For personal use only

Whitehaven Coal Limited

2016 GLOBAL METALS AND MINING CONFERENCE

Australias Leading High Quality Coal Company

MIAMI, UNITED STATES

29 FEBRUARY 2 MARCH 2016

For personal use only

Disclosure

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

Coal Resources and Reserves for active mining areas are as at the 31st of March 2015. Production for the quarter ended 30 June 2015 is detailed
in the June 2015 Quarterly Report. Please see the Whitehaven Coal website (www.whitehavencoal.com.au) for all the Coal Resource and Coal
Reserve Table 1 details.
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 formerly employed with Whitehaven Coal Limited. Mr Ben Thompson is a
Geologist with Whitehaven Coal. Mr John Rogis is a Geologist employed by 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).
2 // GLOBAL METALS AND MINING CONFERENCE

For personal use only

Agenda
About Whitehaven
Asian Coal Market Overview
Operations
Financial Performance
Outlook
Appendices

3 // GLOBAL METALS AND MINING CONFERENCE

Who We Are

For personal use only

LISTED AUSTRALIAN COAL MINER (ASX CODE:WHC) PRODUCING PREMIUM COALS

FROM THE GUNNEDAH BASIN IN NEW SOUTH WALES

Lowest cost quartile coal miner

Producer of premium quality thermal and metallurgical coals

Long life, low cost tier one mines with world class reserves

Profitable at cycle lows

Moving to cash harvest mode

Premium coal products sold into growing Asian markets

Leveraged to regulatory change and technology

Holding a dominant position in the only emerging high quality coal basin in Australia

Note: Refer to Competent Person Statement on Slide 2 and to detailed Coal Resources and Coal Reserves tables on Slides 30 and 31 of this presentation

4 // GLOBAL METALS AND MINING CONFERENCE

For personal use only

Our Mines And Location

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 >8Mtpa
PCI & low ash thermal

Werris Creek (100%)

Reserves ~ 8 years, Permitted & Planned 2.5Mtpa
PCI and thermal coal

Tarrawonga (70%)
Reserves >20 years, Permitted 3Mtpa, Planned 2Mtpa
SSCC, 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%)
Reserves ~ 30 years, Permitted to 4.5Mtpa
SSCC, PCI and high energy thermal coal

Note: Refer to Competent Person Statement on Slide 2 and to detailed Coal Resources and Coal
Reserves tables on Slides 30 and 31 of this presentation

Largest coal producer in the high quality Gunnedah Basin

5 // GLOBAL METALS AND MINING CONFERENCE

Where Our Coal Is Sold

For personal use only

COAL SOLD INTO PREMIUM ASIAN MARKETS

Thermal Coal Sales
1%

11%

Japan

1%

Korea
10%
62%

15%

Managed sales of 9.4Mt in H1 FY2016 with 12%

metallurgical coal and 88% thermal coal

Taiwan

Key markets of Japan, Korea, Taiwan and India

Malaysia

Sales mix improves over time as sales of metallurgical

Philippines
Other

coal from Maules Creek increases

When Maules Creek is fully ramped, metallurgical coal
sales will represent over 35% of total sales

Met Coal Sales

8% 2%

South East Asian countries are identified as growth

6%

India
Japan
Korea

23%
61%

6 // GLOBAL METALS AND MINING CONFERENCE

Taiwan
Other

markets for thermal coal

India

and

Korea

metallurgical coal

are

the

growth

markets

for

For personal use only

Whitehavens Place In Growing Asian Market

7 // GLOBAL METALS AND MINING CONFERENCE

Whitehavens Met Coal

For personal use only

SALES OF MET COAL INCREASE WHITEHAVENS MARGINS

High yields and higher prices for the metallurgical coal products incentivises Whitehaven to
maximise sales of met coal
Mine yields are much higher than competitor mines - Maules Creek 92% and Narrabri 97%

8 // GLOBAL METALS AND MINING CONFERENCE

Asian Countries Building More Power Stations

For personal use only

NEW USC AND SC GENERATING CAPACITY BEING ADDED ACROSS ASIA EX CHINA
The Asian region (excluding China, Japan,

IEA Forecast Coal Fired Electricity

Capacity (GW) and Coal Required (Mt)

Korea and Taiwan) has a population of about

700 million. Average per capita electricity

600

consumption is less than a third of the global

500

average

400

IEA forecasts that electricity demand will

300

almost triple by 2040 with an additional

200

400GW

100

of

power

generation

capacity

required by then

0
2013

2020

2025

GW

2030

2035

2040

Coal Demand

Southeast Asian Countries: Brunei, Cambodia, Indonesia, Laos,

Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam

Based on IEA forecasts coal fired electricity

capacity will almost double between 2013
and 2020 and will more than quadruple
between 2013 and 2040
Whitehaven is well placed to supply premium
quality coals to meet this growing demand

Source: IEA Southeast Asia Energy Outlook 2015 based on the central scenario. If the IEA bridge scenario was
used electricity generation would be lower.

