Whitehaven Coal Limited · ASX:WHC
Whitehaven Coal — FY2010 Earnings Presentation
48 slides from Whitehaven Coal's earnings presentation, Aug 24, 2010
Slide 1: ASX Company Announcement: FY2010 Results Presentation
24 August 2010 Australian Stock Exchange Company Announcements Dear Sir FY2010 RESULTS PRESENTATION Please find attached FY2010 Results Presentation which will be delivered by the Managing Director to analysts and the media later this morning. Yours faithfully Timothy Burt Company Secretary
Slide 2: Delivering Growth: Full Year FY 2010 Results
Whitehaven Coal Limited Delivering Growth Full Year FY 2010 Results Sydney, Australia 24 August 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 Full Year Results - August 2010
Slide 6: 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 7: 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 8: 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 $31.5 million plus 1,150 ha of land ► Accelerated exploration program with budget of
Slide 9: Contents
Contents ► Highlights ► Operating and financial results ► Status of growth plans ► Outlook 7 Full Year Results - August 2010
Slide 10: Coal sales – FY 2010
Coal sales – FY 2010 Equity Basis – 000t FY 2009 FY 2010 Change Gunnedah Operations 2,460 2,924 +19% Werris Creek 1,102 1,209 +10% Whitehaven Total 3,562 4,133 +16% 100% Basis – 000t FY 2009 FY 2010 Change Gunnedah Operations 2,939 3,361 +14% Werris Creek 1,102 1,209 +10% Whitehaven Total 4,041 4,57
Slide 11: Saleable coal production – FY 2010
Saleable coal production – FY 2010 Equity Basis – 000t FY 2009 FY 2010 Change Gunnedah Operations 1,690 2,200 +30% Werris Creek 1,107 1,280 +16% Whitehaven Total 2,797 3,480 +24% 100% Basis – 000t FY 2009 FY 2010 Change Gunnedah Operations 2,174 2,652 +22% Werris Creek 1,107 1,280 +16% Whitehaven To
Slide 12: Full year profitability – FY 2010
Full year profitability – FY 2010 Reported Financial Performance - A$ millions FY 2009 FY 2010 Revenue 489.3 406.8 NPAT before Significant Items 77.3 55.1 NPAT 244.2 114.9 Earnings per share (cents per share - diluted) 60.3 24.0 Interim dividend (cents per share - fully franked) 2.8 2.8 Underlying F
Slide 13: Full year cost of sales down 10% from last year
Full year cost of sales down 10% from last year A$/t Free-on-board (FOB) FY 2009 FY 2010 Coal Sales - 000t (equity basis, excl. purchased coal) 2,753 3,310 Average revenue - (excl. purchased coal & net of NSW royalties) 129.42 99.14 Average cost of sales 66.02 60.18 EBITDA 63.40 38.96 EBITDA Margin
Slide 14: Cash flow – FY 2010
Cash flow – FY 2010 A$ 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 15: 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 Current assets 355.5 502.2 Non-current receivables 98.3 37.2 Other non-current assets 553.2 811.9 Total assets 1,007.0 1,351.3 Current payables 64.8 12
Slide 16: Full year capex – FY 2010
Full year capex – FY 2010 Capital Investment - $ million FY 2009 FY 2010 Tarrawonga 1 1.3 2.4 Werris Creek 26.1 45.3 Rocglen 24.5 2.0 Sunnyside 16.8 2.2 Gunnedah CHPP 1.8 12.9 Total Open cuts 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
Slide 17: Contents
Contents ► Highlights ► Operating and financial results ► Status of growth plans ► Outlook 15 Full Year Results - August 2010
Slide 18: 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 19: 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 20: 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 21: Narrabri underground mine – a world class asset
Narrabri underground mine – a world class asset ► Coal resources of 850 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 22: Narrabri Stage 1 now producing
Narrabri Stage 1 now producing ► First CM production 28 June 2010 ► Second CM now underground ► Third CM due to go underground in November ► All CMs deployed on development for longwall installation, due in July- September 2011 quarter ► Gas drainage successful in reducing CO2 levels below required
Slide 23: First Narrabri coal railed in July
First Narrabri coal railed in July 21 Full Year Results - August 2010
Slide 24: Narrabri Stage 2 progressing well
Narrabri Stage 2 progressing well ► Stage 2 approval has been granted by the NSW Government ► Longwall ordered in September 2009, for delivery in early 2011 ► Ventilation shaft, CHPP and other key Stage 2 facilities designed, tendered, contracts awarded and construction underway ► Longwall currently
