Whitehaven Coal Limited

Good morning, everybody. Thanks very much for taking the time to join us today for the full year results for Whitehaven Coal's financial year 2025. I'm joined here, as always, with Kevin Ball, our CFO, and our IR team with Kylie and Karen here to support as well. As usual, Kevin and I will go through the slides and... Bear with us and we'll get to the Q&A session for what's been a very good year for Whitehaven as our first full year of our expanded footprint with our now enlarged portfolio of assets. Quickly turn over, of course, there's some forward-looking statements here, so I draw your attention to the disclaimer that's there. Let me just start the highlights and I'll start with safety being an important feature of our business first and foremost. Safety performance has been good. So we're pleased with the result now with our expanded business. And our TRIFA was 4.6 for the year. And I've given you just some numbers there incorporating some historical data. So the New South Wales and Queensland combined performances there for you to see. And so on a five-year average basis, which is how we set our targets, you can see that we're doing pretty well relative to the average of the last five years. So we're pleased with the progress, but more work to be done, of course. Another pleasing aspect of our performance here is that our environmental enforcement actions performance has been pretty good, three years without any incidences at all. So, again, the team is very focused on this, making sure that we manage ourselves appropriately in compliance with all the various conditions. There are thousands upon us on any given day, and so we need to make sure that we are compliant with all of those. I'll turn over now to the highlights. Now, you've seen some of these, but it's important just to call out some of them. We've had a very good year, and certainly execution has been excellent across pretty much every dimension of our business. We're pleased with it. Of course, Dornier and Blackwater successfully integrated into the business and have either met or exceeded their wrong guidance. At 39.1, we've had very good results, 60% better than last year, and the top end of our range. Equity sales also in the very good part of our range at 26.5. as a result of the Queensland acquisition, a good step forward. The average price for the year at 215 was broke up in two parts, as you can see. Queensland, 232 on average income for the average revenue for the year. New South Wales, 193. Our costs at 139 were at the bottom, just below the bottom end of our guidance, which was a terrific result from the team. So nice to bring that round. The total revenue at 5.8 split between Queensland at 3.5 and New South Wales at 2.2 billion. The underlying EBITDA at 1.4, you would have seen one of that accrue in the first half, and in the second half, 400 million, broadly consistent with the downturn in experience, certainly in that second half, and certainly have a year of two halves in this particular financial year. The underlying NPAT 319, $309 million, was a decent enough result, given all that I've just mentioned. The statutory result was actually double that at 649, our underlying NPAT, at $649 because it includes the one-off gains associated with the formation of the joint venture. As a result of these good outcomes, the board has seen fit to declare a fully franked final dividend of $0.06 per share, which will be paid on the 16th of September, and an equal in value buyback of up to $48 million will be engaged in over the next six months as well. The aggregate of this works out to be about 60% of our underlying NPAT in line with the capital allocation framework, which has been updated, and we'll talk in a bit more detail on that a little later. Now, those highlights are great, and it's easy to look at that at a superficial level, but let's just dive very quickly just to the structural change within the business that I wanted to highlight for you. And this is an important point, I think, for our shareholders to see, Now, what we've provided here for you is the attributable tons per share and then also the attributable EBITDA per share. And that's now analysed across pre and post buyback and then pre and post acquisition. So what you can see here is a really interesting story where because we haven't used new equity, the buyback obviously drives a significant step forward in terms of attributable tons per share and attributable EBITDA per share. And then when you overlay the acquisition across the top of that, then you can see the big step forward that the attributable EBITDA per share also takes as a result of that. And so you can see in the context of EBITDA per share, you're actually three times what it was if you're a shareholder as you've taken this ride with us through this very short period of time through which we've executed both the buyback and the acquisition. Now, obviously, the chart or the bar to the right on both these scenarios just points to a bright future. And as you can see, there'll be volumed growth, as we know there will be. We're driving hard to move our costs down. Productivity improvements and costs out will drive better margins. And our margins are pretty low based on the cyclical low position we're in at the moment. And of course, the continued use of our buyback is going to amplify the positive effects of all the above as we go forward. So nice structural change for our shareholders to be in. I'm moving over to markets, and I'll just focus on this again. I know you've watched many of these aspects, but I will just summarise quickly. Obviously, two sides of our business with the thermal and the MET side of our business now, which are much more balanced and lower risk business, which is great. The POV performance during