Stanmore Coal’s strong 2023 outcomes and growth plans By Investing.com

Stanmore Coal (SMR) has introduced strong full-year outcomes for 2023, with key monetary metrics surpassing expectations. The corporate’s saleable manufacturing exceeded steering, and its concentrate on sustainability and development initiatives was highlighted through the earnings name. The corporate additionally offered an optimistic outlook for the demand for metallurgical coal, particularly from markets like India and Southeast Asia.

Key Takeaways

• Stanmore Coal reported above-guidance saleable manufacturing of 13.2 million tonnes and a below-guidance FOB money price of $86 per tonne.
• The corporate achieved an underlying EBITDA of $1.1 billion and declared dividends totaling 14.02 US cents per share.
• Complete shareholder return exceeded 40% in 2023, outperforming the ASX 300 common.
• Stanmore is transitioning to underground mining and has accomplished key milestones for initiatives just like the Mavis underground and Lancewood growth.
• The corporate has acquired extra property, together with a 50% stake within the Eagle Downs venture, and up to date its 2024 manufacturing steering.

Firm Outlook

• Stanmore Coal anticipates development in demand for metallurgical coal, with tight provide situations.
• Saleable manufacturing steering for 2024 is about between 500,000 to 600,000 tonnes from the Millennium Complicated.
• The corporate is specializing in a number of development initiatives, together with the MRA2C venture, South Walker Creek CHPP growth, and the Isaac Plains underground venture.

Bearish Highlights

• The corporate reported a rise within the Complete Recordable Harm Frequency Fee (TRIFR), however no basic points had been recognized.
• Common gross sales costs for coal decreased by $76 per tonne from the earlier 12 months.

Bullish Highlights

• Stanmore Coal achieved document manufacturing ranges at South Walker Creek, Poitrel, and Isaac Plains.
• The corporate transitioned to a web money place, deleveraging by nearly 50% in 2023.
• A big pipeline of development initiatives is in place, with the potential to reinforce the corporate’s reserve base and manufacturing capability.

Misses

• There have been weather-related disruptions, however the firm expects to recuperate the misplaced tonnages by the tip of Q1.

Q&A Highlights

• The corporate is engaged on decreasing capital expenditure for the Eagle Downs venture and should begin mining forward of schedule.
• The Lancewood venture is anticipated to take not less than three extra years to start growth, with additional updates deliberate for the second half of the 12 months.
• Stanmore is contemplating refinancing its acquisition debt facility to determine a extra normalized debt construction.
• There aren’t any take-or-pay liabilities for the Eagle Downs acquisition, however commitments for energy infrastructure and water provide are in place, with carrying prices estimated between AUD 12 million and AUD 14 million per 12 months.

Stanmore Coal has demonstrated a robust monetary efficiency in 2023, with vital achievements in manufacturing and sustainability. The corporate’s strategic acquisitions and growth initiatives place it effectively for future development within the metallurgical coal market.

Regardless of challenges equivalent to climate disruptions and security efficiency, Stanmore Coal is taking steps to mitigate these points and keep its development trajectory. With the up to date outlook for 2024, buyers and stakeholders have a transparent view of the corporate’s course and potential within the coming 12 months.

Full transcript – Stanmore Coal (SMR) This autumn 2023:

