Whitehaven Coal Limited · ASX:WHC
Whitehaven Coal — Shareholder Meeting (October 2010)
47 slides from Whitehaven Coal's shareholder meeting presentation, Oct 29, 2010
Slide 1: ASX cover letter for AGM addresses
29 October 2010 The Manager, Listings Australian Securities Exchange Company Announcements office Via ASX Online Dear Sir, We attach copies of the Chairman’s Address and Managing Director’s Presentation which will be delivered at the Company’s Annual General Meeting being held at 11.00am today. Your
Slide 2: Chairman's Address
October 29, 2010 Whitehaven Coal Limited AGM – 29 October, 2010 Chairman’s Address Ladies & Gentlemen, I’ll now discuss the company’s performance for the year before handing over to Tony who will provide you with a detailed presentation on Whitehaven’s operational performance and growth prospects. T
Slide 3: Narrabri
Narrabri As you are aware, Narrabri Stage 1 development is complete with a final Stage 1 cost of $227m, as previously reported. I congratulate all of the individuals who contributed to bringing this modern, safe underground development into production. The first of the mine’s continuous miners began
Slide 4: Community contributions and Cobbora Project
In addition, our operations have contributed or agreed to commit more than $8.5 million to community projects as well as numerous local charities and organisations. Our decision to invest in these projects has been based on consultation with local government and our desire that such contributions sh
Slide 5: Delivering Growth: Presentation to 2010 AGM
Whitehaven Coal Limited Delivering Growth Presentation to 2010 AGM Sydney, Australia 29 October 2010
Slide 6: 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 7: 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 8: Contents
Contents ► Highlights ► Operating and financial results ► Status of growth plans ► Outlook 4 Annual General Meeting - October 29, 2010
Slide 9: Highlights - FY 2010
Highlights - FY 2010 ► Net profit after tax (NPAT) of $114.9 million1 ► Underlying NPAT (excluding Significant Items) of $55.1 million ► Final fully franked dividend of 2.8 cents per share2 ► Average cost of sales per tonne down 10% from last year ► EBITDA of $108.8 million, including $20.2 million
Slide 10: Operating highlights - FY 2010
Operating highlights - FY 2010 ► Coal sales up 16% (equity basis) ► Saleable coal production up 24% (equity basis) ► All open cut operations performed very well in terms of safety, environmental management, production and cost control ► Expansion of saleable open cut coal production to 5.5 Mtpa is w
Slide 11: Business development highlights - FY 2010
Business development highlights - FY 2010 ► Coal Resources (JORC) increased by 114% to 1,632.9 Mt ► Marketable Coal Reserves (JORC) increased by 14% to 318.1 Mt ► Purchased Vickery coal assets from Coal & Allied for $31.5 million plus 1,150 ha of land ► Narrabri Stage 2 project approval received and
Slide 12: Contents
Contents ► Highlights ► Operating and financial results ► Status of growth plans ► Outlook 8 Annual General Meeting - October 29, 2010
Slide 13: Coal sales and production – FY 2010
Coal sales and production – FY 2010 Coal sales – 000t FY 2009 FY 2010 Change 100% Basis 4,041 4,570 +13% Equity Share 3,562 4,133 +16% Saleable coal production – 000t FY 2009 FY 2010 Change 100% Basis 3,281 3,933 +20% Equity Share 2,797 3,480 +24% Saleable Coal Yield 92% 93% 9 Annual General Meeting
Slide 14: Full year profitability – FY 2010
Full year profitability – FY 2010 Reported Financial Performance - A$ millions FY 2009 FY 2010 Revenue 489.3 406.8 EBITDA 136.3 108.8 NPAT before Significant Items 77.3 55.1 Net profit after tax on sale of Narrabri JV interests 184.6 80.0 Other Significant Items after tax (17.7) (20.2) Reported NPAT
Slide 15: Full year cost of sales down 10% from last year
Full year cost of sales down 10% from last year A$/t Free-on-board (FOB) FY 2009 FY 2010 Coal Sales - 000t (equity basis, excl. purchased coal) 2,753 3,310 Average revenue - (excl. purchased coal & net of NSW royalties) 129.42 99.14 Average cost of sales 66.02 60.18 EBITDA 63.40 38.96 EBITDA Margin