the course of the year certainly has taken more of a cyclical turn and has dropped 32% down to 196 for the year, whereas the thermal side actually a little less dramatic than that, 11% down year on year, down to 121. Now, we've seen some good signs since June that says the thermal side has firmed, which is good, and on the met coal side of things, Also, there would appear to be some nice policy announcements coming out in China in particular, focused on constraints of surplus production of coal and, of course, surplus steel production, which I know there's been lots of conversation about that. So I think those two factors and also a settling position potentially on the side of the trade discussions and tariff-related movements does point to, hopefully, further stability in the markets. And with the effects of those policies in China, we expect there to be a firming of the market and prices will go along with it. Overall, you've seen this slide before, 64% of our revenue was generated on the MET side, 36% on the thermal side of our business. And you can see the distribution of the sales by destination. Japan clearly remains the standout for our business, terrific market. uh, takes, uh, nearly half of our total volume, which is, which is good. India's actually emerged as a, it's always been a part of our business, but India's emerged at 11% now, which is, which is good because, uh, that footprint we know will expand considerably as we go forward. Um, a new thing for us, of course, is sales into China. That's obviously met based, uh, having never sold really any thermal coal there. Um, and then the Malaysia and Korea taking up seven, 7% of the business overall, and there's a spread of other smaller destinations, but, uh, But, yeah, Japan continues to be an excellent market for us. And we remain confident about the outlook for the business because there's a supply-demand gap here that we know is going to continue to drive robust pricing into the future. So on the thermal side there on the left-hand side of the page there, you can see out to 2040, a projected gap there from Quality Insights who are assisting us with our views on these things. It's about 150 million tonnes difference between the runoff of mines and the growing appetite for thermal coal. across our region. And on the metallurgical side, perhaps more modest growth, but this is actually a more modestly sized market. So the 61 is actually really important in a market that's actually much smaller in total volume. And so both of which give us the confidence to move forward, and we look forward to enjoying the tension that the supply-demand delta creates in the pricing market. The upside of things, I'm not going to go over too far because I know you've seen all that through the procession of quarters during the course of the year. Only really to summarise that we've had a very good year operationally and we've done well relative to the guidance we gave you at the beginning of the year. We took a conservative position in doing that and I'll get to guidance in a moment. And we've done the same again in this year in terms of taking a conservative view. But the 39.1%. is in the upper end of our guidance, very good. And the sales are similarly so at 30.2. So very good results across, across the business. Um, if I move over to the actual operations themselves, the 24 Queensland, very good start to our first year of ownership. And we want to continue to see that momentum going into the new year, both new mines, Blackwater and Dornier have, have certainly exhibited, um, better than historical performance, uh, over the last few years. And so that's terrific. Um, You know, proportionately, Dornier's had a step up, which has been really good. Blackwater is doing the same, but we want to see more momentum in this year from both of them, and we're encouraged to think that that will come. We did set ourselves a target of $100 million out of cost by the 30th of June of the year. We did achieve that, which is very positive, and the teams have done a great job there in Queensland in delivering on that undertaking. And you saw the benefit of that come through, that cost at $139 for the year. We'll continue to see further cost outs and benefits and productivity improvements in the course of the new year. And New South Wales did a good job as well. At 19.1, that ran it out a solid year. The open cuts did very well. Narrabri obviously less than what we would have liked, but it did have a very long and extensive change out for eight weeks as we did some serious refurbishment work on many of the legs with that change out. So 19.1 off the back of that was actually a solid outcome all round. And we're looking forward to seeing that continue in this new year. So as far as Narrabri goes, we have some revised CapEx news for you, which was the action item on us to come back and release that to the market once we've gone through the various hurdles with our joint venture partners. We have done that, so I'll speak to that shortly. So the only other thing to mention off the back of this is similarly with last year where we had $100 million out of Queensland, it was our cost out target. In this year, we're seeking to take another $60 million to $80 million of costs out of the business, and that is across the whole business. So as I mentioned in the quarter just gone by, our focus has turned to New South Wales as well, just to make sure that we are optimising the underlying structure of the business there in the same way as we've been doing in Queensland. And so the $60 million to $80 million that we're intending to take out here covers both New South Wales and Queensland and corporate, by the way. And that is outside the guidance range that we'll talk about a little bit later on. So with that, I'll hand to Kevin.

