Whitehaven Coal Limited (WHC) Earnings Call Transcript & Summary

Good morning, everybody, and thanks for taking the time to dial in this morning to March 2024's quarterly report for Whitehaven. I'm joined here by Kevin Ball, our CFO; and Kylie FitzGerald, our Head of IR. And as usual, I'll go through the highlights in our report and then move on to Q&A. So thanks very much for your time. The highlights, obviously, for this quarter. The first one, obviously, the top point here is the acquisition of Daunia and Blackwater from BMA completed on the 2nd of April and transforming the company into a metallurgical coal producer. Average realized prices for the quarter was [ stalled ] there at AUD 219 tonne, and I'll talk a little bit about that further on. ROM production at 4.4% was 13% lower than December, while the year-to-date number is actually above by about 12% period-on-period. March quarter managed sales produced represents the same sort of relationship, 16% lower than the December quarter. Our total equity sales produced for coal 3.1 and 16% lower. Whitehaven is on track for the overall ROM production guidance of 18.2 to 20.7 tons and sales guidance for the year. And of course, we know there's high interest in the acquisition. So we wanted to give you some numbers to work to for the Queensland operations, which will figure into the June quarter at 4.5 million to 5 million tonnes of ROM production and 3.5 million to 4 million tonnes of sales for the June quarter. On to safety. Look, safety performance period-on-period has continued the very positive trend that we've had. So we've had our TRIFR down now at 3.45, which represents a 27% improvement from last year, which is continuing the trend of improvement in this area, as we always say, more effort required, but those are positive trends to continue to see, less incidents occurring across our business. Now coming back to just the opening Daunia, Blackwater, obviously, the acquisition has been completed. Very pleasing to see that. Very positive, and I'll talk about the transition. I'm sure there'll be questions as well, but the transition has gone very well, and I'd say it's very positive. Obviously, this is the last quarter we'll be reporting without -- in our current form. And as I say, those production guidance and sales numbers have given you for what to expect for June. Obviously, we'll have a June quarter, which we'll be talking to you in July 19. I think it's the date. So you get the first look to the numbers coming out from our first quarter for the Queensland operations. And of course, our full guidance will be given then with the full year results, which will be released to the market on the 22nd of August. [ In ] which time, you'll see the aggregated business together in its guidance for next year. Overall, as I say, ROM for the period, 4.4 million tonnes, 13% lower than December, reflecting very good operations from our open-cuts in fact, and obviously, less tonnes than we would like from Narrabri, and we'll talk to that separately. The numbers there you can see in both the boxes are a solid performance from our open-cuts. Very pleased to see them running well. And to the top end, if not over, the guidance that we've given you on the individual sites for the open-cuts. But I think the most important thing that I can point out here is that this has continued a solid performance from our open-cuts throughout the year. And so we see ourselves on a year-to-date basis ahead of where we've been in the previous year. And so certainly de-risking the balancing quarter for the year, the June quarter, with not as great, great run rate required in order to deliver ourselves into our guidance range for the full year's operations. Down to Maules Creek [ to say ], been very, very solid. And you can see those numbers, not just the quarter-on-quarter, 2.8 versus 3.1 for the quarter from the ROM sales. But I think if you look over the year-to-date, you've got 8.8 versus 6.2. That's a very much improved consistent performance for the mining year-to-date. Quarter-on-quarter, just delivering a more consistent outcome, which is very positive to see. Saleable there at 2.3 was broadly in line with the previous quarter. Coal stocks at 0.5 million are down, and we've drawn some stocks there, obviously, as you would, when the sales opportunities present themselves. Narrabri. Narrabri has been a continuation of it's a difficult quarter that we've had at December. And as we mentioned before, when we had the discussion about that at the December quarter, that our guidance had really anticipated a replicate of the first half continuing into the second half, and that has been the case. The lower tonnes, 657 versus 1,075 million. The difference there really is mechanical issues largely. We have certainly suffered in this ground, mechanical issues. We've mentioned here just the AFC performance itself, and in particular, the AFC chain, which is, we found some quality defects in there that have manifested themselves more pointedly as we've been going through this -- these difficult conditions. Interestingly, we have swapped out our chain. And with the support of one of our very supportive peers in the industry, being able to access the chain quickly that they had in parts, only to find that, that brand new chain also from the same supplier had also had the same quality defects in it as well, which just speaks to a bit of a quality control issue that we are working through with the OEM. But we are back up and running. So -- and we are as we mentioned before, moving into better ground. And so in the last few weeks, the run rate has been much improved, and [ more ] just be coming out of the site, but there's no doubt that we turned out less tonnes in Narrabri in this quarter than we would have preferred. The Gunnedah ops is to say part of my commentary earlier, just on the open cuts, having performed well. And you can see from the numbers here, both Tarrawonga and Werris have been doing exactly that. And again, the point I'd make, when you look at the year-to-date numbers, they are both knocking up repeated quarters, which is more consistent performance than what we want to see rather than a flurry of activity in the quarter, then less in the following. So that's positive for us. And so overall, the numbers are looking good there on both of those sides. Werris Creek. Werris Creek, well, in fact, is the last quarter, the last quarter that you will see Werris Creek for a full quarter because it will come to conclusion during the course of the coming weeks from a production perspective and moved into the rehabilitation phase. So you recall that, we did have a geotechnical slip there some quarters ago. And we were cautious about being able to recover all the tonnes there in that area, but we have been -- the team has done a great job in successfully navigating its way through that. And there will