Slide 16: Cash flow – FY 2010
Cash flow – FY 2010 A$ millions FY 2009 FY 2010 Cash generated from operations 135.6 69.3 Interest and tax payments (13.0) (108.8) Net cash provided by/(used) in operating activities 122.7 (39.5) Proceeds from sale of assets 59.0 100.7 Capital investment (130.7) (245.7) Other investing activities 11
Slide 17: 30 June financial position
30 June financial position A$ millions June 30 - 2009 June 30 – 2010 Cash 131.2 141.0 Current receivables 173.6 289.2 Other current assets 50.8 72.0 Non-current assets 651.5 849.1 Total assets 1,007.0 1,351.3 Current interest bearing loans and borrowings 33.4 37.3 Other current liabilities 179.7 187
Slide 18: Full year capex – FY 2010
Full year capex – FY 2010 Capital Investment - $ million FY 2009 FY 2010 Open cut mines 1 70.5 64.8 Narrabri 1 91.7 126.6 New coal train - 35.5 Exploration - 1.5 Purchase Vickery - 31.9 Land/other 4.3 7.7 Total Whitehaven 1 166.5 268.0 Note 1. Equity share 14 Annual General Meeting - October 29, 201
Slide 19: Contents
Contents ► Highlights ► Operating and financial results ► Status of growth plans ► Outlook 15 Annual General Meeting - October 29, 2010
Slide 20: Growth of our existing business continues
Growth of our existing business continues Saleable Coal Production - Equity Basis 6,000 5,000 4,000 000 tonnes 3,000 2,000 1,000 0 Actual Estimates Note:The estimate for FY 2011 relates to planned future events and expectations and as such involves known and unknown risks and uncertainties. Please r
Slide 21: Expansion of open cut mines to 5.5 Mtpa in place
Expansion of open cut mines to 5.5 Mtpa in place ► 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 22: Gunnedah CHPP and load-out upgrade almost complete
Gunnedah CHPP and load-out upgrade almost complete ► Gunnedah CHPP and rail load- out (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
Slide 23: Narrabri underground mine – a world class asset
Narrabri underground mine – a world class asset ► 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 for the export market
Slide 24: Narrabri Stage 1 now producing
Narrabri Stage 1 now producing ► First CM production 28 June 2010 ► Second CM now underground ► Third and fourth CMs due to go underground in February ► All CMs deployed on development for longwall installation, due end 2011 ► Gas drainage successful in reducing CO2 levels below required outburst th
Slide 25: Narrabri mining conditions are good
Narrabri mining conditions are good Development roadway dimensions 5.4m wide x 3.5m high Overcast site within the coal seam, which is 9m high 21 Annual General Meeting - October 29, 2010
Slide 26: First Narrabri coal railed in July
First Narrabri coal railed in July 22 Annual General Meeting - October 29, 2010
Slide 27: Narrabri development for longwall #1
Narrabri development for longwall #1 ► Underground mining conditions are good, gas drainage is working well, mining and surface equipment is working well ► Gas drainage drilling along LW#1 has not identified any geological features ► Our current problem is recruiting enough experienced UG miners to
Slide 28: Narrabri Stage 2 progressing well
Narrabri Stage 2 progressing well ► Stage 2 approval granted by the NSW Government in August ► Longwall ordered in September 2009, delivery has commenced ► Ventilation shaft, CHPP and other key Stage 2 facilities now under construction ► Longwall currently scheduled to be installed late in 2011 for
Slide 29: Pre-drainage of gas using SIS and UIS methods
Pre-drainage of gas using SIS and UIS methods in advance of longwall development and extraction ► 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 continue to build up an inventory of drained coa
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: Future potential for top coal caving
Future potential for top coal caving ► 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 recovery (+300 M
Slide 32: Coal Resources up 114%, Marketable Reserves up 14%