Thanks, Paul. I'm over on the five-year financial graphs. As you know, 22 and 23 were really strong years with frequent coal prices compared with FY25, which you'd have to think you're at the bottom of the cycle in the second half of FY25. Full year underlying EBITDA, as Paul said, of 1.4 and FY25. You can see the scale and the benefits that have been delivered to us by acquiring Dornier and Blackwater with nearly 900 million of EBITDA contributed by those two mines. Underlying NPAT at 319, a pretty strong first half and a pretty soft second half with coal prices where they're at. At a statutory level, I've got to apologise. These accounts have got a lot of noise in them as a result of that acquisition and divestiture. But we're going to take you through that and we're going to explain those in slides that are coming up. Our results are translating really well into cash. You can look at the cash generated from operation versus the underlying EBITDA. And you can see that's translated into net debt coming down from $1.3 billion in FY24 to $600 billion in FY25. So we're pretty happy with that. So we reported $1.355 billion of underlying EBITDA. The DNA combined at $607 million includes $238 million for New South Wales and $369 million for Queensland. That's lower than what we initially guided, and that really reflects the settlement of the acquisition accounting within the 12 months of ownership. We had net underlying financial expenses of $289 million. About $190 of that relates to the interest payments on the US $1.1 billion credit facility, and the balance of that is drawn from a number of places including other interest charges of 40-odd, leases, lease interest of $14 million, some non-cash unwinds of provisions of about $50, amortisation of the upfront fees on setting up that facility for $20, and then we had some interest income of $27, which was down substantially from last year. An underlying income tax expense ratio of about 30% continues to hold, so you can use that in your models, and it came to an underlying NPAT of $319 million. As I said, there's plenty of noise in these numbers, but it's good noise. We've got $330 million of net gains from recurring items on a post-tax basis. And that's all spelled out in Note 2.2 to the financials. But if you've got questions, just give us a call and we're going to take you through those things. We booked a post-tax gain on the sale of the 30% of Blackwater of $274 million. And because coal prices were lower than we expected when we went into the contingent process, contingent price mechanism with BMA, We remeasured that at the end of the year and we booked a gain of 289. But that just simply reflects that we haven't paid BMA what we expected because coal prices have softened. We had about $37 million of post-tax transition and transaction costs when we sold the 30%. And we fleshed out SAP and we had a little redundancy in restructuring costs in Queensland. So that's those explanations. And as you know, the US denominated debt, the cash and the deferred consideration are is all in US dollars. So when we retranslate that, we pick up some gains and losses here. So the total of these are about 195 million after tax. If I take you over the page, we said we'd give you a little bit better detail on depreciation, amortization, and finance, and hopefully we do that. So if you look at the depreciation, amortization, net finance for FY25, DNA came in at 607, as I said before. We said we'd be about 750 on guidance when we talked to you earlier this year. We're better than that because it just reflected the acquisition accounting where we rebuilt or restructured that cost of acquisition just at the end of the year. The FY25 DNA for Queensland, there were some one-off adjustments. There were some assets in there that we'd had on the books when we brought them on that we found were surplus, so we took the hit on that. But for depreciation, we estimate it's about $16 to $18 a tonne of owned coal sold for New South Wales and about $23 to $28 a ton for Queensland. And because a lot of the depreciation charge is based on units of measure, it's a function of how well we produce in the pit, how well productivity forms. On the amortization side, that's about $6 a ton, and I think that's pretty safe to use in your models. And I think the net financial expense, we've told you where that is historically. But there's plenty of noise in that number with $568 million of net finance expense, I think spent $219 of that in cash and non-cash is about $350. This year, in this financial year, you should expect that we will look at refinancing the US $1.1 billion. The long call period for that finishes in March 2026. And we would expect to be talking to potential providers of debt capital over this next year. So stay tuned for that as we go through the year. The segment result over the page on that, we give this to you. I think this is a really handy slide. From this, you can pretty much work out what the unit cost is at each of those bases, New South Wales and Queensland. But what you really do see is New South Wales, sorry, Queensland contributed $3.5 billion of revenue, close to 60% of overall revenues. and nearly $900 million in EBITDA. So the acquisition is really helping diversify Whitehaven Coal, has helped to diversify Whitehaven Coal quite well. The net finance expense of $289 million, the underlying components we talked about, I expect that to be down next year. And as I said at the half year, the financial show really do show the benefits of that diversification. And as Paul said earlier, you see that in the participation per share, all without issuing a share in the process. So a good outcome. Um, moving forward, we've told you, we think we can do better at Dornier and Blackwater. That's certainly the focus in, in FY26. And we're really well placed, I think, to, to, to look at a recovery in coal prices and see that translate to better economic performance. Over the page, um, As I said, we think we could continue to improve. At the group level, we realised $215 a tonne and a unit cost of $139 and we paid the various governments an average royalty of $25 a tonne. In Queensland, you know, that's a tiered structure. The average royalty in Queensland was about 12.5% and the average royalty in New South Wales, as you know, is a flat structure, is about 10%. So on the cost side, guidance was about $140 to $155. We thought it would be a higher year, and we expected it to be a higher year because we'd closed Warris Creek, put that into rehab. That was a really low-cost operation, bypass 100%, closer to the port. And we brought on Vickery, and we're digging a box cut at Vickery. We're mining through the hill at Tarrawonga. So, you know, 25 and 26 are periods of higher cost in this operation. Productivity improvements, we've focused on that pretty heavily in Queensland. And in New South Wales, we're seeing benefits from that. And we've reduced the costs in Queensland, but I think there's still more to go there. As we said, we'd rebuild blasted stocks at Blackwater. That's helping us. There's still more to go on the productivity front there in ROM volumes. But I think overall, in the bottom of this market, it's been a pretty good outcome. That'd be my summary for it. So I'm pleased with the second half result. and I'm pleased with the strength of the balance sheet. If I take you over the page, this is just a standard bridge that we use each year. It'll help you understand how we think about things. You can see the New South Wales price was softer, and this is trying to bridge you from $1.4 billion EBITDA, which had one quarter of the whole operation in, to $1.355, which had all of Dornier for all of the year and three quarters of Blackwater in there for the year. But you can see softer coal price. We're down on volume because of Werris Creek closing and Vickery just starting up. Our costs were up as a result of that switch in proportion of coal from different places and higher cost operations. But you can see $600 million in EBITDA, which is the proportion of the year from that operation that's come through in here. So it really has contributed quite strongly to performance. If I go over the page on the net debt, again, it's been a really busy year. You can see that the business delivered $1.1 billion of cash. We had to pay BMA 1.104, which is a combination of the US $500 million, the $363 million in stamp duty that we paid, and then there was about $56 million that we got back in a completion adjustment from BMA. So that's how you get to the 1.104. And the 1.719... is the sell-down of $1.8 billion to Nippon Steel and JFE. So, sorry, yeah. In that process of selling down Blackwater and in that process of re-measuring that contingent liability, there was taxes that had to be paid. That's about $150 million. So really the 1719 is more like 155 net. And the capital expenditure and other acquisitions of 448 is what we've spent on Capital expenditure, what we spent on the remaining 7.5% of the final payments there for the 7.5% of Narrabri. And we also bought a seat at the table at the DBCT coal terminal in Queensland. So that was $24 million. And we gave shareholders $200 – well, call it $200 million. It rounds up to that. In here, the next line in there is really the leases that are paid for. And we've got some foreign exchange variations and others. But we finished the year with net debt at about $600 million, which we're really pleased with. And I think the balance sheet with 10% gearing and a leverage ratio of less than a half is really well positioned to get through the bottom of this cycle. And we've seen the coal prices turn late in the half or late in the year anyway. So a strong balance sheet with gearing of 10%, a leverage ratio That's less than half a turn. We've got plenty of liquidity on the balance sheet, so I think that's good. The sell-down or the receipt of the proceeds from selling down that 30% joint venture interest in Blackwater improved our liquidity. But we're holding that cash on the balance sheet, or $500 million of that, to meet the second payment to BMA next year. Coal price contingent payments. We paid $9 million in the 2nd of July. So that structure, which was really an upside-downside sharing structure, is working as anticipated. And if I look at where we're up to in July year-to-date, we don't expect to pay anything out of the 1st May-June or the April-May-June-July period. So coal prices need to recover in order for us to pay the BMA out of this. And as I said, we intend to reposition our funding sources. So I think a Very busy year, but a pretty good year. A business really well positioned, bottom of the cycle with a turn coming and looking forward to 2026. So with that, I'll hand it back to Paul.