Slide 25: 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 program will continue to build up an inventory of dra
Slide 26: 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 (ie, 1 year’s production per panel) ► Potential for 12 Mt panels with top coal caving ► High productivity expected due to thi
Slide 27: 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 28: 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 29: 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 30: Ongoing growth in Resources & Marketable Reserves
Ongoing growth in Resources & Marketable Reserves Whitehaven Coal - JORC Resources Whitehaven Coal - JORC Marketable Reserves 1,800 350 1,600 300 1,400 250 1,200 Million Tonnes Million Tonnes 1,000 200 800 150 600 100 400 50 200 0 0 Resources Marketable Reserves 28 Full Year Results - August 2010
Slide 31: Vickery - a significant acquisition for Whitehaven
Vickery - a significant acquisition for Whitehaven ► Whitehaven recognised the value of Gunnedah Basin coal early and has built up a large resource base over 12 years ► Narrabri was the last large Exploration Licence (EL) issued under the old NSW system, i.e. without competitive tender ► Transaction
Slide 32: Vickery has a large coal inventory
Vickery has a large coal inventory ► An initial open cut resource (JORC) of 292.7 Mt has now been delineated at Vickery, with a 22.0 Mt underground resource. This is in addition to the 15.5 Mt Bluevale open cut resource ► Coal seams at Vickery contain a range of soft coking coal, semi-soft coking co
Slide 33: Ongoing exploration program
Ongoing exploration program ► Whitehaven has a very large tenement holding between Gunnedah and Boggabri (including Vickery) which has not been explored fully ► Substantial potential exists to increase coal resources and reserves, including significant metallurgical coal resources in the Vickery are
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 33 Full Year Results - August 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 - PORT CAPACITY BUILDUP 10,000 9,000 8,000 7,000 6,000 Thousand tonnes NCIG Stage 2F NCIG Stage 2AA 5,000 NCIG Stage 1 4,000 PWCS 3,000 2,000 1,000 0 35 Full Year Results - August 2010
Slide 38: NCIG Stage 1 now fully operational, but limited to Panamax ships
NCIG Stage 1 now fully operational, but limited to Panamax ships until late 2011 36 Full Year Results - August 2010
Slide 39: NCIG Stage 1 now fully operational, but limited to Panamax ships
NCIG Stage 1 now fully operational, but limited to Panamax ships until late 2011 37 Full Year Results - August 2010
Slide 40: NCIG Stage 1 now fully operational, but limited to Panamax ships
NCIG Stage 1 now fully operational, but limited to Panamax ships until late 2011 38 Full Year Results - August 2010
Slide 41: Contents
Contents ► Highlights ► Operating and financial results ► Status of growth plans ► Outlook 39 Full Year Results - August 2010
Slide 42: 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 open cut capacity in future from PORT CAPACITY - BY FY existing resources + Bluevale and 12,000 Vickery ► Total saleable prod
Slide 43: 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 over next 2 years, 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$596.5m at an average excha
Slide 44: Managing sales growth
Managing sales growth WHC Tonnage Commitments1 11,000 ► Advantages of high 10,000 quality coal and 9,000 flexibility in production 8,000 from existing open cut 7,000 mines 6,000 5,000 ► Forward coal sales 4,000 contracts support 3,000 WHC’s growth profile 2,000 1,000 ► Minimises production - and inf
Slide 45: Coal market outlook
Coal market outlook ► Coal demand growth remains strong ► Supply still constrained by infrastructure and ever-increasing “red tape” and “green tape” ► Contract coal prices – US$ FOB ► Hard coking coal Q1 $200/t....Q2 $225/t ► Newcastle semi-soft/PCI Q1 $167/t....Q2 $172/t ► Newcastle thermal ~$98/t
Slide 46: Growth plans are well funded
Growth plans are well funded Capacity for funding new opportunities Major Cash Needs A$ million ► Major capital needs are more Narrabri Stage 1 10 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 8 ► In addition, n
Slide 47: 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 48: Delivering Growth: Full Year FY 2010 Results
Whitehaven Coal Limited Delivering Growth Full Year FY 2010 Results Sydney, Australia 24 August 2010