Whitehaven Coal Limited · ASX:WHC
Whitehaven Coal — H1 FY2014 Earnings Presentation
36 slides from Whitehaven Coal's earnings presentation, Feb 26, 2014
Slide 1: First Half Results FY2014
Whitehaven Coal Limited First Half Results FY2014 Sydney, Australia 26 February 2014
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: First Half Results FY2014
First Half Results FY2014 Key Themes and Safety Summary Financials Costs Operations and Capex Maules Creek Progress Investment Proposition Conclusion First Half FY2014 Results 3
Slide 4: Key themes
Key themes Strong growth in revenue, margins and earnings reflect major turnaround Strong operating cash flows funding operations, debt service costs, sustaining capex and contributing to development projects Unit costs down 10% driven by increased mine efficiency and improved utilisation of rail an
Slide 5: Safety performance
Safety performance Safety statistics at Narrabri remains significantly below NSW coal industry averages Performance at the open cut mines beginning to improve Note: Data includes WHC employees and contractors at all mine sites, Gunnedah CHPP and Corporate office. LTIFR refers to lost time injury fre
Slide 6: Financial highlights
Financial highlights Headlines HY14 HY13 Comment on HY14 Increase driven by 48% increase in sales EBITDA before significant items ($’m) 50.8 6.0 volume, primarily due to Narrabri ramp up, and reduced unit costs per tonne HY14 significant items relate to Sunnyside EBITDA including significant items (
Slide 7: Costs trending down
Costs trending down H1 H2 H1 (1) On a like for like basis mine coal sales have FY2014 FY2013 FY2013 (1) increased 63% over the same period last year, driven by the doubling of Narrabri Coal Sales (equity basis, excl. purchased coal) '000t 4,302 3,355 (3) 2,639 production. The coal sales mix for the
Slide 8: Delivering on targets
Delivering on targets TARGETS OUTCOME Improve safety performance at all operations Safety statistics showing improvement Production records at Narrabri and open cut mines on Ensure current operations are performing to plan plan Continue to reduce FOB costs Costs continued to reduce across the mine p
Slide 9: Coal sales - on target
Coal sales - on target Strong performance by the Narrabri Mine resulted in record sales for the half Purchased coal sales as a proportion of total sales have declined as logistical issues are resolved and production increases Equity Basis – 000t H1 FY2014 H1 FY2013 Change Open Cuts (including purcha
Slide 10: Saleable coal production - on target
Saleable coal production - on target Excellent performance by the longwall at Narrabri increased Whitehaven production by 37%, achieving a new half year record for the company Open cut production on plan Equity Basis – 000t H1 FY2014 H1 FY2013 Change Open Cuts 2,042 2,053 -1% Narrabri 2,039 929 119%
Slide 11: Narrabri exceeding expectations
Narrabri exceeding expectations Record ROM coal production of 3.29Mt for the half with 193kt produced in a single week. Saleable coal Narrabri HY Saleable Coal Production production was 2.91Mt (managed) (000's t) 3,500 Completed the first longwall relocation on schedule 3,000 early in the half 2,500
Slide 12: Disciplined allocation of capital
Disciplined allocation of capital Capital Investment - $ Million H1 FY2014 H1 FY2013 Sustaining capex Mine Sustaining Capital Sustaining capex at the operating mines has been maintained at minimum levels without compromising Open Cuts 5.1 6.9 production Narrabri 2.5 15.5 Sustaining capex during H1 F
Slide 13: Narrabri development costs
Narrabri development costs Narrabri Development Costs - $ Millions H1 FY2014 H1 FY2013 Longwall “float” remains at a comfortable level to Narrabri cash development costs 36.3 61.2 ensure longwall mining continuity Reduction in Narrabri development costs reflect Development costs amortisation charge
Slide 14: Capital management remains a key focus
Capital management remains a key focus 31-Dec 2013 30-Jun 2013 Increase in interest bearing liabilities comprises: $’m $’m • Drawings of $30.0 million from the corporate debt facility to fund capital expenditure on the Maules Cash on hand 97.7 110.5 Creek development. • New finance leases of $56.8 m
Slide 15: Maules Creek construction underway
Maules Creek construction underway Tier 1 World Class Mine Mine Infrastructure Simple and well understood geology with multiple seams, no major faulting and a low strip ratio High quality resource of PCI, SSCC and high energy thermal coal Maules Creek Rail Loop Situated close to existing infrastruct
Slide 16: Maules Creek - project schedule
Maules Creek - project schedule Site Access Rail Construction CHPP Construction Box Cut First Coal to Trains 13 months to first coal railed Production to 6Mtpa ROM Potential expansion to 13Mtpa ROM CY Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2013 2014 2015 2016 Confirming scheduled delivery First H
Slide 17: Construction progress Maules Creek
Construction progress Maules Creek 100% Maules Creek Coal Overall Project- S-Curve Simple project built by 90% “A” group contractors 80% Work already completed 70% Legend includes the fabrication of the Actual CHPP with delivery to Narrabri 60% Forecast 50% Rail and access road corridor cleared and
Slide 18: Major contract progress