Marcelo Matos: Thanks. Good morning, everybody. Thanks for becoming a member of us at present for our 2023 Full Yr outcomes webcast. I wish to start at present by acknowledging the normal house owners of the land on which we meet the Turrbal and Jagera peoples right here in Meanjin, Brisbane. And I additionally acknowledge the normal custodians of the lands on which our operations are primarily based, the Barada Barna, the Janga, and the Widi peoples of Central Queensland. I’ll start with a abstract of our highlights on Slide quantity 3. 2023 was one other unbelievable 12 months for Stanmore and the primary full 12 months of possession of our new SMC property the place our focus has been on embedding these operations into the Stanmore tradition and our working mannequin. Our efforts have translated into spectacular outcomes highlighted right here, together with under common — under business common security efficiency, above steering saleable manufacturing of 13.2 million tonnes and under steering FOB money prices throughout the consolidated group of $86 per tonne. Monetary end result was a full 12 months underlying EBITDA of $1.1 billion, demonstrating the numerous earnings functionality of our portfolio in a extra normalized pricing setting and likewise supporting a dividend declaration of 8.2 cents US. Along with capital appreciation, Stanmore offered whole shareholders return of over 40% for the calendar 2023, considerably above the ASX 300 common and including to vital returns offered because the final fairness increase again in March 2022. Shifting on to the element for at present’s presentation, we are going to begin with a abstract of our security efficiency on Slide 5. Security is central to every thing we do at Stanmore and is integral to our social license to function. For earlier bulletins, we’ve just lately shifted our public reporting to concentrate on the intense accidents frequency fee or in, after all, severe accidents of over tripper or whole recordable damage frequency fee. Why is the tripper stay an essential metric, notably with regard to informing our present efforts to enhance lead indicator identifiers? The SAFR offers a direct benchmark to the reported business averages and is in keeping with the newest focus of the Queensland Security Regulators, and we’ll sharpen our concentrate on actions and initiatives to forestall essentially the most important incidents. On that observe, we had been upset to document our first severe accident for 2023, proper within the again finish of the 12 months in December, contributing to a closing SAFR of 0.90, thus, nonetheless effectively under business common. We’re additionally acutely aware of the rise TRIFR over 2023 and intention to offer and to enhance our processes, high quality of investigations, procedures and understanding of lead indicators to make sure this doesn’t translate into any severe accidents additional. And we will endeavor to get this again on the appropriate trajectory with a aim to return our workers safely dwelling to their households. I am going to transfer now to the following slide, onto sustainability. We’re progressing on our sustainability journey aligned with the expectations of our stakeholders as a pure play met coal firm. Sustainability roadmap developed this 12 months relative — or in 2023 offers the course for ESG for the following 5 years. On setting, our focus is on our materials issues. We now have developed our first decarbonization plan and recognized varied initiatives to contribute to our emissions reductions. The important thing one which we’re busy with, in the mean time, it is our South Walker Creek fuel to electrical energy venture with ongoing discussions with two companions, in addition to with the Queensland Authorities. Additionally, accomplished a renewable diesel trial as we glance to seek out options to cut back diesel emissions whereas we look ahead to OEM gear options. We now have additionally [costed] motion plans to cut back our reliance on externally sourced water. And we’re engaged on knowledge assortment for the upcoming statutory reporting necessities, together with of Scope 3 emissions from 2026. Within the social area, we developed throughout 2023 a social efficiency technique and motion plan, together with the event of our group funding framework, which we intend to undertake to help us in creating lasting worth for the communities by which we function. We proceed to ship on our reconciliation motion plan as we glance to go from the replicate section to the innovate section later this 12 months. Lastly, within the governance space, we’re centered on the continuing growth of [any penetration] of strong governance administration processes to match the scale and scale of our enterprise, nonetheless, guaranteeing we keep our robust tradition of an agile and entrepreneurial firm. In Slide 7, in rehab, following from our very robust efficiency of over 270 hectares of rehabilitated land in 2022, we delivered one other 191 in 2023. Our focus is utilizing additionally manufacturing gear when not required for manufacturing to create good rehab outcomes. There’s a nice picture on the appropriate right here of a few of our newly rehabilitated land in 2023, displaying the contouring of all dragline spoils and truck shovel dumps leveled, contoured, subsoiled, high dirty and seeded to grade impact. The groups want to the method of doing our first pilot certifications and we glance to implement that within the coming years. On individuals and group, Slide 8, touching briefly, we stay pleased with the constructive affect we’ve on the communities and areas by which we function. In 2023, our affect to the areas was vital with 507 or 67% of our whole employed workforce residing and inhaling these communities. Whereas from a procurement perspective, $223 million was spent in these native communities. Contributions to the state authorities by way of royalties had been AUD835 million, demonstrating the sizable affect of the elevated royalty regime launched from 2022 in Queensland. This determine represents nearly 30% of our market cap and over half of our underlying EBITDA in US greenback phrases. Shifting to Slide 10, on the metallurgical coal markets. Ranging from our product combine, our product combine continues to align with our technique to be a number one met coal producer with PCI and coking coals comprising 93% of manufacturing and over 97% of revenues. Geographical demand developments have confirmed to be dynamic over the past couple of years with the commerce flows adjusting to the Russian sanctions and continued development in demand from India and Southeast Asia. Stanmore’s buyer combine stays secure and centered on conventional markets, equivalent to Japan, Korea and Taiwan. We now have seen European demand keep robust at 21% amidst ongoing Russian sanctions, albeit North American volumes have returned to the market with thermal costs decreasing again under the metallurgical coal. India and Southeast Asia proceed to develop as we are going to spotlight within the coming slides our forecast to the important thing drivers for rising demand going ahead. In Slide 11, we’ve included a couple of slides summarizing key developments in metal making and metallurgical coal demand from key analysis homes equivalent to Wooden Mackenzie. As you’ll be able to see right here in Slide 11, world metal manufacturing capability is forecast to proceed to develop, growing by nearly 17% via 2020. Clearly, we see a lower in China of twenty-two%, which to be truthful to scale, is sort of