Thanks, Kevin. I'll just switch over now to the refresh of Whitehaven's capital allocation framework. And just reminding everybody, I suppose we're not looking for wholesale change with the capital allocation framework. It's certainly served us very well and we get good feedback on the clarity that this provides. But we have said that with the acquisition that we would revise that at the end of the two years. But because we've been able to accelerate the de-risk and the balance sheet with the sell down at Blackwater, we committed to revising that and announcing that with the full year results. And this is the outcome of that process. As I say, it served us well in terms of balancing the needs for CapEx within the business. And so I'll just go through the parameters that we've changed within the capital allocation framework itself. As Kevin's mentioned, we're modestly geared and will continue to stay that way, both on a gearing metric but also on a leverage basis as well, depending on how you'd like to measure it. If we look at historically, we were in a business which was half the size. The payout ratio from NPAT group, NPAT, was 20% to 50%. That was wider than what we think is necessary now with a broader business based lower risk business. So we are narrowing the range of that and elevating the top end. So we've gone from 20 to 50 to now 40 to 60 of our underlying group NPAT. So that's an improvement. And then that is total returns. So when we look at that and the two instruments we're using in which to deliver those returns are through dividends and buybacks. And basically we're going to take a position where we have a balanced in value approach to dividends and buybacks now within that 40% to 60% range. And as we've already noted at the beginning of the presentation, we're at 60% in this current year. So that's the changes to the structure of the capital allocation framework itself, of course. Money to be spent on – well, in the internal competition for the allocation, that incremental dollar on capital remains the same. So whether it be money for internal projects, Vickery, or Stage 3, or M&A from time to time, they must go through the same hurdles that this dictates. And as I say, it's served us well. We don't have any M&A on our agenda at all, so – So, um, that, that part is not part of the immediate considerations for, uh, for how to allocate capital within the framework. So if we look at the outcomes, uh, the 16th of September, we will pay, as I said earlier, six, a six cent fully frank dividend, um, which totals about $48 million of capital. We intend to buy up to about the same amount, $48 million in shares back over the next six months through our buyback program. So a balanced by value approaches, as we've mentioned. And that takes the full year dividend outcome to 15 cents per share, fully franked. And with the buybacks added in, that's $191 million of capital returned, which represents, as I said, 60% payout ratio of the underlying group, NPAT. So I hope those changes, everyone can process those. I think it's a better outcome where we were before. It should be more consistent. more consistent uh payout ratio than what we've had before with the 20 to 50 so a narrow range but the top end is higher and a balanced approach in value to delivery of the dividends and buyback one of the other action items we had or commitments we made to you to to come back to you with was obviously revision of uh the narrow barrage stage three capital so i do want to spend a little bit of time just going through that so i've got a couple of slides here which which does that now a couple of key key points i should just mention which um which are influential in terms of the revision of CapEx. So obviously the time, the much delayed approval of stage three was something which, uh, was grinding on us for some time, unfortunately, uh, which has been very annoying. Um, and so, uh, and, and then that consumption of time during going through that process also, um, diminished the opportunity for the walk on walk off scenarios we mentioned before. And so we've, we have, uh, jettisoned the idea of having the walk-on walk-off and we've now deferred the decision on a new long wall for 10 plus years and so the other decision which we've taken which is influential in this is to look at the changing the direction of mining and under those other scenarios we were going to go from north to south and in this scenario in the scenarios we've now adopted now we are going from south to north and so that makes a That means access will be used through the 201 mains for the 300 series panels. And so you only incrementally drive the 201s as you need incremental access. But the 300 series mains and the 301 mains are no longer required to be done up front. In fact, the 300s, not at all. 301 access is only required in the same vein as 201 as you need to incrementally drive it to get access to develop the next panel. So that will be incremental over time, not something which was going to be a large liquor capital up front with the previous iteration of of stage three. So much lower capex profile now as a result. And I'll walk that through. The assumption in terms of volumes for us modeling out Narrabri, we're in the six to seven million tons range. And I think as we talked about, I got the question last quarter about this as well. And that's how we think about the average volumes for Narrabri over the life of mine. I'm over the page now just to go through what the implications of this are. So the previously discussed 800, 850 capitals has changed dramatically. So Narrabri stage three capital is now 2,62300. the bulk of which is actually deployed to the maintenance of our existing long wall. We will make this last longer. There's clearly a trade-off there in terms of less capital up front, more in maintenance over time to make sure we keep this wall in good shape. Of the $260,000 to $300,000, we've already spent $40,000 of it. There's about $15,000 in the new guidance that we're giving you. And then there's a bit more that's got to go into this. The balance of capital goes over the next six years outside of guidance. but a big reduction from the 800, 850, as I say. I mean, if you looked at like-for-like basis on an inflation-adjusted basis, that would be well over a billion dollars in capital for this project. So, which, you know, given Narrabri has been producing less in recent times, the deferrals in the receipt of approvals and our view on the direction of mining, this is a far superior outcome from our perspective in terms of... from a capital management perspective, but also then, you know, given the competing demands that the enlarged business has for capital, there's obviously a need to fight for its capital, just like every other site does within the portfolio. So I think there are positive changes to be made. Just to go through quickly some of the other outcomes from that, we've given you some numbers there in terms of the sustaining CapEx requirements for the mine. So life of mine is $8 to $9.00. In the next couple of years, that does go higher in the short term just to be setting up balances of infrastructure needed over the next two years. But life of mine is the $8 or $9 that you should use in your model. Remaining capex for the 200 series panels is there's about $80 million in that. And $60 million of that will be spent between $26 and $27 million. So overall, we feel like a much better optimised plan for Narrabri, a big reduction in capital required for Narrabri. The trade-off in tonnes is not too difficult. At six to seven, we feel that's an appropriate thing to do. But overall, a much better outcome for our investment in Narrabri. I'll flick over now just to our guidance. Now, I'll start by saying, look, last year and the year before, we took a measured approach to guidance, so we took quite a conservative position which we thought was prudent to do. We feel it's prudent to do that again. We're only a year into this, this bending down these assets and there's more bending down to do, even though the year has shown great promise and we delivered good outcomes at the upper end of our guidance. And so, so our intention is to do the same, but we are going to start the year with, with sensible guidance that doesn't bank in everything. And so just for everybody's understanding, it's the same approach to last year. So we're talking about 37 to 41 million tonnes of ROM at, at the group level. We're talking about managed sales, 29.5 to 33 million tonnes across the group as well. And obviously, just to remind everybody when they're comparing year to year, that, of course, the sales guidance at the equity level is only 70% of Blackwater. I'm sure everyone understands that, but just to remind everybody, because when you look at the numbers year on year, you think, oh, what's the difference? But, of course, we've sold 30% of Blackwater and very happy to have done that. The cost guidance itself at 130 to 145, reminding everybody knows we came in at 139, just at the bottom, below the bottom end of our guidance. And we're certainly aggressively targeting costs again to try and drive a better outcome. But again, let's just be conservative to start off with here. The $60 to $80 million I've mentioned already, that run rate change of annual cost savings we want to see by 30 June at the end of this financial year 26th. We did deliver on the $100 million last year. We intend to deliver on this as well. But that is outside of the guidance, so on top of the guidance range that we've given you there. And there are other levers there to continue to drive things, improvements. Blackwater, obviously, we're continuing our journey with the pre-strip inventories being rebuilt. We are continuing to see good opportunities with the AHS system and the productivity that we can deliver by driving that harder with the support of the OEMs. And we're always trying to maximise our margins by tweaking and refining not just the marketing strategies, but then also the cost base of the business more generally. So there will be more of that in this new year as the 60 to 80 highlights. And as I say, we intend to deliver that on top of the cost outcomes that naturally form from our guides. Given what we've done with Narrabri, you can see the CapEx profile for this year is lower than last year. And so our CapEx guidance there, 340 to 440, reflects not just the times and markets being what they are, but also that lower CapEx expectation for demand for narrowed by with the revised approach to stage three. So with that, I think we'll finish up the formal presentation. Very good year from us. We're happy to have got through the first year well, setting ourselves up for FY26 in a positive way and look forward to the questions in the session with the sell-side analyst. Thank you.

