sale of assets 41.7 86.1 Capital investment (excluding leasing) (76.2) (1
Slide 15: 31 December financial position
31 December financial position A$ millions Dec 31 - 2008 Dec 31 - 2009 Cash 76.6 232.6 Current receivables 172.4 251.7 Other current assets 53.1 90.2 Current assets 302.1 574.5 Non-current receivables 157.0 72.2 Other non-current assets 462.7 646.1 Total assets 921.8 1,292.8 Current payables 40.2 71
Slide 16: First half capex – FY 2010
First half capex – FY 2010 Capital Investment - $ million H1 - FY 2009 H1 - FY 2010 Tarrawonga 1 1.3 3.3 Werris Creek 26.1 25.0 Rocglen 24.5 1.7 Sunnyside 16.8 1.9 Gunnedah CHPP 1.8 0.1 Total Open-cuts 1 70.5 32.0 Narrabri 1 91.7 57.7 New coal train - 19.2 Exploration - 2.2 Land/other 4.3 3.2 Total
Slide 17: Contents
Contents ► Highlights ► Operating and financial results ► Status of growth plans ► Outlook 15 Half Year Results - February 2010
Slide 18: Coal Resources up 56%, Marketable Reserves up 16%
Coal Resources up 56%, Marketable Reserves up 16% COAL RESOURCES – FEBRUARY 2010 (100% Basis) Measured Indicated Inferred Total Mining District Resource Resource Resource Resources GUNNEDAH OPERATIONS Opencut 48.24 97.26 37.4 182.9 GUNNEDAH OPERATIONS Underground 8.44 40.29 62.1 110.8 WERRIS CREEK O
Slide 19: Bluevale (formerly Vickery) added to resources
Bluevale (formerly Vickery) added to resources ► Whitehaven recognised the value of Gunnedah Basin coal early and has built up a large resource base over 11 years ► Narrabri was the last large Exploration Licence (EL) issued under the old NSW system, i.e. without competitive tender ► Transactions si
Slide 20: Accelerated exploration program - $5m budget in 2010
Accelerated exploration program - $5m budget in 2010 ► Whitehaven has a very large tenement holding between Gunnedah and Boggabri (including Bluevale) which has not been explored fully ► Substantial potential exists to increase coal resources and reserves ► Exploration efforts are currently focussed
Slide 21: Bluevale (formerly Vickery) has a large coal inventory
Bluevale (formerly Vickery) has a large coal inventory ► Exploration in the Bluevale area is focussed on: ► extending the known Bluevale open-cut area ► defining underground resources and reserves ► Coal seams being explored include the Shannon Harbour, Stratford, Bluevale, Cranleigh and Gundawarra
Slide 22: Expansion of open-cuts to 5.5 Mtpa saleable underway
Expansion of open-cuts to 5.5 Mtpa saleable underway ► 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 ► Tarrawonga Mine (WHC 70%) Reserves to support 15 – 20 year LOM
Slide 23: Gunnedah CHPP and rail loader being upgraded
Gunnedah CHPP and rail loader being upgraded ► Gunnedah CHPP (WHC 100%) ► Permitted to handle and rail 4.0 Mtpa saleable coal ► Being upgraded to handle planned 3.5 Mtpa saleable production from Tarrawonga, Rocglen & Sunnyside ► Remaining 2.0 Mtpa saleable open- cut coal will be crushed and loaded f
Slide 24: Narrabri underground mine development - Stage 1
Narrabri underground mine development - Stage 1 ► Coal resources of 854.6 Mt in single seam of 8-9 metres thickness ► Marketable reserves of ~199.9 Mt based on extracting the bottom 4.2 metre section of the seam ► Low ash, high energy, low sulphur PCI and thermal coals for the export market ► Saleab
Slide 25: Narrabri longwall mine plan
Narrabri longwall mine plan ► Seam thickness 8-9 metres ► 26 longwall panels ► Full panel length 4,000 metres ► 300 metre panel width ► 6 Mt panels at 4.2 metre mining height ► Potential for 12 Mt panels with top coal caving ► High productivity expected due to thickness and continuity of the coal se
Slide 26: Narrabri Mine – construction almost complete
Narrabri Mine – construction almost complete ► Kamilaroi Hwy Upgrade ► Earthworks & Rehab ► Access & Kurrajong Rds ► 66kv Transmission Line ► Rail Loop ► Ventilation Fans ► Industrial & Admin ► Mine Entries ► Sewerage Plant ► Boxcut ► Mining Equipment ► Crushing Plant ► Train Loadout ► Drift Constru
Slide 27: Drift drivage delayed by difficult ground conditions
Drift drivage delayed by difficult ground conditions ► Initial sandstone layer driven with road headers from the box cut ► Expected the hard dolerite layer to need drill & blast – this went to plan with good performance ► Underlying soft material expected to be good for road headers, but was too sof