vital, thus, we nonetheless see a web constructive development. And as talked about in our final slide, the clear drivers for this growth are India and Southeast Asia, that are projected to greater than offset the reducing output from China. Slide 12 exhibits the forecast change in international blast furnace metal manufacturing exterior of China. While conventional metal making international locations are anticipated to extend output from various strategies, equivalent to fuel base direct iron discount and electrical arc furnace metal making, the expansionary section in India and Southeast Asia is forecast to be primarily pushed by the extra aggressive and scalable standard blast furnace metal making rooms. WoodMac has projected whole BOF metal making ex-China to extend 23% within the subsequent 10 years and 54% to 2050, while India’s share alone is anticipated to extend nearly 200% over the identical horizon. Zooming in on the PCI market on Slide 13, which as a reminder, at present comprise round 60% of our manufacturing. Demand is projected to steadily enhance with India’s share of export demand forecast to extend 3 occasions to 2050, pushed each by India metal making development but additionally by the growing PCI injection charges, which additionally grows with the maturity of metal making working practices. PCI stays an essential enter to traditional metal making, enhancing prices by decreasing the quantity of coke required, one thing which has change into more and more essential in mild of the present 40% low cost of PCI to premium exhausting coking coal. At these value ranges, we additionally see growing demand for PCI as a mix filler in coke making, creating a brand new supply of demand and offering some help for costs. In Slide 14, with Australian exporters set to learn from rising demand out of India and Southeast Asia, this naturally leads into the dialog of provide we will see right here on this slide. Projected development in demand would require growing provide for seaborne met coal, after all, particularly from Australia. Stanmore’s present working portfolio and future growth is in line with this projections with growth alternatives like Lancewood and Eagle Downs offering potential elevated publicity to the exhausting coking coal market. After all, development in provide stays topic to ample investments supporting the event of latest mines, in addition to consideration of the logistics community and difficult regulatory setting in Australia. The expansion via 2033 out to 2050 above consists of WoodMac’s expectations for potential and possible initiatives. Therefore nonetheless plenty of uncertainty contemplating all regulatory and funding challenges as effectively. On the quick time period dynamics from Slide 15, which exhibits the historic value of premium exhausting coking coal and the reductions to PCI within the space, within the space chart, premium exhausting coking coal costs have remained robust over the past 12 months with PCI relativity softening from the center of final 12 months, and remaining comfortable and effectively under long run common of round 75 to 80%. Weaker metal market sentiment and compressed margins proceed to weigh on demand setting. Nonetheless, we see the present value and disparity between Australian coking coal grades to be primarily a operate of provide. On the PCI facet, exports are concentrated to Australia, round one half to 2 thirds, in Russia, round one third of the market with any vital disruption from both markets impacting costs. Following decrease volumes from Russia in 2022, which aided very robust relativities, volumes normalized in 2023 and have more and more offered competitors to Australian exports in key markets, equivalent to India and Southeast Asia, whereas conventional markets nonetheless with ongoing commerce sanctions. Nonetheless, in our view, tightness in prime coking coal and provide from Australia will — with many massive operations acting at decrease ranges previously 12 months has stored the premium coking coal at elevated ranges and is the first driver behind persistently low relativities for decrease PCI and semi-soft grades. This pattern is obvious on Slide 16 displaying that 2023 was the bottom annual metallurgical coal export determine in over 10 years with [further] provide interruptions from main producers. Export figures from Queensland port in January 24 present provide remains to be tight with moist climate holding again and any restoration in provide and distorting costs for premium merchandise within the quick time period. Shifting on from markets and on to our operations from Slide 18. Complete saleable manufacturing for the 12 months was 13.2 million tonnes, exceeding the higher finish of our steering by 0.2 million tonnes, and as soon as once more demonstrating the output succesful from the portfolio in a full 12 months of full possession of our new asset portfolio. Consolidated FOB money prices remained regular year-on-year, however, continued problem from inflation and labor while our common gross sales value was $76 per tonne decrease year-on-year, following the document highs in 2022. Specializing in every property and beginning with South Walker Creek on Slide 19. It has been one other very robust 12 months with salable manufacturing growing 5% in comparison with annualized ’22 volumes. CHPP carried out exceptionally effectively, delivering practically world benchmark working ranges at shut to eight,000 hours with zero no coal delays and underpinning the robust manufacturing outcome, and feeding into our robust gross sales efficiency with solely a gradual enhance in unit prices. We sit up for how South Walker Creek will proceed to ship in future years with a number of ongoing initiatives to enhance and increase this basis asset. On Slide 20, we see that Poitrel additionally had a sturdy 12 months, reaching a number of information together with drilling meters, explosive tonnes loaded and impressively a mine document for whole materials [movement]. While the primary half was challenged with moist climate early in 2023, catch up of stock stripping and logistics constraints, we’re happy to report a really strong second half in ’23 with gross sales volumes growing nearly 50% within the second half. Unit prices had been up $9 year-on-year, which is primarily an element of inflation but additionally decrease yields as a result of mining of decrease seams with greater ash thermal coal product recoveries as per the earlier discussions, but additionally the truth that coal move was maximized in second half of 2022 to leverage from the document excessive value setting and a few stripping catching up was required within the first half of 2023. Stockpiles had been proactively wholesome on the finish of 2023 with 900,000 tonnes of ROM offering buffer and derisking the plant for moist climate in elements in early now in 2024. Lastly, at Isaac Plains, on Slide 21, we achieved an all time document for saleable manufacturing and gross sales, supported by wholesome opening stockpiles for 2023, maximizing utilization of the just lately upgraded CHPP, in addition to the washing of some volumes at Poitrel earlier in 2023. Preparations elevated as anticipated with the mining sequence proceed down seen at Isaac Plains, while waste motion at Pit 5 North commenced within the second half forward of first ROM proper ultimately of the 12 months in December. Nonetheless, unit price remained comparatively regular year-on-year given the excessive volumes. I am going to hand over to Shane now to debate our monetary outcomes.

