DEUTSCHE BANK
23RD ANNUAL LEVERAGED FINANCE CONFERENCE
PHOENIX, ARIZONA
28 -30 SEPTEMBER 2015
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 ESTIMATED COMPANY EARNINGS ARE OR MAY BE FORWARD LOOKING STATEMENTS. SUCH STATEMENTS RELATE TO FUTURE EVENTS AND EXPECTATIONS AND AS SUCH INVOLVE KNOWN AND UNKNOWN RISKS AND UNCERTAINTIES. ACTUAL RESULTS, ACTIONS AND DEVELOPMENTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED BY THESE FORWARD LOOKING STATEMENTS DEPENDING ON A VARIETY OF FACTORS.
THE PRESENTATION OF CERTAIN FINANCIAL INFORMATION MAY NOT BE COMPLIANT WITH FINANCIAL CAPTIONS IN THE PRIMARY FINANCIAL STATEMENTS PREPARED UNDER IFRS. HOWEVER, THE COMPANY CONSIDERS THAT THE PRESENTATION OF SUCH INFORMATION IS APPROPRIATE TO INVESTORS AND NOT MISLEADING AS IT IS ABLE TO BE RECONCILED TO THE FINANCIAL ACCOUNTS WHICH ARE COMPLIANT WITH IFRS REQUIREMENTS.
ALL DOLLARS IN THE PRESENTATION ARE AUSTRALIAN DOLLARS UNLESS OTHERWISE NOTED.
Competent Persons Statement
Information in this report that relates to Coal Resources and Coal Reserves is based on and accurately reflects reports prepared by the Competent Person named beside the respective information. Mr Greg Jones is a principal consultant with JB Mining Services. Mr Phillip Sides is a senior consultant with JB Mining Services. Mr Mark Dawson is a Geologist with Whitehaven Coal Limited. Mr Ben Thompson is a Geologist with Whitehaven Coal. Mr John Rogis is a Geologist with Whitehaven Coal. Mr Rick Walker is a Geologist with Whitehaven Coal. Mr Graeme Rigg is a full time employee of RungePincockMinarco Ltd. Mr Doug Sillar is a full time employee of RungePincockMinarco Ltd.
Named Competent Persons consent to the inclusion of material in the form and context in which it appears. All Competent Persons named are Members of the Australian Institute of Mining and Metallurgy and/or The Australian Institute of Geoscientists and have the relevant experience in relation to the mineralisation being reported on by them to qualify as Competent Persons as defined in the Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code, 2012 Edition).
About Whitehaven Coal
Low cost producer and margin analysis
Benchmarking Whitehaven against US peers
Whitehaven's markets
High quality coal
Operational performance
Community contribution
Summary financials
Outlook
LOW COST MINES PRODUCING HIGH QUALITY COAL
ASX Code: WHC
1,026 million shares on issue
Market Cap $A1.0 billion
Trading 90 million shares per month
Whitehaven Operations
Narrabri U/G mine, Maules Creek, Werris Creek, Tarrawonga and Rocglen O/C mines
Saleable Production
On track to produce 18.9Mt to 19.4Mt in
FY2016
Increasing to 26Mt in FY2019
Metallurgical coal production increasing to over 35% of total as Maules Creek ramps
Costs
Unit costs reduced to A$60/t in H2 FY15, in
the lowest cost quartile
Shareholders- Farallon
16.6%
- AMCI Group
14.7%
- Eastspring
10.1%
- Manning & Napier
6.0%
- Martua Sitorus Group
5.8%
- Kerry Group
5.0%
- Australian Institutions
17.8%
Capital StructureSenior Secured Debt facility A$1,200m
- thereof drawn A$ 900m
Asset financing drawn A$ 136m
Cash on hand A$ 100m
Net Debt A$ 936m
LOW CASH COST PRODUCER OF HIGH QUALITY METALLURGICAL AND PREMIUM THERMAL COAL
Maules Creek (75%) Tier One Mine
Reserves: ~ 30 years, Permitted & Planned 13Mtpa
SSCC, PCI and high energy thermal
Narrabri (70%) Tier One Mine
Reserves: ~ 25 years, Permitted 8Mtpa, Planned 7Mtpa
PCI & low ash thermal
Tarrawonga (70%)
Reserves: >20 years, Permitted 3Mtpa, Planned 2Mtpa
SSCC, PCI and thermal coal
Werris Creek (100%)
Reserves: ~ 8 years, Permitted & Planned 2.5Mtpa
PCI and thermal coal
Rocglen (100%)
Reserves: ~3 years, Permitted 1.5Mtpa, Planned 1.2Mtpa
Thermal coal
Gunnedah CHPP (100%)
Permitted to 4.1Mtpa product coal
Vickery (100%) Future Development
Reserves: ~ 30 years, Permitted to 4.5Mtpa
SSCC, PCI and high energy thermal coal
Note: CHPP stands for Coal Handling and Preparation Plant
5 // 2015 DB LEVERAGED FINANCE CONFERENCE
Management has a strong recent track record of delivering on recent targetsDELIVERED ON KEY FY14 AND FY15 TARGETS
Targets | Outcomes | |
Aiming for ongoing improvement in safety performance at all operations | | Outstanding safety performance with TRIFR falling by 35% in FY15 |
Ensuring Maules Creek construction remains ahead of schedule and under budget | | Maules Creek completed three months ahead of schedule and $27m under budget |
Improving the production performance of all mines in the portfolio | | Record production results in FY2015 with further growth to come |
Reduce costs | | Increased operating margins in FY2015; Unit costs down for 5th successive half |
Implementing a long term financing plan that aligns funding requirements and mine life | | Robust capital structure underpinned by re- finance on improved terms |
Developing long term markets and sales contracts for all Maules Creek production | | Opened a representative office in Tokyo |
DELIVERING SUSTAINABLE COST REDUCTIONS AND INCREASED MARGINS
Unit costs down 24% from H1 FY2013 to
$85
$80
$75
$70
$65
$60
$55
$50
A$60/t in H2 FY2015
Whitehaven increased margins in second half of FY2015 to A$15/t from A$10/t in the first half
Using current market prices and exchange rate the margin have increased above A$15/t in September 2015 quarter
H1 FY13 H2 FY13 H1 FY14 H2 FY14 H1 FY15 H2 FY15
Costs positioned in lowest quartile of cost
curve
Sales Price ex Royalties
Costs ex Royalties
Source: Whitehaven. Costs and ASP (Average Selling Price) exclude Royalties levied as a percentage of the sales price and paid to the NSW State Government.