9 // GLOBAL METALS AND MINING CONFERENCE

Thermal Coal - Ash vs Sulphur

Ash (% a.d,)
20.0

18.0

16.0

14.0

12.0

10.0

8.0
0.20

High Quality Coal

Whitehaven

Whitehaven produces some of the

0.30

highest quality coals sold in the Asian

region

0.40

Hunter Valley
(Japan)

0.60

0.70

Korea

These high yielding, high quality

0.50

0.80

Sulphur (%a.d.)

For personal use only

Whitehavens High Quality Thermal Coal

coals are sold into the premium Asian

seaborne markets
As countries strive to reduce their
carbon emissions and use highly
efficient

low

emissions

(HELE)

0.90

technology, they need and use higher

China
Lower Quality Coal

1.00

1.10

1.20

10 //GLOBAL METALS AND MINING CONFERENCE

quality coals

For personal use only

Narrabri Coal Used In Japans Most Efficient

Power Stations
IF JAPANS COAL FIRED GENERATING EFFICIENCY WAS ADOPTED ELSEWHERE2,
CARBON DIOXIDE EMISSIONS WOULD BE REDUCED BY 1.5BT/Y1
Japan COP21 Target Mix 2030
3% 3%
8%

In H1 FY2016, 62% of Whitehavens thermal coal

2% 1%

was sold in Japan, to increase as Maules Creek

Coal
26%

LNG
Nuclear

9%

Hydro
Solar
Oil
Bioenergy

21%
27%

Wind
Geothermal

Source: J-Power, Japan Government energy and climate policy July 2015 and Coal in the 4th Strategic
Energy Plan April 2014
1 The US Greenhouse Gas inventory report advises 2013 US CO2 emissions of 6.7 billion tonnes
2 United States of America, China and India

11 //GLOBAL METALS AND MINING CONFERENCE

coal is sold into Japan

Coal will remain a key fuel source for Japan into
the future

For personal use only

12 //GLOBAL METALS AND MINING CONFERENCE

Operations

For personal use only

Safety
Whitehaven and NSW Coal Industry TRIFR
25.00

Whitehavens TRIFR remains

20.00

significantly below the NSW

15.00

average of 15.5
The TRIFR increased to 10.7

10.00

from 9.2 at the end of FY2015

5.00

Renewed
0.00
Jul-12

focus

across

operations to improve safety

Jan-13

Jul-13

Jan-14

Whitehaven Coal TRIFR

Jul-14

Jan-15

Jul-15

NSW Coal TRIFR

Note: Data includes Whitehaven employees and contractors at all mine sites, Gunnedah CHPP and corporate office. TRIFR refers to total
recordable injury frequency rate

13 //GLOBAL METALS AND MINING CONFERENCE

all

Production Profile

For personal use only

STRONG GROWTH FROM TIER ONE MINES

Whitehaven Saleable Coal Production (100%, Mt)

25.0

Production is forecast to be in the

20.0

range of 19.5Mt to 20.1Mt in FY2016

15.0

Production

has

quadrupled

since

FY2012 as Narrabri longwall was

10.0

commissioned, followed by Maules

5.0

Creek mine production commencing

in FY2015 and ramping up

0.0
FY 2012 A

FY 2013 A

Gunnedah

FY 2014 A

Narrabri

14 //GLOBAL METALS AND MINING CONFERENCE

FY 2015 A

Maules Creek

FY 2016 F

Maules Creek A Tier One Mine

For personal use only

OUTSTANDING MARKET ACCEPTANCE OF MAULES CREEK COAL

Mine permitted to 13Mt ROM (12Mt saleable)

Maules Creek Half Yearly ROM Coal

Production (000's t)

4,000

Mine operated at 8.5Mtpa rate in December

FOB Costs averaged A$58/t in H1 FY2016
Thermal coal from Maules Creek achieved a 7% premium

3,000

over Newcastle benchmark price in H1 FY2016

Construction largely completed with capex savings of

2,000

A$50m on a budget of A$767m

1,000

Expected sales mix to be 50% thermal and 50% met coal

when mine is fully ramped up in CY2019

0
H1 FY15

H2 FY15

H1 FY16

Infill drilling programme underway to convert Resources

to Reserves

Note: Pre-commercial production before July 2015

Note: Refer to Competent Person Statement on Slide 2 and to detailed Coal Resources and Coal Reserves tables on Slides 30 and 31 of this presentation