be full recovery of the tonnes available there to be mined despite that slip, which would be a very positive way to finish up the production phase of Werris and moving into the rehab phase. So good numbers there from all the open cuts, which is very positive to offset less tonnes ahead of Narrabri. Over to pricing and realization. Despite a lower thermal price from the gC NEWC perspective quarter-on-quarter, we've actually done slightly better the December quarter, so -- which is very positive. The index is 7% lower quarter-on-quarter, but we've actually achieved a better result there being slightly better and so an 8% premium for our gC NEWC sales, which is very positive. There is, of course, a settlement for the April start of the JPU pricing framework, and it's been reported between the USD 145, USD 146 range, which is a very good number. So we're just waiting for published confirmation of that, what seems to be an agreed price and expect to see that imminently. From the domestic coal reservation policy, which is, as we all know, a very unfortunate. And it's even largely be seen as a policy failure from our perspective in terms of the outcomes required from that. That comes to a conclusion at the end of June, which is very positive to see, but you can see we put 145,000 tonnes into this policy at an average cost there realized of AUD 112. So very good to see the back of that. And our table there provided just in terms of realizations. Again, there's a few milestones in this report. Werris Creek, of course, the last time you'll see a full quarter's earnings and this table also with 91% of our revenues as a thermal company and 9% metallurgical. That will be the last time you see that as well. So that will transform very quickly, obviously, with the Queensland operations skewing ourselves very positively towards the met coal side of things more in the 70% range of revenues going forward. In terms of the market dynamics, gC NEWC has been -- well, it's been steady is probably the best way to describe it. I don't think the market has been [ steadying ] anything a lot in any great form. But it's been very steady and consistent, which is very easy to plan for, which is nice. So we've been in that range, $120 to $130. It is obviously trending up. We do see some tightness coming out. So I can see the forward curve tightening up quite a bit, which is nice. But in terms of our realizations there, we've done a good job in this period to bring ourselves in 8% over the index for that period. The met coal, whilst it had softened, has certainly recovered pretty well, and we've seen some very positive movements overnight. So down from the $333 down to $308 and obviously, somewhat softer than after, but we've seen a jump again into the mid- to high 2s, which is looking very good from our new ownership of these assets in Queensland. To say our revenue split going forward won't be the 91-7. It will be 70-30 met going forward, which is a very positive transition for the business to be making overall. So the transition itself has gone exceedingly well. We're very, very pleased of where this -- the transition lands to. 2 weeks in now, it'd be safe to say, the amount of issues that we've uncovered along the way have been minimal. And from a people and IT systems transition perspective, I think the hard work that we put in advance of completion of the transaction has been paying dividends and broadly a very seamless transition, I have to say. People have been paid here, [ particular ] activities have been undertaken. Cash is -- cash will be received from the sales that we've been making. I think we've made 5 shipments already under our ownership, which is great. So all of that has gone very well. Obviously, the consideration paid on the date, the second of April, $2 billion funded obviously, with cash and obviously, the bank facility we put in place which now transformed our balance sheet from being obviously net cash, obviously, for some period of time. Now we have a net debt position of AUD 1.4 billion after having put in place and secured a revolver facility there for USD 100 million in order to provide liquidity for the business. Our process for the sell-down of up to 20% of Blackwater is ongoing, and there is a strong bit of interest in this process. So that will continue over the next few months and into the balance. Our objective here is to see that settled by the end of this calendar year. From a development projects perspective, early mining, Vickery has gone very well and has largely completed the construction effort and will be handed over to ops very shortly, and that's all gone well from a timing and budget perspective, very positive to see that. And then from Narrabri Stage 3, there's not a lot to report here. In fact, as anybody who's watching that will have seen that the hearings for this appeal that this federal case has come and gone, and we are waiting on judgment there. Positively from a development projects perspective, Winchester South. As you'll note, did receive its recommendation for approval at a state level, but it does then move into the courts as is the way in Queensland. Anyone who's objected during the period of open exhibition does have a chance to test their arm in court. So we are ready for that, and we'll work our way through that as it proceeds. From a guidance perspective, we -- our ROM guidance remains the same. So no challenge there in terms of ROM guidance or sales guidance for that matter. So feeling confident about that. Less tonnes from Narrabri, usually our cheapest coal has moved our cost certainly in this quarter, just over the top of our range, but with improving performance, as I mentioned earlier in the last few weeks and transitioning into better ground. We feel that the guidance trend is to the top end of that range rather than over it as the particular quarter was, just based on lower Narrabri sales in that quarter versus a ROM remains the same. The open-cut is doing very well and exceeding their individual targets, which is great. Sales also remains the same, and CapEx is trending to the bottom end of the guidance overall. So from our perspective, a solid quarter from the open-cuts very good. Narrabri, a little bit less than we'd like, of course and -- but improving now. And clearly, Daunia and Blackwater being the transition point for the company, which we'll see the company forever different from what it was in the past. And the transition itself is going incredibly well. So we're very positive with the people on-site are very enthusiastic about the change that's coming their way. And from all the town halls and meetings and briefings we've given over the last few weeks to meet as many as the people we can on the new sites. Energy levels are high and people are looking forward to the future. So with that, I might close up the report itself and move into the Q&A. Thanks, operator.