WHITEHAVEN PRODUCTIVITY CONTINUES TO IMPROVE
NSW and Whitehaven Mine Productivity
25.0
Maules Creek ramped
20.0
15.0
10.0
5.0
0.0
FY04
FY06
FY08
FY10
FY12
FY14
FY16
FY18
NSW tpmy
Whitehaven tpmy
Note: Graph depicts saleable coal on a 100% basis including coal destined for domestic and export sales and pre-commercial coal production from Maules Creek
tpmy = saleable coal production (tonnes per man year)
Productivity at Whitehaven's Maules Creek and Narrabri mines ensures that productivity remains well above the NSW average
Whitehaven benchmarked against US coal companiesHIGH QUALITY COAL AND LOW COST OPERATIONS GENERATE HIGH MARGINS
Whitehaven generates significant EBITDA margin per short ton in the current coal market
$25
Gearing Versus Cash Margin First Half CY1512
This is due to its low cost operations and high quality coals which sell at a premium to benchmark prices
Whitehaven is much less geared than US coal
companies
Limited net debt of A$936m (US$655m at current AUD/USD exchange rate of 0.70)
Cash margin (US$/ton)
$20
$15
$10
Whitehaven
Producer 5
- Gearing of less than 25%
$5
Operating cash flow will meet interest payments, sustaining capex and be applied to
reduce debt $0
Producer 1
Producer 2
Producer 4
Producer 3
Producer 6;
Gearing: 172%
Margin: ~$4 / ton
New mine investment cycle has concluded
Delevering becomes the priority
0% 20% 40% 60% 80% 100%
Gearing ratio
Note: Market data as of September 14, 2015.
1 Gearing ratio defined as net debt / (book equity + net debt) 2 Cash margin defined as EBITDA / short ton
Circle width represents market cap
Producer 7;
Gearing: 635% Margin: ~($22) / ton
Whitehaven benchmarked against US coal companies (continued)EXPOSED TO GROWING COAL DEMAND IN THE PACIFIC BASIN
% of Sales by Region Global coaldemand
Company N. America3 Pacific Atlantic Other
- 100% of WHC's coal sales are to Asia Pacific customers
Producer 12 | 85% | 12% | 3% | |
Producer 22 | 80% | 2% | 18% | |
Producer 31 | 82% | 5% | 10% | 3% |
Whitehaven1
Producer 41
Producer 51
Producer 62
Producer 72
100%
77% 23%
70% 1% 26% 3%
100%
34% 14% 52%
Annual coal consumption in the Asia Pacific region increased 5 fold between 1980 (1.1 bn tons) and
2012 (5.4 bn tons) CAGR (1980 - 2012): 5.2%
The Asia Pacific region is the largest coal consumer globally - 65% of global consumption
Emerging and Developing Asia is forecast to grow 6.6% in 2015 and 6.4% in 2016, outpacing global GDP growth [source: IMF]
Coal is expected to remain a key source of energy fuelling economic growth in the Asia Pacific region
Note: Market data as of September 14, 2015. 1 Regional sales breakout by revenue.
2 Regional sales breakout by shipments. 3 Represents the US and Canada.
Source: EIA, IMF, company filings
Our coal goes to premium Asia (ex China) marketCOAL SALES TO PREMIUM PAN-ASIAN MARKETS / MET COAL MIX INCREASING TO > 35%
Thermal Coal Sales
9%3%
3%
Japan
- Over 82% of thermal coal sold into premium Asian markets
3%
5%
38%
39%
Korea
Taiwan SE Asia
Sth America Other
China
Sales mix 84% thermal and 16% metallurgical coal for FY2016
Sales mix improves as higher margin metallurgical coal product rises to over 35% of total sales following ramp up to full production at
Metallurgical Coal Sales
Maules Creek
60%
26%
1%
13%
Japan Korea Taiwan India
Overall thermal coal quality improves as production from Maules Creek increases
Korea and India targeted growth markets for metallurgical coal in the future
STRONG REGIONAL GROWTH FOR HIGH QUALITY COAL
New Coal Fired Generation Capacity (GW)
20
15
10
5
0
2015 2016 2017 2018 2019 2020 2021 2022
Japan Korea Malaysia Philippines Taiwan Thailand Vietnam
All countries in Whitehaven's key market region are adding new supercritical and ultra-supercritical coal fired generating capacity
Over 70 GW of new capacity by 2022 will require about 180Mtpa of high quality coal supply
200
(GW)
150
100
50
0
(Mt)
Cumulative Growth in Generating Capacity & Coal Demand in Whitehaven's Key Markets
2015 2016 2017 2018 2019 2020 2021 2022
Cumulative Total (GW) Additional Coal Demand (Mt)
- Whitehaven is well placed to increase sales of its high quality coals in the region
Source: Various Investment Banks and country forecasts
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