15 //GLOBAL METALS AND MINING CONFERENCE

Narrabri Mine Plan

For personal use only

A TIER ONE MINE

Mine permitted to 11Mtpa ROM

Mine produced 3.5Mt ROM in H1FY2016 (including LW
move) and 8.3Mt ROM in CY2015

FOB costs at Narrabri averaged A$49/t in H1 FY2016

First production from the 400m wide longwall face is
scheduled for April 2017

Plan to extend the longwall panels from Narrabri North into

Narrabri South lease

Drilling is scheduled in FY2017 in Narrabri South tenement

to convert existing Resources into Reserves

Note: Refer to Competent Person Statement on Slide 2 and to detailed Coal Resources and Coal Reserves tables on
Slides 30 and 31 of this presentation

16 //GLOBAL METALS AND MINING CONFERENCE

For personal use only

Financial Summary

17 //GLOBAL METALS AND MINING CONFERENCE

Recent Financial Highlights

For personal use only

PROFITABLE AT CYCLE LOWS

Profit and Loss

H1
FY2016

H1
FY2015

Net profit after tax

(A$m)

7.8

(77.9)

EBITDA before
significant items (A$m)

106.4

52.1

More than double the pcp

Cash generated from

operations (A$m)

118.3

22.7

Up A$95.6m

58

63

Unit cost per tonne

Balance Sheet

Net debt (A$m)

Gearing (%)

18 //GLOBAL METALS AND MINING CONFERENCE

Dec
2015

Comment
Up A$85.7m

Down 8%, excludes ITDA

June
2015

925

936

24%

25%

Reduced debt as Maules

Creek ramps
Gearing remains modest

Costs And Margins

For personal use only

INCREASING MARGINS AS LOW COST PRODUCTION AND MET COAL SALES GROW

Whitehaven ASP and Costs ex Royalties

(A$/t)
85.0

Whitehavens costs are now firmly

80.0

entrenched in the first quartile of the

75.0

seaborne market and cost reductions

70.0

are sustainable

65.0

Fully absorbed costs have fallen by

60.0

26% over three years to A$58/t in H1

55.0

2016

50.0

EBITDA margin increased to A$14/t

45.0

Margin per tonne provides strong free

40.0
H1 2013 H2 2013 H1 2014 H2 2014 H1 2015 H2 2015 H1 2016
Average Sales Price

19 //GLOBAL METALS AND MINING CONFERENCE

Average Cost of Sales

cash flow

For personal use only

Balance Sheet And Capital Management

BALANCE SHEET IMPROVED AT CYCLE LOWS

Cash on hand

31 Dec 2015
A$m

30 Jun 2015
A$m

112.0

102.4

Capital spend complete

Net interest expense has peaked
Sustaining capex is modest

Senior secured bank facility

900.0

900.0

ECA and finance leases

136.9

138.2

Total interest bearing liabilities

Net debt

Debt serviceability continues to improve

EBITDA improves

with

increased

sales

1,036.9

1,038.2

volumes from Maules Creek and Narrabri

924.9

935.8

and changes in sales mix towards more met

2,876.6

2,865.0

24%

25%

4.1:1

N/A

coal

Net assets

Based on existing margins, Whitehaven

Gearing ratio
Actual interest cover ratio

expects free cash flow of A$300-A$500

million over the next 3 to 4 years, which

would be available for debt reduction2

1
2

ICR will first be tested using 31 December 2016 results at 2 x TTM result shown is for information only.
Excludes Funds generated from any sell down of Vickery to create a Joint Venture

20 //GLOBAL METALS AND MINING CONFERENCE

Cash Margins

For personal use only

ENTERING THE CASH HARVEST MODE

Major capital investment at Maules Creek and Narrabri

completed
A$ $3.50/t

Face widening at Narrabri only remaining growth project

Cash flows generated to be used in debt reduction
Higher margin coal being added at both Maules Creek and

A$ $7.00/t

Narrabri
Long term sustaining capital of A$1/t for the open cuts and
A$2/t for the Narrabri underground mine and A$20 million
A$ $3.50/t

per year for mains development (completed in FY2019)

Interest

Sustaining Capex & Mains

21 //GLOBAL METALS AND MINING CONFERENCE

Free Cash

Rising volumes, improving sales mix and robust margins

mean strong debt service capability

For personal use only

22 //GLOBAL METALS AND MINING CONFERENCE

Outlook

Production Growth To Continue

For personal use only

MORE HIGH QUALITY, LOW COST, HIGH MARGIN COAL

Saleable Coal Production (100%, Mt)

30.0

Tonnage growth is low risk

Low cost, tier one mines provide

25.0

margins greater than current average

(A$14/t)

20.0

Production commences from Narrabris

15.0

wider longwall in FY2017

Maules Creek achieves full production

10.0

in CY2019
5.0

Margins will increase as more met coal

0.0
FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019
Gunnedah

Narrabri

Maules Creek

Note: Graph depicts saleable coal on a 100% basis including coal destined for domestic and export sales and pre-commercial
and commercial coal production from Maules Creek . The production profile shown in the chart is fully underpinned by the
Companys Marketable Reserves from its operating mines. See slide 31 for full details of the Coal Reserves JORC table.