Thank you, sell-side analyst. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you are on a speakerphone, please pick up the handset to ask your question. Your first question comes from Rahul Anand from Morgan Stanley. Please go ahead.

Hi, Paul and team. Thanks for the call. Two from me. Firstly, on Narrabri, look, very good rationalization there, obviously, on the renewed mine plan. And I think absolutely makes sense to allocate capital judiciously to the asset, given its history and growth options that you have within the portfolio now post-acquisition of BHP assets. Look, I just wanted to touch upon some of the guidance that's been provided and updated for Narrabri. So obviously you've gone to 6 to 7 million tonnes. There's minimal impact to the mine life there as well. How should we think about, I guess, the coal quality impacts, costs impacts, and potentially where you can make up the lost tonnes from within the portfolio? Like, where would your targets be? That's the first one. I'll come back with a second on the guidance. Thanks.

Yep. Thanks, Raoul. I'm not sure how you managed to be the first question every one of our calls, but well done to you. Yeah, look, we're very happy... Well, we're happy to have bottomed out the CapEx revisions for Narrabri. So we think that's a more sensible approach. As we've said, and you rightly point out, given its recent performance, this is the right answer, given the competing demands of capital within the business. Look, the call quality does... We've said that the ash does increase over time, and so that changes its profile. As everybody knows, it sort of sits just under GCNUK spec today, and that does drift further into, say, if I can just use in round terms, it drifts further over time into the Korean market, and at the back end of its life, there's actually some 5,500 as well. And so that's okay. It's still our cheapest coal. um by some margin and so at that at that six to seven million ton rate we're even less it's still our cheapest coal uh so that's the right way to think about in terms of volumetrically the blending opportunities across our business with that coal is the bit that is very interesting to us because and just to use the most extreme example um you know you all understand what the api5 number is today you know relative to gc nuke and to be able to capture that benefit with blending uh is is part of the reason why Narrabri continues to be very interesting to us. And, of course, that's part of the reason why Vickery continues to be very interesting to us because the two of those married together, you know, that's essentially $40 up for grabs there in blending benefit across the difference between API5 and GCNUK. So that's how we think about it. There's, of course, more tons. I think the other part of your question was just what are the other ton options in the business. Vickery, of course, is one of them. That requires capital. That's off the table for the next 12 months, as everybody has heard from us in the past. That's prudent given where the market's at. But as I say, Vickery itself is a very interesting prospect and in the right market is going to come on at some point in time, if I can say that. The returns of the standalone project are very interesting to us, as is that blending benefit I've just highlighted. And then Malls Creek continues. Once Malls Creek continuation project is approved, we'll be able to reorient the pit. And we feel that that is the key to getting close to the 13 million tonne approval. Moore's continuation project is actually set at a 14 million tonne approval, actually, but that's just to cover the spikes. We'd be very happy to see the continuation project deliver the 13 million tonnes. That would be very positive. But that increased strike length that reorienting the pit run north to south would deliver, that would certainly give us the productivity benefits that we struggled to attain in the back end of the, in the Southern end of the lease at the moment where, where pit intensity, mechanical intensity in the pit is, is the enemy to good productivity. So we think that will, um, that will free up the fleet in a much more positive way. So that's where we certainly expect to get more tons of Queensland. Just another story altogether, of course, in terms of incremental tons, we, we, we, we've got great aspirations for both sites up there. And of course, Winchester South in time. Um, but, uh, And as many of you have visited the site, you'll see that the potential there, we're delivering on that potential. We delivered more tonnes than they've seen in recent years in this past year. And our plan is to do that again. Now, okay, we've given you conservative guidance, but I think that's the right thing to do.

Great. Now, you've kind of answered my second question, but I'll bring it up anyway. So FY26 guide, obviously you just touched upon Queensland. So the guidance is basically FY25 production already sits at top end of guidance for next year. 25 was basically your first year. You had weather impacts there, and yet you produced quite well. And then if I think about NSW as well, very marginal lift into guidance for next year. Narrabri, I think, just has this current long-well move, but none others planned for next year. And then malls as well at, you know, 11.5 rates. A bit of gap between the 13 that's named late. Admittedly, you don't get there without the investment, but you would think that you can potentially year on year do a bit better. So I guess the question is, is this basically just being too conservative in terms of guidance or are we missing some impacts that you're potentially expecting to production from Queensland or NSW into next year?

We're just being conservative again. I think that's the right thing to do. I wouldn't say too conservative. I'm just saying conservative. We think that, as you rightly point out, the midpoint of guidance is what we did last year. That's factual. And as we did in this past year, we plan to get in the upper end of our guidance, and we certainly want to do that. Now, we're at the beginning of the year, not towards the end of the year, where that's obviously, you could say, with greater confidence, but... That is our intent, and we feel like we've got the momentum to carry that into the year. But we're not going to bank that all at the beginning of the year, and I think that would be the wrong posture to take as far as guidance setting goes. But all of what you just summarised is appropriate. We have had weather, there's no doubt. You just have to look out the window, not for you if you're in Melbourne, but here in Sydney and New South Wales and Queensland. We've had certainly some weather, so we've taken that into account, of course. And Narrabri is back and cutting, but, you know, it's had a slow ramp up, so we've factored that in as well. So, look, I think it's the right thing to be conservative in this instance. And we certainly plan to... Under-promise and over-deliver, to use that overused term of phrase. So that's the intent here, for sure. Not just on the volumes, but on the cost as well.

Understood. That's very clear. Thank you very much.

I'll pass it on. Your next question comes from Paul Young from Goldman Sachs. Please go ahead.

Morning, Paul, Kevin. Paul, just to touch on, I think, the under-promise, over-deliver statement, strategy which is a right one I think for FY26 but just to dig into the Queensland guidance a bit more and considering we were up on site in June and we just saw how well the Dornier Truck Fleet's performing and also what you managed to achieve at Blackwater so just curious around the like is it a simple approach how you set the the guidance. And by the way, I'm not disagreeing with this. I'm just, obviously the sites come through with their budget for the year. Are you just applying like a simple safety factor and the same safety factor across both Dornier and Blackwood? I'm just wanting to understand what the strategy is and how you've come up with that guidance.

Yeah. Yeah. Thanks, Paul. Look, we're just being conservative, Paul. As everybody, you included, would have seen the opportunity up there. We are delivering on that. The weather in the first month of the year has been has been unseasonably annoying. But that's okay. We're at the beginning of the year, and the momentum of the team is doing really well. So we're positive that we can do well. But we have taken a conservative position. I think it's the right posture to take. I mean, this is only the second year. And whilst we feel like we've got our hands around the assets better, we've still got some work to do in terms of getting that pre-strip where we want it. The fact that we've mined faster has actually chewed into – The incremental improvement in the pre-strip inventory balance. Now, you would have seen that when we talked about that when we were up there. So we need to step that up again, you know, because we're mining faster. And that's a high-quality problem. And Dornier itself, no doubt. no doubt can do better. It's had a very good year. Proportionally, it's done better than Blackwater, but that's easy to say because it's a smaller mine and the things we're able to do there have a more immediate effect than the longer term systemic alignment that we need in terms of getting the dragline system working better. The AHS system is delivering a good step up and we want to see that continue in the year. It still needs to get to manned equivalent basis. That's our target. And that's the pressure you're keeping on CAT to help us achieve that. Yep.

No, understood. And then just with respect to the strategy over the medium term, Paul, and I think, you know, where you've come out with on focusing on just brownfields, CapEx and reducing NABRA, really sensible on returning more to shareholders, capital shelters, which is great as well. And you've obviously got the deferred payment, second deferred payment to BHP, I think in the June quarter of next year. So it's still a You've still got some cash outflows with the BHP payment. So, Paul, I know you're option-rich, if I call that, as far as a few projects are shovel-ready. You've got working through synergies with Dorneum, with Winchester South, but you've got a lot of organic options. But there's also a lot of inorganic options as well that I'm not going to go through them all, but you know them up in Queensland and close to both your assets. So is it more the fact that you just get through this fiscal year and get through that payment, assess everything, and then just make a decision on where you think the best opportunity is?