Shane Younger: Thanks, Marcelo. And let’s begin with a abstract of our key monetary efficiency metrics on Slide 23. It is essential to recollect right here that each one 2022 comparative figures embody the SMC property, South Walker Creek and Poitrel, solely from Could 2022 onwards, so 2023 is basically our first full 12 months of consolidated reporting, together with these property. As all the time, too, I remind everybody right here that each one monetary figures used are quoted in US {dollars}, which is Stanmore’s purposeful forex. Complete earnings was 4% greater year-on-year with the extra 4 months of SMC gross sales, which helped overcome a discount in coal processed in 2023 relative to 2022’s document ranges. Prices stays largely regular year-on-year, flowing via to an underlying EBITDA of simply over $1.1 billion and working money flows of $737 million, which supported vital deleveraging, funding for worth accretive natural development CapEx and $52 million particular dividend declared in November, all whereas transitioning the steadiness sheet from a web debt to web money place through the 12 months. Additional to the particular dividend declared final 12 months by reference to 2022 money flows, we’re once more happy to return money to shareholders with at present’s absolutely franked dividend of 8.4 US cents per share calculated by reference to 2023 money flows with our dedication to creating worth for shareholders, additional demonstrated with whole shareholder returns of over 40% in 2023. Shifting on to a extra detailed abstract of our monetary efficiency on Slide 24. From a P&L perspective, full 12 months underlying EBITDA translated into web revenue aftertax of $472 million and EPS of 52.4 US cents per share, reflecting regular course of enterprise earnings. Noting that the 2022 figures had been affected by vital as soon as off non-operating changes and deferred tax advantages associated to the SMC acquisition. Wanting on the underlying EBITDA stroll ahead. As you’ll be able to see right here, the first driver for decrease EBITDA was the normalized value setting following these document excessive coal costs in 2022, partially offset by the extra 4 months of manufacturing of South Walker Creek and Poitrel. Isaac Plains was barely decrease year-on-year because of anticipated strip ratio will increase and non-capitalized overburden and advance removing for the event of Pit 5 North the place first run of coal mine was not really produced till December. Turning now to the dividend willpower on Slide 25. As beforehand highlighted, we’re happy to announce the absolutely franked remaining dividend of 8.4 US cents per share following cautious consideration of our dividend coverage because it applies to our outcomes for 2023, which when taken along with a particular dividend of 5.82 US cents per share in November has generated dividend yield of 6.2% in slightly below 4 months. Importantly, because the particular dividend was successfully decided by the use of software of the coverage on 2022’s outcomes, at present’s announcement demonstrates our 100% dedication to our dividend coverage since our fairness increase for the SMC acquisition final 12 months, rewarding our shareholders for what has been a really profitable few years for Stanmore. Almost about this dividend calculation particularly, you’ll discover that we’ve opted to order funds for the upcoming absolutely accrued BMC acquisition earnout cost, which will probably be made mid-2023. This represents only a portion of our main money commitments arising. And we contemplate reserving this quantity to be prudent to make sure enterprise stays adequately funded to satisfy future money necessities, in addition to our ongoing CapEx program. On that observe, we’ve offered additional element on our money place and steadiness sheet on Slide 26. As you’ll be able to see on the waterfall, a serious achievement in 2023 was transitioning to a web money place in slightly below 12 months because the SMC acquisition, overcoming nearly $800 million of debt raised on the time of the acquisition in Could 2022. Money era since that point has been used to solidify steadiness sheet energy with deleveraging of virtually 50% in 2023 and following the debt sweep cost of $77.5 million in early February this 12 months will increase our whole deleveraging of the acquisition debt facility to $385 million or 62% of the ability since its graduation. As talked about on the earlier slide, we do have some vital money move necessities this 12 months, which have been beforehand guided to market. They embody, a catch up tax cost of between $155 million to $170 million, the SMC earnout, as talked about earlier, of $150 million and upfront consideration for the 50% Eagle Downs acquisition of $15 million. These commitments are anticipated to be partially offset by the $136 million in proceeds for the sale of the southern portion of Wards Effectively, which is anticipated to finish and subsequently be obtained this 12 months. Earlier than I hand again to Marcelo, Slide 27 consists of some extra element on the breakup of capital expenditure. As you’ll be able to see right here, there are quite a few vital capital initiatives happening, that are largely roughly 60% associated to development and enchancment initiatives. When aligned to our 2023 capital expenditure of $200 million US, the sustaining portion of round 40% sits at that $70 million to $80 million mark for the portfolio. I’ll now hand again to Marcelo to offer a extra detailed replace of a few of these key capital initiatives from Slide 29.