Coal Resources up 114%, Marketable Reserves up 14% COAL RESOURCES – AUGUST 2010 (100% Basis) Measured Indicated Inferred Total Mining District Resource Resource Resource Resources GUNNEDAH OPERATIONS Open cut/Underground 94.87 301.69 339.8 736.3 WERRIS CREEK Open cut 29.96 4.79 2.7 37.4 NARRABRI Und
Slide 33: Vickery has a large resource of high quality coal
Vickery has a large resource of high quality coal ► Initial open cut (OC) resource (JORC) of 272.7 Mt, plus a 22.0 Mt underground resource ► Coal seams at Vickery contain a range of semi- soft coking and high quality thermal coals ► Previous coal quality analysis indicates a 95% yield of low ash (~6
Slide 34: Rail infrastructure to meet Whitehaven's growth
Rail infrastructure to meet Whitehaven’s growth ► 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, Whitehaven and Idemitsu
Slide 35: Rail infrastructure to meet Whitehaven's growth
Rail infrastructure to meet Whitehaven’s growth 31 Annual General Meeting - October 29, 2010
Slide 36: 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 37: Whitehaven's existing port capacity entitlement
Whitehaven’s existing port capacity entitlement WHC – EXPECTED PORT CAPACITY BUILDUP 1 10,000 9,000 NCIG Stage 2F 8,000 7,000 NCIG Stage 2AA 6,000 Thousand tonnes 5,000 NCIG Stage 1 4,000 3,000 PWCS 2,000 1,000 0 1. These estimates relate to planned future events and expectations and as such involve
Slide 38: NCIG Stage 1 now fully operational
NCIG Stage 1 now fully operational, but limited to Panamax ships until late 2011 34 Annual General Meeting - October 29, 2010
Slide 39: Contents
Contents ► Highlights ► Operating and financial results ► Status of growth plans ► Outlook 35 Annual General Meeting - October 29, 2010
Slide 40: 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 OC mines can WHC - SALEABLE PRODUCTION CAPACITY VS produce up to ~5.5 Mtpa for 20 years PORT CAPACITY 1 - BY FY ► Total WHC saleable production 16,000 capacity expected to be ~11.5 Mtpa by FY 20
Slide 41: Potential to produce up to 40% metallurgical coal
Potential to produce up to 40% metallurgical coal SALEABLE PRODUCTION CAPACITY METALLURGICAL & THERMAL COAL ► Currently producing 80% 16,000 metallurgical coal from Tarrawonga and 15% 14,000 from Werris Creek 12,000 Thermal ► Indications are that Thousand Tonnes Narrabri can produce up 10,000 to 40%
Slide 42: Fixed price coal contracts and fixed FX status
Fixed price coal contracts and fixed FX status ► “Legacy” thermal coal contracts of 5.38 Mt remain during FY 11 and FY 12, average price US$68.35/t. Otherwise, US$ coal prices are currently only fixed for the short term ► Whitehaven currently has a total FX fixed position of US$507m at an average ex
Slide 43: Coal market outlook
Coal market outlook ► Demand for metallurgical and thermal coal remains strong ► Supply still constrained by infrastructure and ever-increasing “red tape” and “green tape” ► Current spot coal prices – US$ FOB ► Hard coking coal ~$200/t ► Newcastle semi-soft/PCI ~$140/t ► Newcastle thermal ~$102/t ►
Slide 44: Growth plans are well funded
Growth plans are well funded Capacity to fund new opportunities Major Cash Needs A$ million ► Major capital needs are more Narrabri Stage 2 210 than covered by cash on hand and proceeds from the sale of Open cut expansion 50 Narrabri JV interests Other 50 ► In addition, net cash flow from 310 operat
Slide 45: 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 ► Mix of metallurgical and thermal coal products ► Efficient, flexible open cut mines, competitive costs ►
Slide 46: Possible corporate transaction?
Possible corporate transaction? ► As reported to shareholders in August, Whitehaven had discussions with third parties in relation to potential corporate transactions, following unsolicited approaches. These discussions are preliminary and incomplete ► In view of the ongoing interest being shown in
Slide 47: Delivering Growth: Presentation to 2010 AGM
Whitehaven Coal Limited Delivering Growth Presentation to 2010 AGM Sydney, Australia 29 October 2010