Whitehaven Coal Limited · ASX:WHC
Whitehaven Coal — Merger or Acquisition (October 2023)
37 slides from Whitehaven Coal's merger presentation, Oct 18, 2023
Slide 1: Transforming Whitehaven Coal
Transforming Whitehaven Coal A compelling, materially earnings accretive acquisition Investor Presentation 18 October 2023 Authorised for release by the Board of Whitehaven Coal Limited Investor contact Media contact Kylie FitzGerald Michael van Maanen +61 2 8222 1155, +61 401 895 894 +61 2 8222 117
Slide 2: Disclaimer
Disclaimer This presentation contains information in a summary form and does not purport to be complete. It is qualified by any other information that Whitehaven discloses to the ASX. FORWARD LOOKING STATEMENTS Statements contained in this material, particularly those regarding the possible or assum
Slide 3: Contents
Contents 1. Transaction overview 2. Strategic rationale 3. Asset overview 4. Capital allocation and strategy
Slide 4: 1. Transaction overview
1. Transaction overview
Slide 5: Transaction summary
Transaction summary A highly attractive acquisition that transforms Whitehaven into the leading ASX-listed metallurgical coal producer ▪ Whitehaven to acquire 100% of the Blackwater and Daunia metallurgical coal mines from BMA for an aggregate cash consideration of US$3.2 billion1 comprising: – US$2
Slide 6: Overview of acquired assets
Overview of acquired assets Established metallurgical coal mining operations with combined ROM production of ~20 Mtpa sold via export markets Daunia Blackwater Product type and mix1 ~80% HCC / ~20% PCI ~65 - 70% HCC / ~25 - 30% SSCC Mine type and method Open cut / truck & shovel Open cut / draglines
Slide 7: Another transformational acquisition
Another transformational acquisition Whitehaven has delivered exceptional growth organically and via M&A Managed ROM production (Mt) ROCGLEN and ~40 MAULES CREEK SUNNYSIDE mine production commences closures MAULES CREEK Production impacted by a combination NARRABRI of COVID, labour supply, Narrabri
Slide 8: Snapshot of expanded pro-forma portfolio
Snapshot of expanded pro-forma portfolio Whitehaven will be the leading ASX-listed metallurgical coal producer1 Pro-forma structure Port of Hay Point Dalrymple Bay Terminal 100% 100% Daunia Blackwater NSW Queensland Blackwater RG Tanna Coal Terminal Maules Creek Narrabri Tarrawonga Blackwater Daunia
Slide 9: Transaction details
Transaction details Consideration and key conditions ▪ Whitehaven to acquire 100% of the Blackwater and Daunia metallurgical coal mines from BMA for an aggregate cash consideration of US$3.2 billion1 comprising: – US$2.10 billion consideration payable on completion Consideration – US$500 million, US
Slide 10: Sources and uses
Sources and uses A prudent, low-risk funding structure that preserves Whitehaven’s balance sheet strength and flexibility ▪ Initial acquisition funded via a combination of available cash and a bridge facility Uses of funds ▪ Bridge facility expected to be replaced expeditiously with US$m longer term
Slide 11: 2. Strategic rationale
2. Strategic rationale
Slide 12: Strategic rationale
Strategic rationale This is a compelling and transformational acquisition aligned to Whitehaven's strategy 1 Highly attractive and earnings accretive acquisition 2 Provides significant value upside including strategic growth options 3 Transforms Whitehaven into a metallurgical coal producer, in line
Slide 13: Highly attractive and earnings accretive acquisition
1 Highly attractive and earnings accretive acquisition EV / FY23 EBITDA EV / FY24F EBITDA Consideration implies 3.6x 1.8x EBITDA multiple at Highly attractive acquisition multiple current spot pricing 2.9x ▪ 2.5x EV / EBITDA on a trailing basis 2.7x 2.5x ▪ 1.8x EV / EBITDA at spot pricing ▪ EV / EBI
Slide 14: Highly attractive and earnings accretive acquisition (cont.)