Marcelo Matos: Thanks Shane. Beginning with South Walker Creek, we’ve a major pipeline of development initiatives, which is able to strengthen South Walker Creek standing as a world class asset. I might additionally spotlight right here that the {dollars} quoted right here signify the unique finances for every venture with the proportion being the quantity of that finances spent by the tip of 2023. The MRA2C venture involving a serious creek diversion to open up an space of 58 million tonnes of ROM coal is progressing effectively with vital infrastructure developments occurring in 2023 with the completion of the 66KVa powerline relocation, nearly all of the required water infrastructure. Importantly, the fabric motion commenced in August ‘23 is on monitor with the present plan with venture being forward of schedule and effectively underneath finances at this stage. The South Walker Creek CHPP growth and mine growth is progressing effectively with some key achievements of 2023 being the award of the CHPP improve contract and the dry rent contracts for the extra three truck and excavator fleets with the mobilization of the primary extra fleet effectively underneath means. We commenced entry to the Y South pit in 2023 with clear and seize in website preparation forward of nearly all of the work anticipated to happen in 2024, which is able to allow entry to prime quality low strip ratio coal throughout 2024. The final main venture we wished to spotlight right here for South Walker is the dragline 27 AC improve, which will probably be accomplished in 2024. This improve has been in planning section since 2022 and in 2023, we had been in a position to full the manufacturing facility acceptance testing of the foremost electrical gear required for the AC improve forward of the foremost shutdown and improve to beginning Could this 12 months. On Slide 30, Poitrel had a really constructive 2023 with the development of the 2 main initiatives at present in progress, being the ramp up — the Ramp 10 North growth and the Ramp 30 touchdown. The Ramp 10 field lower is essential for Poitrel’s manufacturing profile and for the strip ratio competitiveness. And regardless of some moist climate challenges early in 2023, venture recovered and was in a position to transfer over 80% of the deliberate field lower volumes by the tip of 2023. The Ramp 30 levee venture is a important venture to allow us to proceed mining in direction of the southern a part of the mine and maintain strike size with a big licensed flood mitigation construction. The crew had been in a position to attain one to 1,000 12 months flood peak in November ’23, effectively forward of schedule and underneath finances. We additionally commenced revegetation of the levee and disturbed the realm previous to the moist season. In relation to our growth venture on Slide 31, on the finish of December, we acquired the remaining 50% within the MetRes three way partnership, which owns the Millennium Complicated. Millennium concluded standard open lower actions in 2023 with the operation centered on underground coal mining actions going ahead. The achievement of ‘23 for the Mavis underground was the completion of the underground development and the transition to operations with two steady minus place change models. Research for the Lancewood growth venture proceed to progress with exploration actions commencing after EA amendments, focusing initially on water bores for groundwater modeling, in addition to baseline ecology works. The examine crew accomplished additional optimization of open lower mining operations and refined infrastructure and coal processing optionality. And we intend to conclude the prefeasibility examine inside this 12 months to have the ability to make some choices on how one can method the venture, together with infrastructure choices to help all of the regulatory approval submissions. Lastly, I simply wished to do a fast recap of the deal we signed with South32 (OTC:) for the acquisition of fifty% in Eagle Downs introduced earlier this month on Slide 32, which after all stays topic to completion. That is an asset that has carried out the rounds over the past decade being on the Enviro’s 50-50 three way partnership buildings, initially between Vale and Aquila and extra just lately between South32 and Aquila, which is majority on and managed by the Chinese language big metal maker, Baowu. For Stanmore, it’s a transaction that is sensible and aligns with our technique, including a big exhausting coking coal deposit to our reserve base, offering optionality at low upfront price. Not like earlier house owners, our neighboring property permit us to auctioneer growth pathways, probably using neighboring infrastructure at Poitrel and Isaac Plains and decreasing begin up growth CapEx and our enlarged income contract portfolio by way of each the [BCT and NEQXT] are additionally important enablers for a possible growth. The transaction stays topic to the satisfaction of situations precedent, and we’re additionally in discussions with Aquila to contemplate the acquisition of a further 30%, which can take us to 80% possession. Because it stands, the asset comes comparatively unencumbered from any earlier essential take or pay preparations and have all of the regulatory approvals required for startup development and future operations. We sit up for finishing this transaction and convey it right into a stage the place we perceive the event necessities and the potential it will probably supply to our portfolio within the long-term, together with as a development alternative but additionally as a future substitute to the shorter lifetime of mine at Poitrel and Isaac Complicated. I am going to now hand briefly again to Shane to shut out at present’s presentation with our up to date 2024 steering.