Major contract progress CONTRACT STATUS CHPP design and fabrication Completed with CHPP in yard in Narrabri Rail spur and access road Awarded to Leighton and work underway Construction and permanent water supply Awarded with work well advanced Bulk earthworks for mine site Awarded with contractor mo
Slide 19: De-risking Maules Creek
De-risking Maules Creek Maules Creek Capital Expenditure Construction and Other Risks (100% basis) Key risk areas for the rail construction are Total estimate $767 million blasting, material movement and weather Rail conditions. Work being performed by highly Spent to date $224 million regarded cont
Slide 20: Preparing to mine as owner operator
Preparing to mine as owner operator Contract miner quotes for Maules Creek were not deemed competitive Decision taken to go owner operator at the mine Review Mining Model Whitehaven currently operates mines in close proximity to Maules Creek so completely understands the mining costs in the region L
Slide 21: Mining equipment ordered
Mining equipment ordered Ultra class mining equipment order has been placed for the initial 6Mtpa fleet, coaling truck order still to be placed Selected ultra class equipment for overburden mining Productivity benefits and the ability to match equipment (trucks and excavators) provides significant c
Slide 22: Recent project images of Maules Creek
Recent project images of Maules Creek First Half FY2014 Results 22
Slide 23: Maules Creek rail path and loop
Maules Creek rail path and loop First Half FY2014 Results 23
Slide 24: Whitehaven and the community
Whitehaven and the community Whitehaven currently employs over 600 people with over 84% living in the region around its operating mines Wages to employees in the region total $86 million each year, boosting the local economy Whitehaven has set out an aspirational target of 10% for the Maules Creek w
Slide 25: Investment proposition - unmatched growth
Investment proposition - unmatched growth Saleable Production by Mine 25.0 21 20 20.0 Production is expected to double by FY2017 as Maules Creek ramps up million's tonnes 14 toward its full capacity 15.0 11 Saleable production in FY2014 is 10.0 expected to be 10.7Mt on a 100% 8 basis 5.0 The Vickery
Slide 26: Investment proposition - low cost capacity
Investment proposition - low cost capacity Capex $US/t Annualised Capacity 250 The estimated construction capital cost of $767 million on a 100% basis for a mine 200 producing 13Mtpa is low at A$64/t compared to many other coal projects developed in 150 recent years 100 50 Low construction cost comb
Slide 27: Investment proposition – broker consensus
Investment proposition – broker consensus Investment Bank Modelling Project NPV (A$m’s) Share Price Share Price Maules Creek Project Discount/ Discount/ Premium Premium UBS 1,867 Goldman Sachs 2,237 WHC Share $1.70 Price CIMB 2,307 Mean (1) Median (1) Citi 2,977 Target Price $2.50 (32%) $2.40 (29%)
Slide 28: The focus for CY2014
The focus for CY2014 Ensure construction of the Maules Creek project remains on schedule and budget Develop long term markets and sales contracts for all Maules Creek production Recruit and commence training of diversified workforce for Maules Creek Engage with local indigenous groups to achieve an
Slide 29: Conclusion
Conclusion Whitehaven is generating positive operating cash flow Whitehaven to reduce average costs further when Maules Creek commences production Narrabri and the open cut mines to produce at or above planned levels Construction of Maules Creek is progressing on schedule and budget Funding committe
Slide 30: Thank you
Thank you www.whitehavencoal.com.au
Slide 31: Appendices
Appendices First Half FY2014 Results 31
Slide 32: Where we operate
Where we operate Maules Creek (75%) • Reserves to support ~ 30 years • Permitted & Planned : 13 Mtpa ROM • SSCC, PCI and high energy thermal Narrabri North (70%) • Reserves to support ~ 25 years • Permitted : 8 Mtpa ROM • Planned : 6 Mtpa ROM • PCI & low ash thermal coals Tarrawonga (70%) • Reserves
Slide 33: Reconciliation - NPAT to Operating EBITDA
Reconciliation - NPAT to Operating EBITDA A$ millions H1 - FY2014 H1 - FY2013 Net profit/(loss) for the period attributable to members (11.6) (48.6) Add back: Significant items after tax (1) 2.7 19.5 Net profit/(loss) before significant items (8.9) (29.1) Profit/(loss) before tax (16.0) (67.8) Add b
Slide 34: Significant Items
Significant Items A$ millions H1 - FY2014 H1 - FY2013 Included within the balances presented on the face of the Consolidated Interim Statement of Comprehensive Income: Operating Expenses: Suspension of mining activities and office closures (2.0) (22.9) Other expenses: Share-based payment expense - (
Slide 35: Balance sheet at 31 December
Balance sheet at 31 December A$ millions 31 Dec - 2013 30 June - 2013 Cash 97.7 110.5 Current receivables 102.8 87.3 Other current assets 57.9 58.4 Current assets 258.4 256.2 Non-current receivables 32.6 37.8 Other non-current assets 3,870.6 3,806.8 Total assets 4,161.6 4,100.8 Current payables 142.
Slide 36: First half cash flow
First half cash flow A$ millions H1 FY2014 H1 FY2013 Cash from / (used in) operations 78.3 (100.1) Interest and tax payments (22.0) (13.6) Net cash from / (used in) operating activities 56.3 (113.7) Capital investment (139.2) (124.2) Other investing activities (including cash from acquisition of sub