There's a lot in that one. There's a lot in that question. Gosh, or comment. There's a bunch of stuff in there, Paul. So look, yeah, look, the next bullet payment, well in hand. We have the money in the bank. It'll stay there. That won't be touched. So that's, rest assured, the balance sheet is in good state to be able to deal with that as and when it arrives. And then you've obviously just got the $100 million that's the further 12 months then from then on the third-year anniversary. And so, again, that's not something which would trouble the business too much at all. You're quite right. We have internal options. Those internal options are all about sweating the assets today, make driving what we've got harder. As I said, Vickery, which is the obvious answer for some of the reasons I've mentioned earlier, Vickery is obvious and fully approved to do so, but not in this market. We've taken that view and the board's 100% behind the notion of that. Let's sweat the assets properly. and continue to drive the returns. And let's get the cost base even sharper. That's our focus for this year, just margin protection, because the market has been a little bit variable, to say the least, and margin protection should be the balance of that. The assets you're talking about around our space, look, they're not particularly compelling from our perspective, given the other options we have. And so that's That's how we think about it. So don't expect to see us playing in any of those spaces at all. Look, that doesn't mean we don't have a look at stuff. Of course, we look at everything, as you know, but they don't form part of our strategic picture, if I can say that. So we've just got too many, as you say, we don't have too many options. We're options rich. I think you coined that phrase. Yeah. Prioritising those options is the job we had before us. We're keen to make sure we make the right decisions in maximising our returns to shareholders.

Yep, understood.

Thanks, Paul. Our next question comes from Chen Zhang of Bank of America. Please go ahead.

Good morning, Paul. Morning, Kevin. Thank you for taking my questions. My first question is a follow-up on Narrabri stage 3, on slide 26 and 27. It's good to say you have 500 million capex reduction, which is very significant because you don't need to purchase land wall or construction of ventilation, etc., But I'm wondering, I guess you have assessed the economics benefit of mining the 200 versus 300. But I'm just wondering, is there any other trade-off in volume, quality, or geopolitical conditions, not mining you previously planned? And also, what stops you to mine narrowly? beyond the 7 million pound prime, and thank you.

Yeah, thanks, Chen. There's a lot in that question too. I'll try and get through it all. Look, our view of Narrabri is that this is the right answer given its recent history and quite frankly, given the other options within the business. Narrabri still forms a very important piece of our puzzle. And so six to seven is the right answer volumetrically, given that we're not contemplating the walk-on, walk-off scenarios, as I said. So you will have change-outs. And so that tempers the total volume that you might have otherwise achieved had you been able to eliminate the change-outs by virtue of having two long walls on a walk-on, walk-off scenario. So, as I say, it's an important piece of the puzzle. It is our cheapest coal, and there's certainly very good blending options within the business with the high-quality thermal that we have coming out of both malls and, of course, as I mentioned earlier, Vickery. So, there's nothing else that stands in our way in optimising that. There's the 200 panels. It's not a 200 versus 300 type thing. It's just a sequencing. 200s will get done before we get into the 300s. Now, there is preferentially obviously a desire to stay on the shallower side of the mine. So as you can see in the diagram there, the panels that we're highlighting that sort of get taken first are the ones in that shallower end before. So we don't take all the ones in the 200. Can we flip over to the 300s to stay in the shallower side of the mine? So that is just us optimising what we believe to be the right answer from a volume and cost perspective perspective. It also actually coincidentally corresponds with the better quality side of the mine as well. So there's a little bit more CO2 as you go to the western boundary, and the ash certainly creeps up a little bit more there too on that side of the mine. So it's about all us just pulling the right levers, we feel, to make sure we optimise our investment in Narrabri.

Thanks for that, Paul. Maybe a question for Kevin, please. Kevin, you mentioned earlier in the call that why haven't we refinanced the debt, the U.S. $1 billion debt. Are you happy to carry the U.S. $1 billion debt on your balance sheet, or is there any plan to deliver it from here? Kevin, you have changed your dividend policy based on the group NEPA, so if you deliver it to your your partnership that will improve your dividend going forward? Thank you.

Oh, Chen, that is a really good question. I'm going to say, like for US $1.1 billion of debt, we are collateralized well beyond that from a security perspective. So what we're looking for is a better price structure, a little more flexibility in terms, and we're probably going to look to see if we can put more in the capital stack outside of private capital. We'll be looking for a lower rate And we'll be looking to try and push this business or help get this business towards that top end of that double B, if not investment grade credit. Look, the feedback from investors through this last few years is they've been delighted with providing us that capital. We've been delighted in taking that capital and buying those two assets. So it's been a great deal for all of us. We're two years in. It's settled down. We've got reasonable numbers. We should be able to go to market and tell a pretty good story, I think, Jen. So I'm looking forward to doing this over, or the whole team is. Kylie, as the GM of Capital Markets, is leading this charge. So we'll be busy in 26 doing that. And to Paul's point, the focus of the CFO in 26 is about putting the funding structure in place for the long term, not on M&As.

Sure. Just to follow up on your answer, so there's a plan to reduce your interest payment going forward?

Reduce the interest payment? I think we'll finish up building, managing, keeping debt on the balance sheet, but managing the cash position to get to a net debt position that works. Because the business of funding a coal business is about maintaining relationships with providers of capital. and you want to keep those relationships warm. So you manage that through a net cash position, and that gives you flexibility through facilities and cash to manage whatever comes your way in the process. But underlying that, Jen, is a plan to keep sufficient liquidity on the balance sheet that no one calls you up and says, oh, you're in trouble, aren't you? And we've done that pretty well, I think, for a few years now, so the best part of the last decade, to be honest.

Yeah, sure. Thanks for that, Kevin. Thank you. Yeah, I'll pass now.

Thank you.

Your next question comes from Lyndon Fagan from JP Morgan. Please go ahead.

Oh, good morning. I'm just wondering if you're able to give a split of the Queensland, uh, production guide between Dornier and Blackwater. Thanks.

So, sorry, Lyndon, was that you wanted the split? Is that what you said? Yeah. Yeah. Okay. No, no, we prefer to keep it. We prefer to keep it aggregated. We are, we're, We took the decision now over a year ago that we would provide guidance on a state basis. You can see where we ended up last year, so you can infer a split there pretty reliably. But, yeah, we won't be giving guidance on an individual mine-by-mine basis.

Well, from a qualitative point of view, I guess if ROM coal's up 3.5% at the midpoint, which of the assets is one doing better than the other? Obviously, it's going to be heavily weighted to blackwater, but any colour?

We're happy with the guidance that we've given you, and you can use the average realisations that we've given you, and you can see where that implies, obviously, a product mix, which we've also given you. So you've got enough there for your models, I think.

