Transcription of Finance News Network Interview with Whitehaven Coal Limited (ASX:WHC) Managing Director, Paul Flynn
 
 
Lelde Smits: Hello I’m Lelde Smits for the Finance News Network and joining me from Whitehaven Coal Limited (ASX:WHC) is its Managing Director, Paul Flynn. Paul welcome back to FNN.
 
Paul Flynn: Thank you Lelde, nice to be here, thank you.
 
Lelde Smits: Whitehaven Coal has just reported record June quarter and annual production results for the year to the end of June. Which projects supported your growth?
 
Paul Flynn: I think everybody has performed, but the standard has to be Narrabri in terms of our outperformance. We’ve done 7.7 million tonnes of ROM (Run-of-Mine) production for the year. And it really puts it at the pointy end of underground mining output in the country.
 
Lelde Smits: Could you take us through the production numbers?
 
Paul Flynn: In terms of the breakdown for this year, we’ve done about 5.5 million tonnes from our smaller scale open cut mines. We’ve done the 7.7 as I’ve mentioned for our Narrabri, which is really a tremendous result. And then we did about 2.6 million tonnes at our brand new pre-commissioning phase, out of Maules Creek.
 
Lelde Smits: What are your production goals for the year ahead?
 
Paul Flynn: For this year I would say firstly, Maules Creek now constructed ahead of schedule and under budget, our focus is to build the production profile. So 2.6 is great for the first few months of its pre-commissioning phase. Now that it’s commercial, we want to ramp it up. So we want to see in excess of six million tonnes for this New Year.
 
The smaller open cuts, we’ll do about the same, about 5.5 million tonnes for the year. Narrabri with two change outs in this financial year, we’ll do a little bit less than this fantastic year we’ve had, but still a very strong performance from it as well.
 
Lelde Smits: Looking at coal prices however, they are near decade lows. What action has the company taken to adapt to this environment?
 
Paul Flynn: Lelde, we like all miners have been focused on cost reduction. Obviously we can’t control the coal price, but there is a story within a story here. Our coal quality is vastly different from the average coal quality that you see in the seaborne trade. It is superior; it’s high calorific value, low ash, low sulphur. And we are extracting a premium over and above the others, in terms of our Australian dollar price received. So that positions us differently.
 
And that sector of the market that consumes the higher quality coals is tighter in supply, than what it is in the lower CV market. So we certainly are positioned differentially from the broader market, and particularly those suppliers into China, which we obviously don’t supply to China. Our thermal product all goes to Japan and Korea, and people pay a premium there for our premium quality.
 
Lelde Smits: To your financing, Whitehaven Coal completed $1.4 billion of refinancing in March. How has this aided the business?
 
Paul Flynn: We’ve been delighted with that outcome, because it was strong broad base support across the financing sector for our industry as a whole, but certainly for us as a business. And it was really reflective of the strengthening underlying credit quality of our business. So its $1.4 billion, we’ve put a bit more head room into it over and above our previous facility. It matures in July of 2019. It’s quite covenant light and so a very flexible facility for us, and we can repay it early if we feel.
 
Now that is the benefit of the business and in those increasing margins I’ve mentioned, we can actually de-lever now with Maules Creek ramping up on production. And de-levering at the bottom of the cycle, I think that says a lot about the strength of your business.
 
Lelde Smits: Finally Paul, could you outline how Whitehaven Coal plans to capture growth opportunities over the following year?
 
Paul Flynn: Well in particular, ramping up Maules Creek. I mean having built it; we’ve spent the money we now need to extract a return from this fantastic investment. So ramping it up well past six million tonnes in this next financial year.
 
Obviously Narrabri is performing tremendously, so we want to continue that pace of growth. With two change outs and during the year, we’ll obviously need to manage that as effectively as was done on previous change outs. And the open cuts will continue to perform the way they have been. It’s a very reliable consistent portfolio of mines that we’ve got.
 
Lelde Smits: Paul Flynn, thank you for the update from Whitehaven Coal.
 
Paul Flynn: Thanks Lelde, pleasure to be here.
 
 
Ends