Shane Younger: Thanks, Marcelo. On Slide 34, we’ve the up to date steering. Given we offered 2024 steering as a part of the market replace and particular dividend declaration in November final 12 months, that is actually simply an incremental replace following the acquisition of the remaining 50% of the Millennium Complicated, which was beforehand fairness accounted for as an funding moderately than absolutely consolidated into our total outcomes. As per the desk on Slide 34, we’re guiding to salable manufacturing of between 500,000 to 600,000 tonnes out of the Millennium Complicated in 2024, coming from the Mavis Downs underground, which has been ramping up via the again half of 2023. Being an underground operation within the growth section, it is naturally a better price than our open lower portfolio and subsequently has a barely inflationary affect on Stanmore’s consolidated free on board money price per tonne with steering subsequently being adjusted to between $99 to $104 per tonne, whereas CapEx has additionally been adjusted to incorporate the remaining growth actions at Millennium for 2024. This concludes the formal presentation. I am going to now hand again to the operator to begin Q&A.

Operator: [Operator Instructions] Your subsequent query comes from Jim Xu from Barrenjoey. Your subsequent query comes from Tom Sartor from Morgans Monetary.

Tom Sartor: Simply had a few questions on the asset offers, you had a busy few months. It seems just like the Millennium Complicated spent a chunky than anticipated quantity of growth capital in ’23. Are you able to simply remind us of the scope of the chance there by way of sustainable annual manufacturing, perhaps lifetime of the underground? And perhaps if, Shane, you’ll be able to replace us on how the debt to the JV from Stanmore was or is being accounted for within the steadiness sheet please?

Marcelo Matos: I’ll begin perhaps with ’23, and possibly the best solution to clarify the extra capital is that, I imply that is — it was principally working capital. I believe the ramp up challenges that we confronted simply principally required extra injection of working capital provided that we aren’t getting the tonnes. So I imply, growth — the precise growth capital hasn’t been greater than beforehand anticipated. And therefore, that is nonetheless an analogous scenario now for the primary quarter of this 12 months the place we’re nonetheless anticipating ramp up volumes to get to the degrees we wish. You’ve got most likely seen in our steering slide that we’ve derated the quantities for product go in Millennium to round 500,000 to 600,000 this 12 months, that is principally to replicate the nonetheless, for example, ongoing ramp up. I believe we’re most likely going to get into extra benign situations quickly, each from a geological, I imply, construction or geotech standpoint, but additionally some water that we confronted within the final 45 days ingressing from of all of the excessive wall mining plunges that had been mined in that [pit]. I believe we’re assured that we must always have the ability to obtain these 0.5 to 0.6 this 12 months, hopefully, growing barely from that going ahead into 2025 and ‘26. Mavis was all the time meant to be a brief life asset, Tom. And our goal is to show up reserves within the Millennial facet of the advanced, transfer the prevailing gear into Millennial to have the ability to lengthen life. To try this, we require some EA amendments, as a result of there was solely open lower mining approvals on the Millennial facet. We’re busy engaged on that, as we converse.

Shane Younger: Tom, simply on the mortgage between Stanmore and MetRes. I imply, clearly, that now’s a 100% owned entity, so it eliminates on consolidation by earlier and instantly previous to the acquisition, we did have to assess the truthful worth for accounting functions of that mortgage. So you could discover within the accounts that there was a provision put aside for potential credit score losses on that simply primarily based on the place coal costs are at long run from a few of the analysis homes. So for accounting functions, we had to offer round 18 million towards that mortgage for that goal. However now that it is 100% owned it absolutely eliminates on consolidation and we’ll proceed to help that asset primarily based on the place we see the longer term for Millennium going ahead.

Tom Sartor: And only a reminder, it is a prime exhausting product, kind of from the underground there, and it will get near 100% realization. Is that proper?

Marcelo Matos: Not likely, I believe, it is at — we’ve round 60% as a low vol exhausting coking firm, nevertheless it’s not prime exhausting, Tom. The Mavis coking coal has been marketed for a few years proper again within the days, and it was all the time attracting 100% of the tier two low vol index, not the prime one. And the steadiness, which is round 35% to 40% is a 20 VM PCI.

Tom Sartor: And simply shortly on Eagle Downs, admire it is a longer dated choice. Simply interested in what drilling and/or analysis expenditure you may want or have to spend there over the following few years, or is it too early to say?

Marcelo Matos: The venture’s being extraordinarily, for example, studied and the outcomes are extraordinarily effectively outlined. It has been quite a lot of exploration from all angles potential from drilling to coal, I imply, coal high quality, construction, seismic and fuel. So it is very effectively outlined. Two, very strong bankable feasibility research carried out by the house owners previously, the 40% constructed entry drift. So we do not count on that any vital quantity of that acquisition is required. What we’re trying now’s actually to do optimization research to see what is the entry capital to get the venture began. After all, beginning with drift growth, attending to coal and naturally, decrease mining air flow and all of the infrastructure required. Our intention is to reduce startup capital. However as I stated earlier than, I believe, first we have to get the acquisition accomplished and for example the ultimate format of the three way partnership aligned with the three way partnership companion. I believe it aligns effectively with our technique, it is subsequent door to our property, the exhausting coking coal asset that has all of the approvals in place, it is a potential long run substitute for Poitrel and Isaac Plains, and places us into the excessive coking coal area and provides one other billion tonnes of useful resource to our portfolio. Three years in the past, we had been an organization with 20 million tonnes of reserves forward of us. I believe we are actually in a really privileged place if you happen to full this deal to have 4 billion tonnes of assets with a number of choices to select from.

Operator: Your subsequent query comes from Brett McKay from Petra Capital.

Brett McKay: Simply on the expansion choices going ahead. When do you count on you may be able to, I suppose, make clear what the optimum method is to the optionality within the portfolio now? I do know that Eagle Downs hasn’t been — hasn’t closed but, however simply by way of an extended dated timeline. In the event you may present a bit of little bit of steering round after we could discover out a bit extra about Lancewood? Clearly, you are doing a pre section there this 12 months at Eagle Downs, you’ve got nonetheless bought Isaac Plains underground within the portfolio. So that you do have plenty of optionality now within the portfolio. However are you able to give us a little bit of a really feel for after we would know precisely how you are going to method all these choices after which perceive how not solely the capital is spent but additionally the manufacturing profile the way it would possibly develop over time?