1 Highly attractive and earnings accretive acquisition (cont.) FY24F pro-forma EPS accretion1 Materially earnings accretive ▪ Expected to be materially earnings accretive in the first year of acquisition1 ▪ ~70% EPS accretive on broker consensus prices ▪ ~160% EPS accretive on spot prices Quality of
Slide 15: Provides significant value upside including strategic growth options
2 Provides significant value upside including strategic growth options Blackwater asset improvement Potential additional saleable production above expected average of 12-13Mtpa via: ▪ Optimisation of existing dragline sequence and pre-strip to allow access to latent dragline capacity ▪ Increasing of
Slide 16: Transforms Whitehaven into a metallurgical coal producer
3 Transforms Whitehaven into a metallurgical coal producer, in line with strategy TRANSFORMS PORTFOLIO1 Revenue by coal type1,3 ($m) ▪ Revenue from metallurgical coal sales from <20% to ~70% FY24F pro-forma1 FY24F pro-forma Whitehaven 10-year average FY24F pro-forma ▪ Repositions Whitehaven as Austr
Slide 17: Transforms Whitehaven into a metallurgical coal producer (cont.)
3 Transforms Whitehaven into a metallurgical coal producer, in line with strategy (cont.) Total Coal Resources3 (Mt, % equity basis) Recoverable Reserves3 (Mt, % equity basis) LONG-LIFE ASSETS1 +75% ▪ Blackwater mine life could extend beyond 50 years2 4,563 ▪ Daunia production expected until FY40 ▪
Slide 18: Delivers scale and diversification benefits
4 Delivers scale and diversification benefits ROM production vs Australian metallurgical coal peers (Mt, 100% basis)3 FY24F pro-forma relative to FY23 actual production >20Mt SCALE BENEFITS ▪ Doubling of managed ROM production to ~40.0 ~40Mtpa1 ▪ Becomes Australia’s leading ASX listed metallurgical
Slide 19: Delivers scale and diversification benefits (cont.)
4 Delivers scale and diversification benefits (cont.) DIVERSIFICATION ENHANCES OPPORTUNITIES & DE-RISKS Diversification of revenue by product type ▪ Product diversification – expanded product offering via addition of FY24F Whitehaven standalone1 FY24F Whitehaven pro-forma2 HCC and SHCC, and increase
Slide 20: Delivers scale and diversification benefits (cont.)
4 Delivers scale and diversification benefits (cont.) A balanced ESG approach through diversification DIVERSIFICATION DELIVERS FINANCIAL MARKET BENEFITS Supporting economic ▪ Metallurgical coal companies trade at a premium to thermal development through coal companies metallurgical coal ▪ Improved i
Slide 21: Strengthens and expands position in attractive growth segments
5 Strengthens and expands Whitehaven’s position in attractive growth segments of the market Pro-forma1 sales volumes Asia seaborne demand for metallurgical coal2 (Mt) ▪ Steel is essential for economic by geography 300 Japan development, and metallurgical coal is a 250 China critical component of bla
Slide 22: 3. Asset overview
3. Asset overview
Slide 23: Daunia – at a glance
A Daunia – at a glance Established mining operation expected to produce ~4.9Mtpa of saleable product for seaborne export Mined area ▪ Produces high quality metallurgical coal for seaborne market Future potential – Low vol hard coking coal (HCC) mining – Low vol pulverised injection coal (PCI) ▪ Long
Slide 24: Daunia – operational & financial overview
A Daunia – operational & financial overview Average ROM production of 6.0Mtpa and saleable production of 4.9Mtpa anticipated over the next 5 years1 ROM production (Mt)1,2,3 Saleable production (Mt)1,2, 3 Historical average realised price (A$/t) FY24F - FY28F Average 6.0 FY24F - FY28F Average 4.9 FY2
Slide 25: Daunia – operational & financial overview (cont.)
