Yancoal Australia Ltd

Good day and thank you for standing by. Welcome to Yanko 3rd Quarter 2024 Report Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star 11 on your telephone. You then hear an automated message advising your hand is raised. To withdraw your questions, please press star 11 again. Alternatively, you may submit your questions via the webcast. Please be advised that today's conference is being recorded. I would now like to hand the call over to your first speaker today, Mr. David Moore, Chief Executive Officer. Thank you. Please go ahead.

Thank you, Desmond. Thank you to everyone on the call for joining this briefing on Yancol's third quarter production report for 2024. I'm joined on the call by several members of the Yancol executive team, including our Chief Financial Officer, Kevin Su, Executive General Manager of Finance, Mike Wells, Executive General Manager of Marketing, Mark Salem, and our Executive General Manager, Environment and External Affairs, Mark Jacobs. Before discussing the operational performance, I want to acknowledge that during September, an incident occurred at our Ostar coal mine, which resulted in a fatality. I, along with the Yankel team, are greatly saddened by the loss of a former longstanding employee who was working for a contracting company at the Ostar coal mine as part of its closure activities when the incident occurred. Our thoughts remain with his family, friends and colleagues. We have offered Yankol's full support to them and to all our people affected by this event. This is the first time we've addressed the market since Yankol's inclusion into the S&P ASX 200 and S&P ASX 300 indices on the 23rd of September. Welcome to any new participants on the call and welcome to those of you who have joined us on prior to calls. The index inclusion is a welcome event in Yankol's 20th anniversary year. and 12 years since listing on the ASX. I will give a summary of the third quarter activities and then open the call to a question and answer session. My comments are based on the quarterly production report published to the Australian Securities Exchange and the Stock Exchange of Hong Kong yesterday, the 17th of October. There is no presentation packed for this conference call. The ANCOL website holds past presentations for any participants who require additional information in the conference. The total recordable injury frequency rate was 7.2 at the end of September. And while it remains below the industry weighted average of 8.7, we aim to reverse the current increasing trend through targeted safety intervention activities. As we indicated previously, like last year, we are aiming for significantly higher output during the second half. And as anticipated, our third quarter production rate showed a step up to 17.5 million tons of ROM coal production, 26% higher than the second quarter, and 13.2 million tons of saleable coal production, 28% higher. These volumes are on a 100% basis. Our attributable share of the saleable coal production was 10.2 million tons, indicative of what our portfolio of assets can achieve when operating with minimal disruptions, particularly the three large-scale open-cup mines where saleable coal output increased between 18 and 60%. It is worth noting our mines in New South Wales and Queensland did encounter some weather disruptions during the quarter. But in most cases, production impacts were modest due to past investment in water storage and handling capacity. Malarban had a strong quarter as both underground and open-cut operations performed largely to plan. There were minor equipment disruptions at MTW and HBO, but whole cycle management and mine schedule modifications enabled teams to deliver strong operational outcomes. Yarrabee benefited from improved geotechnical conditions and equipment availability, and Middlemount had a steady performance despite the impact of some wet weather. At Ashton, a planned long-warm move during the quarter resulted in lower output. However, following completion of the move, production rates increased with improved mining conditions being experienced. Our attributable sales volume was 10.4 million tons, with a typical mix of thermal and metallurgical coal products. The overall realized coal price was 170 Australian dollars per ton, down 6% from the second quarter. However, this included the impact of a provisional price adjustment from earlier in the year. Prices on an adjusted basis in the third quarter were not too different from second quarter prices, confirming our view that coal markets remain stable. Over 10 million tons of attributable sales at what are still good coal prices generated robust cash inflows. After all operating capital and corporate costs, including our monthly tax payments, our cash balance increased by $430 million to almost $2 billion at the end of September. We see thermal coal markets continuing to experience relatively balanced supply and demand conditions, with small variations in market conditions affecting sentiment and coal indices. Thermal coal indices peaked in mid-August on the back of the Middle East tensions and a hotter than average summer in the northern hemisphere, contributing to additional electricity demand. Year-to-date thermal coal imports by China are up compared to the first nine months of 2023, and there is the prospect that stimulus measures will be constructive for both thermal and metallurgical coal markets. On the supply side of thermal coal markets, various factors constrained exports from South Africa, Russia, and Colombia. By contrast, Indonesian exports were not constrained and achieved good output levels. The main thermal coal indices we referenced traded within limited ranges during the quarter. We retain our view that thermal coal markets and coal indices remain subject to short-term drivers. The prospect of a cold winter in the northern hemisphere could result in increased demand during the December quarter. Turning to metallurgical coal markets, we see price indices reflecting weak steel market conditions. The low vol PCI price benefited from reasonable demand early in the quarter. However, like the hard coking and semi-soft coking indices, demand declined through the quarter, dragging down the price. Yancol's large-scale, low-cost production profile is well suited to all coal market conditions. With no interest-bearing loans, a large net cash position and robust operating margins, we have the capacity to pursue suitable growth opportunities as they arise. If such an event materializes, we will inform the market. In the meantime, we are focused on delivering another robust operational performance in the final quarter of 2024 and delivering on our production guidance of 35 to 39 million tons of attributable saleable production at cash operating costs of $89 to $97 per ton. That concludes the summary of Jankol's third quarter performance. We will now move to the question and answer session, starting with questions from the phone, then moving on to questions submitted via the webcast. So, Desmond, could you please initiate the process for questions via the phone?

Thank you. As a reminder, to ask a question, you need to press star 11 on your telephone and wait for a name to be announced. To withdraw your questions, please press star 11 again. If you wish to submit your questions via the webcast, please type it into the box and click submit. One moment for the first question. Our first question comes from Jonathan Sharp from CLSA. Please go ahead.