Marcelo Matos: I believe it is fairly related and I count on that that is essential info. I believe there is a bit of labor we nonetheless have to do to have the ability to present higher visibility. What I can say is Lancewood is a venture that we might want to undergo its personal, for example, the complete regulatory approvals. Our conclusions up to now is, if we keep underneath the two million tonne run of mine every year, which is the brink for us to not require an EIS in Queensland, it would not appear to be financial, it is fairly a big field lower, it is a very compact pit and we begin at greater than 9:1 strip ratio in comparison with Isaac Downs the place we had been at 3:4:1 to start out. So it is fairly a big field lower, which would require extra capital and at a scale to be justifiable that is going to be most likely above that 2 million tonne run threshold. That implies that we might want to undergo a full EIS and its personal, for example, environmental approvals. So I do not assume we might be seeing begin of development until we might in lower than three years, for instance. And that gives a little bit of visibility, as a result of in Eagle Downs, for instance, conversely is able to go, it has all of the approvals in place. It is a query now of us understanding the attractiveness of the venture, how low we will deliver the CapEx to have the ability to get began and the way staggered is the funding till we get your first name, proper, as a result of we’ll must do drift growth, growth on the bottom to get to a longwall field developed and able to be mined. Luckily, there’s quite a lot of degassing that was carried out in Lancewood — in Eagle Downs. So I imply, we imagine that we might be able to begin mining lots forward that we might in any other case if we wanted to get to start out fuel drainage from scratch. So I believe we want a little bit of time, Brett. However I believe we could discover that there’s most likely a means for us to stagger these investments given Lancewood will, I imply, inevitably will take one other not less than three years till we’re in a position to begin disturbing floor, till we’ve approvals. And Eagle Downs, likewise, just isn’t a venture that is going to be inbuilt a 12 months and half or two years. It is a big growth and we must always have the ability to unfold it effectively. However once more focus now’s it accomplished the transaction, doing the work to have the ability to get to that time. So I hope to have the ability to present that visibility someday within the second half this 12 months to the market about what we will count on by way of timing, by way of common choices for Lancewood. And clearly, topic to us finishing Eagle Downs, get to a degree in direction of the tip of the 12 months the place we all know what the venture might be for us and we might be able to begin taking some choices quickly.

Brett McKay: Simply shortly, are you able to present us an replace on the climate occasions that you simply had earlier within the 12 months? Clearly, that was a subject of dialog on the quarterly name. Simply what’s occurred since then, it would not seem like it has been overly moist. Do you’re feeling like there’s potential so that you can catch up any of these misplaced tonnages that we spoke a few month or so in the past?

Marcelo Matos: I believe catching up is already occurring, as we converse. So you might be proper, I believe it hasn’t been too moist just lately. January and first half of February had been fairly tough. Poitrel may be very effectively arrange, as I stated earlier, since late final 12 months we introduced quite a lot of coal ahead, we had quite a lot of uncooked inventories, which is able to assist lots. We had shipped round 800,000 tonnes in January. February, it is trying actually robust, which will probably be. We may have caught up quite a bit in February already from the decrease January, each from gross sales but additionally on manufacturing. I believe by the tip of Q1, we needs to be again to the place we wished to be as a part of the plan or the finances for this 12 months.

Brett McKay: And simply lastly, on the dividend, simply noting that you simply pulled out the 150 million that you should pay for BMC. On an ongoing kind of forward-looking foundation, is that one thing that the corporate will proceed to do is to kind of ex out large chunks of — or not even large, modest chunks of anticipated outgoings from that dividend pool? Simply attempting to grasp the Board’s determination round these upcoming funds, particularly contemplating the expansion profile of the corporate and the way it will evolve over the following kind of 12 to 24 months? Simply attempting to get a learn on how the dividend outlook will morph or evolve over that point?

Shane Younger: Brett, unsure this one. So it was a little bit of a singular scenario with the BMC earnout and that it was a confirmed dedicated cost that associated to a previous transaction that we do produce other money commitments arising in 2024, as talked about on the decision, round massive tax cost anticipated in midyear and another funds as effectively. However we thought that this one was extra distinctive within the sense that it did relate to a previous transaction and it was identified and dedicated to on the time of constructing a dividend declaration. So I do not count on this to be one thing that is actually repeated on an ongoing foundation past the money move sweep adjustment that we make annually, which as , is related on to money flows generated from the prior 12 months. And I would additionally most likely level out that it’s timing in nature. For instance, after we — if we’re to sit down down right now subsequent 12 months and take a look at this calculation once more, as a result of we’ve reserved or preserved this 150 million from the dividend determination for 2023, we’ll have to regulate that again for after we take a look at money flows that had been generated in 2024. So it is actually nearly timing of sustaining satisfactory money and liquidity for these large ones off kind of chunky objects, which we do not count on to see too lots of going ahead.

