Whitehaven Coal Limited · ASX:WHC
Whitehaven Coal — Morgan Stanley Presentation, Sydney (May 2010)
38 slides from Whitehaven Coal's conference presentation, May 4, 2010
Slide 1: Delivering Growth – Morgan Stanley Presentation
Whitehaven Coal Limited Delivering Growth Morgan Stanley Presentation Sydney, Australia 4 May 2010
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
Contents ► Overview ► Recent operating and financial results ► Status of growth plans ► Outlook 3 Morgan Stanley - 4 May 2010
Slide 5: A snapshot
A snapshot ASX listed company “WHC”; market capitalisation ~A$2.4 billion Large coal resources in the Gunnedah Basin (refer ASX release 23rd February) Superior coal quality: PCI + low-ash, low-sulphur, high energy thermal coals First mover and major coal producer/developer in the Gunnedah Basin Sale
Slide 6: Whitehaven is the leading coal producer and developer in the Gunnedah Basin
Whitehaven is the leading coal producer and developer in the Gunnedah Basin ► 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 competi
Slide 7: Experienced managers/owners
Experienced managers/owners Director/Title Experience John Conde AO +30 years commercial experience ► Directors have extensive Non-Executive Chairman coal industry experience. Neil Chatfield +25 years in transport and resources Non-Executive Director industries ► Directors are proven mine developers
Slide 8: Contents
Contents ► Overview ► Recent operating and financial results ► Status of growth plans ► Outlook 7 Morgan Stanley - 4 May 2010
Slide 9: Coal production and sales are growing rapidly
Coal production and sales are growing rapidly ► Saleable coal production and coal sales have been growing rapidly Saleable Coal Production 1. since WHC was listed on the ASX 7,000 in June 2007 6,000 ► Four existing open-cut mines will produce around ~5.5 Mtpa saleable coal in FY 11 following 5,000 t
Slide 10: Recent business development highlights
Recent business development highlights ► Coal Resources and Marketable Coal Reserves (JORC) increased substantially (refer ASX release 23 February) ► Purchased the Vickery coal assets from Coal & Allied for $31.5 million plus 1,150 ha of land ► Accelerated exploration program with budget of $5 milli
Slide 11: 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 12: 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 $53.9 mill
Slide 13: 31 December 2009 financial position
31 December 2009 financial position A$ 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
Slide 14: Contents
Contents ► Overview ► Recent operating and financial results ► Status of growth plans ► Outlook 13 Morgan Stanley - 4 May 2010
Slide 15: Open-cut expansion to 5.5 Mtpa saleable underway
Open-cut expansion 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 Perm
Slide 16: 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 17: Narrabri underground mine development
Narrabri underground mine development ► 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 ► Saleable coal yi
Slide 18: 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 19: Narrabri Stage 1 construction almost complete
Narrabri Stage 1 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 Constr
Slide 20: 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 construction
Slide 21: 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 22: 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 show that substantial quantities of PCI coal can be produced ► By adding a dense-medium cyclone (DMC) to the planned Stage 2 CHPP, indications are that ~40% of ~7.5% ash
Slide 23: Significant exploration program, targeting Bluevale
Significant exploration program, targeting Bluevale ► 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 24: 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 25: 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 26: New Whitehaven coal train now being delivered
New Whitehaven coal train now being delivered 25 Morgan Stanley - 4 May 2010
Slide 27: Train being assembled at Narrabri loop
Train being assembled at Narrabri loop 26 Morgan Stanley - 4 May 2010
Slide 28: 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 now being commissioned ► Stage 1 capacity of 30 Mtpa will be available to NCIG members pro-rata to shareholding ► Stage 2 capacity of a further 36 Mtpa expected to
Slide 29: NCIG now operational & completing commissioning
NCIG now operational & completing commissioning 28 Morgan Stanley - 4 May 2010
Slide 30: NCIG despatched its first ship in March
NCIG despatched its first ship in March 29 Morgan Stanley - 4 May 2010
Slide 31: Contents
Contents ► Overview ► Recent operating and financial results ► Status of growth plans ► Outlook 30 Morgan Stanley - 4 May 2010
Slide 32: Low-risk open cut production base with substantial growth from Narrabri
In summary - 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
Slide 33: 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 34: 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 35: 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 ~$70/t ► Contract coal prices fo
Slide 36: Growth plans are well funded
Growth plans are well funded Capacity for funding new opportunities Major Cash Needs A$ 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 37: 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 38: "Henry tax" - a blow to investor confidence
“Henry tax” - a blow to investor confidence ► The new Resources Rent Tax raises significant and very real concern in relation to Australia's sovereign risk and the future of our mining industry ► Regardless of the detail, the Federal Government has sent a signal to the global investment community th
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