Slide 28: Narrabri Stage 2 progressing well
Narrabri Stage 2 progressing well ► Stage 2 proposal lodged with the NSW Government for approval; progressing through the system as expected ► Longwall ordered in September 2009, for delivery in late 2010 ► Ventilation shaft, CHPP and other key Stage 2 facilities designed, tendered and ready to cons
Slide 29: Preliminary evaluation of top coal caving for Narrabri
Preliminary evaluation of top coal caving for Narrabri ► 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 resourc
Slide 30: Narrabri can produce PCI coal, up to 40% of ROM
Narrabri can produce PCI coal, up to 40% of 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 that ~40% of ~7.5%
Slide 31: Rail infrastructure to meet Whitehaven’s growth
Rail infrastructure to meet Whitehaven’s growth ► Whitehaven (60%) and Idemitsu (40%) sponsored RIC and ARTC investments which have increased rail track capacity north of Muswellbrook, to meet the needs of Whitehaven & Idemitsu ► In return, Whitehaven and Idemitsu have rights to track capacity north
Slide 32: Port infrastructure to meet Whitehaven growth
Port infrastructure to meet Whitehaven growth ► Newcastle Coal Infrastructure Group (“NCIG”) ► Whitehaven owns 11% of NCIG....Stage 1 is due to be commissioned in March ► Stage 1 capacity of 30 Mtpa will be available to NCIG members pro-rata to shareholding ► Stage 2 capacity of a further 36 Mtpa ex
Slide 33: NCIG first train arrival, February 2010
NCIG first train arrival, February 2010 31 Half Year Results - February 2010
Slide 34: NCIG first coal receival, February 2010
NCIG first coal receival, February 2010 32 Half Year Results - February 2010
Slide 35: Contents
Contents ► Highlights ► Operating and financial results ► Status of growth plans ► Outlook 33 Half Year Results - February 2010
Slide 36: Low-risk open cut production base with substantial growth from Narrabri
Low-risk open cut production base with substantial growth from Narrabri ► Four existing open-cut mines can produce up to ~5.5 Mtpa. More WHC - SALEABLE PRODUCTION CAPACITY VS PORT CAPACITY open-cut capacity in future from existing resources + Bluevale 12,000 ► Total saleable production capacity for
Slide 37: Managing sales and production growth
Managing sales and production growth ► Advantages of high quality coal & flexibility in production from existing open-cut mines ► Our forward coal sales contracts support WHC’s growth profile ► Our matrix of coal sales contracts & commitments minimises production and infrastructure risks ► A$ forwar
Slide 38: Fixed price coal contracts and fixed FX status
Fixed price coal contracts and fixed FX status ► “Legacy” thermal coal contracts of 5.2 Mt will remain over the FY 2011 and FY 2012 years with an average fixed price of US$69.14/t ► Whitehaven currently has a total FX fixed position of US$408.7m at an average exchange rate of 0.7784 US$:A$ ► 100% of
Slide 39: Coal market outlook
Coal market outlook ► Coal demand growth remains strong ► Supply still constrained by infrastructure and ever-increasing “red tape” & “green tape” ► Contract coal prices in 2009 – US$ FOB ► Hard coking coal ~$128/t ► Newcastle semi-soft/PCI ~$80/t ► Newcastle thermal ~$70/t ► Spot coal prices – US$
Slide 40: Growth plans are well funded
Growth plans are well funded Capacity for funding new opportunities Major Cash Needs A$ million ► Major capital needs are more Narrabri Stage 1 20 than covered by cash on hand Narrabri Stage 2 210 and proceeds from the sale of Narrabri JV interests Open-cut expansion 50 Coal train 20 ► In addition,
Slide 41: Looking further ahead
Looking further ahead ► Strong fundamental growth in demand for coal remains (both metallurgical and thermal) ► Whitehaven is well positioned ► Large resources and reserves of high quality coal ► Efficient, flexible open-cut mines, competitive costs ► Narrabri to provide substantial growth ► Increas
Slide 42: Delivering Growth: First Half FY 2010 Results
Whitehaven Coal Limited Delivering Growth First Half FY 2010 Results Sydney, Australia 24 February 2010