Operator: Your subsequent query comes from Jim Xu from Barrenjoey.

Jim Xu: So perhaps simply comply with up on the steadiness sheet. So perceive your acquisition debt facility is non-callable up till Could of this 12 months, given it is bought pretty restrictive money sweeps in that facility. Are you trying to refinance it and the way superior are these discussions? After which additional on simply to that, if you happen to do refinance it and it turns into type of curiosity solely funds, how will you provision for the debt repayments when you consider your dividend?

Shane Younger: So the acquisition financing, as you identified, might be repaid at par worth following a two 12 months anniversary, which is the third of Could this 12 months. So we’re free to refinance at any time. But when we do it after the third of Could, it’s going to be at par. So it’s one thing that we’ve been contemplating. I believe I’ve perhaps talked about that a few event beforehand as effectively. It simply provides us a great alternative to take a look on the market and contemplate, I suppose, our optimum debt construction and extra normalized debt services as effectively for the entire firm as a company. So to that finish, it’s one thing that we’re contemplating transferring ahead with within the first half of this 12 months and performing some planning for that, as we converse. When it comes to how that appears like and what that appears like going ahead, that is actually one thing that can kind of play out via that work. I believe the target for us is to have services which can be normalized for the scale of firm that we are actually. And in addition on the lookout for enhancements on the place that pricing is coming as effectively given the change in our credit score profile and danger profile as a corporation. So that they’re most likely the 2 keys along with permitting the capability to contemplate future development if we wished to begin to develop a few of our natural development platforms or in any other case.

Marcelo Matos: Possibly simply so as to add to that, Jim. It is cheap to imagine that this restrictive sweeps that we’ve as a part of the acquisition facility would not be one thing that we might be trying so as to add as a part of a extra regular, for example, refi construction. Having stated that, relying on the construction, we could not essentially see solely curiosity solely sort of buildings. We may even see some extra regular amortizing profile as effectively relying on the, for example, on the construction of the general facility and the profile of the lending group. So I believe that is work. There’s quite a lot of work occurring as we converse, as Shane stated. And sure, we sit up for replace you guys when we’ve a bit an increasing number of progress.

Jim Xu: Possibly only a follow-up query on security. Your SAFR remains to be effectively under business averages, however each SAFR and TRIFR have elevated over the previous 12 months. Has there been a most important driver of the rise within the TRIFR, something that the administration crew wish to concentrate on specifically?

Marcelo Matos: Jim, I usually wish to speak to [indiscernible] as a rabid canine. You will hold your foot on its neck, in any other case it grows and bites you. So you’ll be able to have a take the foot off and I do not assume there’s any basic structural difficulty. I believe the tradition is sweet, it is constructive, the methods are in place. And we had been working at a TRIFR degree of 1.5% is extraordinarily low. So it isn’t very uncommon so that you can see a few of these recurrences occurring. And I believe what you should do after they occur is perceive the drivers, the lead indicators. And that is what we’re working exhausting on, is to ensure that we concentrate on main initiatives to have the ability to see them coming. And as I stated, the concentrate on SAFR going ahead is basically to forestall the intense one, these are those that we actually must be on high of that we can not afford them occurring, okay. I believe as I stated, quite a lot of work, good work going into that. And I hope to see these developments reversing quickly.

Jim Xu: And if I can simply sneak another in, actually fast one. Simply wished to verify, with the Eagle Downs acquisition, are there any take or pay liabilities related to that, or have they been all held on the equal degree and cleared by them?

Marcelo Matos: No [Ravenport] take or pay. There are some current commitments for energy infrastructure. This was part of the implementation of the transmission strains and the ability infrastructures obtainable to the venture. There isn’t a energy provide nevertheless it’s not a long run cost of infrastructure. And water provide is round simply above 600 megaliters of uncooked water as a contract which is prime for the venture. I do not assume by way of carrying prices for the venture, they’re vital. And we additionally need to be speaking to the JV companion, as a result of even on our current enterprise, we must always have the ability to take up a few of the, for instance, water necessities provided that we even have quite a lot of reliance on the Brae facet oilfield to South Walker and Poitrel. And so once more, water, energy and minimal websites might be [maintained] in the mean time, as we converse, that is all.

Jim Xu: And so can you give any information on the scale of the carry price of the venture?

Marcelo Matos: In the mean time, between AUS12 million, AUS14 million per 12 months, that is the fundamental carrying price in the mean time, as we converse, and a 100% foundation.

Operator: There aren’t any additional questions right now. I am going to now hand again to Mr. Matos for closing remarks.

Marcelo Matos: Effectively, thanks everybody for the questions. It has been a privilege to current such a unbelievable outcome at present. I wish to take the chance to thank our workers and our main contractors. Final two years has actually been a dynamic interval. And on the finish of the day, it is our workers who will present up every day to underpin our enterprise and its successes. So after all, I wish to thank our main shareholders which were with us via this journey and proceed to indicate their help for the basics of our enterprise. We sit up for participating with all of you within the coming days. Thanks everybody to your time. Have a great day.

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