23 //GLOBAL METALS AND MINING CONFERENCE

is sold from Maules Creek and the wider

face at Narrabri decreases unit costs

Vickery Whitehavens Next Project

For personal use only

ANOTHER SIGNIFICANT GROWTH OPTION

Timing of construction is market dependent, Whitehavens share of capex is expected to be funded from
selldown of interest

Location

About 25kms north of Gunnedah

Resources and Reserves

Resource of 505Mt, Underground Resources of 230Mt, Open cut Reserves of 200Mt

Ownership

Whitehaven 100%, Seeking to form a JV (may sell up to 30%)

Coal Quality

Similar to Maules Creek Metallurgical SSCC, PCI and High CV thermal coal

Start-up

Can be started at any time but scheduled after Maules Creek is fully ramped

Current Status

Approval granted in September 2014 for a 4.5Mtpa open cut mine

Application expected to be lodged with the Government in June 2016
seeking to increase the approved mining rate to 10Mtpa.

Note: Refer to Competent Person Statement on Slide 2 and to detailed Coal Resources and Coal Reserves tables on Slides 30 and 31 of this presentation

24 //GLOBAL METALS AND MINING CONFERENCE

For personal use only

Valuation Disconnect
EQUITY MARKET VALUES SIGNIFICANTLY BELOW RECENT TRANSACTIONS
Reserve Values -A$/t
A$ $14.00/t
A$ $12.00/t

Recent coal transactions in Australia have been

A$ $10.00/t

completed at significantly higher prices than

A$ $8.00/t

equivalent equity market valuations

A$ $6.00/t
A$ $4.00/t

Brokers are applying large discounts to the DCF

A$ $2.00/t

valuations to obtain share price targets

$0 Mt

100 Mt

Boggabri

200 Mt

Clermont
Credit
Suisse

DCF (A$/share)

WACC % (post tax)

Price Target

1.71

1.00

1.64
1.00

500 Mt

Whitehaven

Shaw &
Partners

Wilsons

10.0%
$

400 Mt

Bengalla

UBS

10.0%
$

300 Mt

1.57
10.9%

1.10

1.44

Citi
$

11.7%
$

0.72

1.38

Deutsche
Morgans JPMorgan
Bank
$

11.0%
$

0.50

1.10

10.5%
$

1.10

1.05

10.0%
$

0.70

1.00

BAML
$

10.0%
$

0.65

0.60

13.0%
$

0.60

Discount to DCF

-42%

-39%

-30%

-50%

-64%

0%

-33%

-35%

0%

Share Price Discount to DCF

-73%

-71%

-70%

-67%

-66%

-57%

-55%

-53%

-22%

25 //GLOBAL METALS AND MINING CONFERENCE

Median

1.38
10.5%
0.72
-35%
-66%

Investment Highlights

For personal use only

LOW COST, LOW RISK, GROWTH COMPANY

Compelling value on all metrics

Low risk growth
Levered to growing Asian markets
Levered to regulatory and technological change
Volumes and margins increase
Overall margins improve as metallurgical coal is added to the sales mix

26 //GLOBAL METALS AND MINING CONFERENCE

For personal use only

THANK YOU
www.whitehavencoal.com.au

For personal use only

28 //GLOBAL METALS AND MINING CONFERENCE

Appendices

Who We Are

For personal use only

PRODUCER OF HIGH QUALITY COAL SOLD TO PREMIUM ASIAN SEABORNE MARKET

ASX Code: WHC
1,026 million shares on issue with 6,829
shareholders

Costs
Unit costs reduced to A$58/t in H1 FY16, in
the lowest cost quartile

Market Cap $A500 million

Trading over 80 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 19.5Mt to 20.1Mt in
FY2016
Increasing to 26Mt in FY2019
Metallurgical coal production increasing to
over 35% of total as Maules Creek ramps

29 //GLOBAL METALS AND MINING CONFERENCE

Shareholders

Farallon
AMCI Group
Eastspring
Kerry Group
Australian Institutions

16.6%
14.8%
11.1%
5.0%
18.0%

Capital Structure 1
Senior Secured Debt facility
thereof drawn
Asset financing drawn
Cash on hand
Net Debt
1 Data

at 31 December 2015

A$
A$
A$
A$
A$

1,200m
900m
137m
112m
925m

For personal use only

Resources

Note: See Competent Person Statement on Slide 2

30 //GLOBAL METALS AND MINING CONFERENCE

For personal use only

Reserves

Note: See Competent Person Statement on Slide 2

31 //GLOBAL METALS AND MINING CONFERENCE