Okay, no worries. And then I guess on the cost out front, Is this year the last year that you expect to realise sort of cost out related to the new management sort of regime? Or do you expect that to be a multi-year thing still? I'm just wondering if at the end, the exit rate of this year is sort of a steady state, Whitehaven operating regime regime.

Yeah, fair call, fair call. Look, I do think in terms of overt cost reductions initiatives that we publicly discuss, I do feel like this would be the second and probably last year of that. Now, that's really as a result of, you know, but cycles dictate cost focus as and when, as you know, and so this is not the first time we've focused on our cost base and it's the right time to do it. Obviously, Queensland, with the transition in, it was right, to deal with that then and the continuation of that in this year. But we didn't turn our attention to New South Wales just because we had our hands full, but we will be doing that this year. So in terms of overt expression of further cost targets over and above guidance, yes, I think you can say this is the last of that. But that doesn't mean the cost journey will stop or that you should use that as the exit rate because what we do see, what takes over, is a productivity drive. And so that's where we think the real upside comes. And so, say, for instance, just to use a case in point, at the end of this year, so we would like to see the continuation project at Moores Creek done by, say, 28. And the productivity benefit with the same fleet of being able to manage the fleet across a much bigger strike going north to south is going to be a really nice productivity benefit for us and obviously the cost base of Moores Creek. So the conversation in subsequent years will all be about productivity, and that will manifest itself in improvements in our cost base. But I think, yes, the 60 to 80 we've tabled for this year is, at this point in time, it's the last time we need to be talking explicitly about a separate program outside of our normal cost and productivity focus.

And a quick follow-up, of that cost out number, how much would you apportion to New South Wales? considering you've been running those assets a long time. I can't imagine there's too much fat.

Yeah, well, that's right. But every side of the business creeps over time, right? Particularly when your focus over the last few years has been drawn to something else. And inflation has had its way with the business and the cost base. And so you're right to say that New South Wales has been ours all along, and therefore it should be reflective of how we want to operate. But I would say to you that you know, turning our gaze to New South Wales is already unearthing opportunities for us. And so we are saying, and that's not to mention that the corporate side of things shouldn't also, everybody should share the load in the cost focus. And so rather than trying to split it up for you, I'll just say that Queensland's got more to do. New South Wales needs to tip in. And so we'll report to you how this is going during the course of the year.

Right. Thanks, Paul. Your next question comes from Rob Stein from Macquarie. Please go ahead.

Hi, Paul and Kevin. Thank you very much for the update. I've got a question on the capital allocation framework. So when we look at the 40% to 60% of NPAT, when we're thinking about this from a one-half to second-half point of view are we to infer that the first half you're going to keep a bit of your powder dry conservatively so that on a full year financial basis you'll meet the target or are we to think about this as in any given period you'll pay out 40 to 60% and I've got to follow up thank you.

I know I can answer that one really quickly and it's as simple as this we've typically been conservative in the first half we've typically always been conservative in the first half we view our numbers as being an annual result and so we would generally be conservative in the first half and then true up in the full year. And I don't see that changing. This is not a real estate investment trust. It's a commodity business.

Thank you for that. That's useful for forecasting, sir. Appreciate that. And then just on the refi or the upcoming refi, are we to expect this to come as one big chunk? Are you thinking about it as diversifying your funding sources? How should we think about this as a combination of bonds, loans, and particularly the flexibility that long-term debt can give you? Just sort of any steer on that would be interesting.

We've been sitting in the steering committee, have you? So the short answer for that is I think, yes, we'd like to diversify capital sources, but we're really happy with the group of investors we've got. That group of investors or capital providers also have different arms that provide funding at different levels and pricing structures. So we're really early in this process. We are seeking to diversify. For your modelling purposes, I think what you need to consider is that today we're probably paying about 10 and a half on this thing. And I think you'd be looking at somewhere, you know, with a seven handle on it, seven to eight for a funding price that comes through. If I got better than that, I'd be pretty happy. But at the moment, markets are priced pretty well, actually. They're really constructive. So If I got to a six, I think I'd be delighted. But for your modeling purposes, I think seven to eight, pick a number in that range, and that's probably where we're aiming to get to. And it's probably likely to get concluded after the non-call period expires in March next year.

Thanks. That's really helpful.

Appreciate it. Your next question comes from Lakeland Shaw from UBS. Please go ahead.

Yeah, morning, Paul, Kevin and our team. Thanks for your time. Just a couple of sort of clarifications, I guess. So just on the capital guide for FY26, the range 340 to 440, yeah, can you give us a bit of a sense in terms of what's in the bucket and, you know, how do you think about what's going to sort of put you at the top end of that range versus the bottom end? I'll come back with my second. Thank you.

We have to. Look, there's money in there for the development projects at Winchester South and Vickery as we keep pushing those a little bit forward. We're very careful in what we commit to and spend there, but clearly we're looking to move those forward. We've got about half of that, I think, is component maintenance, right, which is really our major overhauls on gear that we've acquired. So that, I think, we're going to spend that money because we're it really does support the productivity of the business over the coming years and we need to do that right. And the balance of that is material that we're working our way through and traditionally we revisit and review as we go through and we're very tight on how we spend that. So our underperformance in capital or our underspend on capital in the past has been really around the non-major overhauls and about those things that we take a good look at through the year. So That's probably the answer I'd give you, Lachie.

We've rarely hit. We've always been relatively parsimonious in our capital, I would say. Last year, obviously, we didn't hit the bottom of our guidance. And obviously, when the market's in this state of condition as well, we'll look very judiciously at the capital. I think that the number's already pretty tight. So for the sake of for the sake of your modeling, you know, take the midpoint and we'll update you during the course of the year how we're going. It'll be safe.

Yeah, got it. That's really helpful. Thanks, guys. And then just maybe back to Narrabri, so the six to seven sort of capacity kind of guide is helpful. Do you have a sense in terms of, you talked about the mine plan, shallower cover versus deeper cover. Do you have a sense about how that might vary

when you're moving between the shallower sections and deeper sections just just given you know all the learnings in the in the past of the effort yep yep yep that's that's an interesting topic um yeah we have a lot of learnings that came from the 100 series panels of course and we've and you've been there and seen seen with us the journey as we've moved from the shallow side of mine to the deeper um and so uh We have seen lower productivity in the deeper grounds, for sure, and an increase in cost associated with increased roof support that goes with that. And so when you're on the shallow side of the mine, you can unwind the roof support to some degree. And so there is an improvement on that side, and just productivity generally improves when you're in that shallower ground, and that's just wading event related. So our desire, for sure... And there are lead times associated with developing these panels. As you can see from the diagram, the panels are not of equal length between the 200s and 300s. They're six kilometres long in the 300s. So the lead time associated with developing a panel there is longer than what you would otherwise take in the 200s. So that dictates how quickly you can actually get into the 300s. And so the plan is depicted there. is sculpted in a way that allows us to get over to the shallower side of the mine as soon as we can, because we know there's productivity and cost benefits in doing that. And qualitatively, as I mentioned earlier, qualitatively, the coal quality is actually better on that side of the mine too.