A Daunia – operational & financial overview (cont.) Unit costs forecast to return to historical levels as strip ratio reduces and production returns to historical levels Product mix and price vs benchmark (%) FOB cash costs (A$/t)1,2 Capex (A$m)1,2 FY24F - FY28F Average 122 FY24F - FY28F Average 110
Slide 26: Daunia – embedded automated haulage & infrastructure
A Daunia – embedded automated haulage & infrastructure Mining & processing supported by state of the art infrastructure with over US$2.3bn invested to date Mining Fleet Site Infrastructure Logistics Network ▪ More than US$2.3bn of capital ▪ Modern, standardised fleet, ▪ Tier 1, modern site ▪ Strong,
Slide 27: Daunia – rail and port overview
A Daunia – rail and port overview Daunia comes with 4.7 Mtpa of contracted rail and port capacity for export via DBT Map of Daunia port and rail arrangements ▪ Port capacity with DBT Export coal is loaded onto trains at the Port of Abbot Point Legend Red Mountain train loadout facility (shared with
Slide 28: Blackwater – at a glance
B Blackwater – at a glance The second largest open-cut metallurgical coal mine in the Bowen Basin ▪ Produces high quality metallurgical coal for the seaborne export market – low-ash (8.5-9.5%), low-sulphur (0.40-0.42%), metallurgical coal Sagittarius Pit (HCC, SSCC) – export quality thermal coal Air
Slide 29: Blackwater – operational & financial overview
B Blackwater – operational & financial overview ROM production of 14.8Mtpa and average salable production of 12.4Mtpa anticipated over the next 5 years1 ROM production (Mt)1,2,3 Saleable production (Mt)1,2,3 Historical average realised price (A$/t) FY24F - FY28F Average 14.8 FY24F - FY28F Average 12
Slide 30: Blackwater – operational & financial overview (cont.)
B Blackwater – operational & financial overview (cont.) FOB unit costs forecast to return to historic levels, with cost savings opportunities to improve unit economics Product mix & price vs benchmark (%) FOB cash costs (A$/t)1,2 Capex (A$m)1,2 FY24F - FY28F Average 119 FY24F - FY28F Average 168 Pro
Slide 31: Blackwater – rail and port overview
B Blackwater – rail and port overview Blackwater has extensive, well capitalised rail and port infrastructure Blackwater port and rail arrangements ▪ Blackwater uses the Blackwater Rail System to transport to RG Tanna Coal Terminal (RGTCT) for all exports Legend ▪ Export coal loaded onto trains at t
Slide 32: Blackwater and Daunia – rehabilitation
Blackwater and Daunia – rehabilitation Whitehaven has a strong reputation of responsible and effective mine rehabilitation Daunia and Blackwater are long-life mines that are well-positioned to meet rehabilitation commitments Blackwater Daunia ▪ Current Estimated Rehabilitation Cost (ERC) ▪ Current E
Slide 33: 4. Capital allocation and strategy
4. Capital allocation and strategy
Slide 34: Delivering our strategy through disciplined risk management and capital allocation
We are delivering our strategy through a disciplined approach to risk management and capital allocation Our strategy is to own and sustainably operate large, cost-efficient mines that support economic development and the global energy transition. A core pillar of our strategy has been to increase ex
Slide 35: Capital allocation framework – current priorities
Capital allocation framework – current priorities Allocation of capital will be reviewed in light of the acquisition Operating cash flows 1 2 3 Maintain & optimise Retain cash / maintain Return to shareholders operations balance sheet strength Dividends Buy-backs Includes capital expenditure for ear
Slide 36: The acquisition has been made using conservative price assumptions
The acquisition has been made using conservative price assumptions Metallurgical coal prices (US$/t)2 $700 ▪ Whitehaven adopted conservative $600 long-term coal price forecasts in its bid valuation $500 ▪ The acquisition is attractive at broker $400 PHCC consensus prices, which are materially below
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