Great. Thank you. I have one more, but I'll pass it up for now and come back. Thanks.

Your next question comes from Glenn Lockhock of Baron Joey. Please go ahead.

Morning, Paul. So you've obviously outlined conditions impacted your business in the first six weeks of fiscal 26. Can you help me understand what did that shave off your guidance this first six weeks and the weather we're experiencing outside?

Yeah, look, the guidance is the guidance. So I'm not going to go on a raging exercise, Glyn, on if you had weather or you didn't have weather. But, yeah, we've obviously had impacts. We've had impacts on both states in weather. And the most notable, obviously, as you would have seen, has been flooding in the Gunnedah region. And, look, that was nowhere near as significant as the last flood we had. And so... Broadly, we've lost about a week there across our operations there. Now, the mines themselves are fine. It's just, as you know, it's the access into them that causes us the grief. And so if the river's rising and the access is about to be cut off, we've got to evacuate everybody. And so we've lost a week across the operations there. in New South Wales, whereas in Queensland it's been wet, and that's been more of a productivity issue as opposed to having to evacuate everyone. You're still there and working, but productivity can drift off when you're parking up equipment because of damage to roads and things and so on. So, yeah, so we have taken it into account. That would be prudent to do, and we have done that.

Okay, thanks. And then you made a comment about Narrabri. It's obviously starting back up next panel in. But you said slow ramp-up. What issues now are we experiencing? And then just how, leading into that, you gave us some idea of CapEx and sustaining for Narrabri. Now that you've had Queensland for a good year and a bit, what do you think sustaining capital is for the business as a whole as well? Thanks.

Yeah, look, we've given you Narrabri's sustaining CapEx. We haven't given you guidance for the business as a whole because there are different profiles to that and... And we'll give you annual guidance there anyway. And we'll tell you if there's other issues. There's no particular lumpy capital in there other than the fact we're getting into a new rhythm with the drag lines and shovels and the chunkier stuff. And we are uncovering that there's a little bit more maintenance required there than what we probably planned, but it's well manageable within the envelope of what we thought we would be doing. And then, of course, there's fleet renewal over time, which both the New South Wales and Queensland will update the guidance for you as and when Narrabri the only thing that I'm pointing to there is that we've been just cautious just because we went through a very significant overhaul of the wall and we'll continue to do that because we didn't get to give all the chocks a birthday half of them got a good birthday which is nice and it's just a matter of how much time you've got and so we'll rotate that through successive maintenance periods as we give them a birthday it's easier obviously during a change out but there's only so much time you can get that done we can do some of that work in our maintenance days, and we are doing that as we go through this year. But we had a few commissioning issues just because of such an extensive refurb that we gave the wall. So there were a few commissioning issues that went on, and that contributed to slower productivity rates with waiting events when you stopped, as you know. So overall, we're in reasonable form. But, yeah, we're taking it cautiously and we're in better shape now, but we're taking it cautiously just because we want to make sure that we understand all the areas where targeted maintenance is required because we have laid in, as you can see from the guidance we've given you, a little bit more sustaining capex required to make this long wall last longer.

All right. And what do you think a new long wall would cost us, Paul? I know it's 10 years away, but if I had to buy one today, just roughly?

Yeah, that's a really interesting question. I mean, I would have said to you a couple of years ago, three, four hundred million, but I don't think that's real anymore because there's no one, and that would have been a European procurement, whereas I don't think that's the case anymore. So I think the numbers are likely to be half that and it would come out of China. So, you know, given that they are the experts in underground mining and 60%, 70% of their volume comes from underground, Longwall being a big piece of that. They are the experts, and we're obviously using Chinese technology in our chocks now, and the big refurb that we've been through incorporates a lot of Chinese gear. So we're comfortable with that, and we understand the quality and dimensions of that. Generally, it's been pretty good, but I would have said half that cost, that historical cost, Glenn.

Interesting, I guess, that option then to push it out 10 years just for the sake of 200, but I guess you've done all the maths.

Yeah, we've done all the maths. We've looked at it all. There's the lead time associated with it as well, and then there's the other competing uses of capital, and then there's the point in the cycle you're in. So all of those things have to be married in that capital allocation framework, and we're comfortable with the decision in terms of the approach we've taken now.

All right. Thanks, Paul. Appreciate it.

Thank you.

Your next question comes from Rob Stein, Macquarie. Please go ahead.

Thanks for the follow-up. Just on the contract with Verizon for malls, noting that that contract's been restructured, is there any implication on what that means for malls going forward in terms of upside capacity? And do those savings, do they amortise to 26 or 27?

Yeah, thanks, Rob. That's been an important development for us. It does provide us a structural change in our cost base for New South Wales, not just malls. So that's New South Wales. That contract is for New South Wales. And that starts at 1st of July. So we're still under our current arrangements with both PN and Horizon for the balance of this financial year. And so we need to make sure that everyone remains focused in what's otherwise a transition period for PN to take on the balance of work. But, yeah, look, it was a very competitive process. And from our perspective, it results in a material improvement to our costs on a per tonne basis, Kevin. Three, four dollars. Yeah, it's between three and four dollars a tonne improvement on New South Wales. In 27. In 27, yeah.

So in effect, as Paul says, we've right-sized the number of consists or train consists for the tasks that we have and we've created enough flexibility to deal with growth in periods to come. So we're really pleased with the outcome and the process we went through.

Yeah. I mean, there's two dimensions to that. Just to highlight that, the number we've given you, the $3 to $4 range, is the aggregate of two things. We took the opportunity to ensure that we were able to minimise surplus take-or-pay exposure, which we were carrying for some time. That's gone. As Kevin says, we now have a flexibility to surge as required with these new arrangements. And then there's just the straight out cost out opportunity, which came from that tender. So the aggregate of those two impacts is in that $3 to $4 range for New South Wales. So half that, obviously, when you consider the group on a per tonne basis.

Thank you. That sounds like a really good result.

Yep. Thank you.

That concludes our question and answer session. I'd now hand back to Mr. Flynn for closing remarks.

Thanks, everyone, for your time and interest in wrapping up the year in financials. Another good year for us. Business is doing well. But if there's any outstanding questions anyone has, you know where to find us. So look forward to engaging with you all over the coming weeks. Thank you.