[Operator Instructions] Your first question comes from Rahul Anand with Morgan Stanley.

I've got two questions. Look, the first one is around Blackwater and Daunia. You've obviously had the keys for a couple of weeks. I was just interested to hear your thoughts on how you think the assets are versus your initial estimates of costs and price realizations at the assets that you presented in the presentation at the time of acquisition. That's the first one.

All right. Thanks, Rahul. Look, no major surprises, I have to say, which is nice to be able to say. Obviously, you've seen BHP's reporting yesterday from a BMA perspective. I note that Blackwater has called out as being one of the contributors to the their results. So there's less -- a few less tonnes have come out of the mines than I'm sure they would have planned, but that's for you to talk to them about. From our perspective, you may recall, we had protections in the mines -- in sorry, in the sales agreement relating to the performance of the mine from a strip ratio perspective. That has been maintained. So what we've got from our perspective, the transition to us has been a mine that is consistent with the strip ratio expectations that we want to see. Although volumetrically, they move less dirt and coal, but that's really an issue for them rather than us. So in our sense, we've inherited the mine or the mine has transitioned to our ownership with the strip ratio that's intact from what we expected. Outside of that, there's nothing particularly exciting to call out that. There's plenty of coal on the ground, plenty of coal actually still opened in the pit as well, which is very positive. So from our perspective, the sales book is good. Realizations on contracts for sales are as good, if not slightly better, than what we've seen -- or what we assumed during our [ duty ] phase. So that also is a positive thing to be able to say. But operationally, the challenges here, as we mentioned before, our view of this is the real opportunity is to get the drag lines swinging as consistently as we possibly can. And so there'll be an investment, of course, in opening up the mine as we talked about in previous quarters and making sure that, that remains the same. So Daunia, I think so, [indiscernible] Daunia, that's been operating consistently and so no surprises at all there.

No, excellent. So I guess your risk on the cost side is minimized given that sales agreement strip rate ratio side of things. But you probably had a few shipments or if not a shipment, since you've had the key price expectations still going to plan as per presentation initially provided?

Yes. Yes, Rahul, that, that's for sure. Yes, we've had 5 shipments go and the contracts that they're going under, we've inherited a book, which is about 80% sold. So there's not a lot of work to do from our perspective sales-wise in the short term. So that's great. And just circling back to the comment, I'll sort of made just there a little bit earlier, which I'll just expand on. I mean the realizations that we are seeing now that we have obviously the sales book, are slightly better than what we budgeted for or that we used in our bid model. So that's positive to be able to say that. So yes, look, that's all trending in the right direction for us.

Excellent. That's excellent to hear. Look, the second one is perhaps one which you can't answer it in a fulsome way. But I guess, any updates you can provide on the stake sale, you're still targeting a 20% sale as far as I can see? Any updates on time lines, your expectations? Anything you can tell us in terms of those things?

Well, nothing further other than to say that, that process is well and truly underway, and there's a good bit of interest. So we're very positive about that. No change in our expectations in terms of what we would like to do. The interest levels are higher than what we have announced we would like to sell. So the formation of the joint venture is around 20% is what we've said. The interest levels are higher than that, which is positive from a competitive tension perspective. And bidders are immersed in the data room doing all the work and asking Q&A the way you would expect them to, which indicates a good genuine level of strong interest, and so we're very positive. So as I said earlier, our expectation is to wrap this up by the end of the calendar year. But obviously, there's lots of different hurdles and milestones that go in before that is concluded. So over the coming months, there'll be more to say in terms of where that gets to.

Excellent. One final one for me, if I can sneak it in, is just around Maules Creek autonomous strategy. Obviously, you've gone back to man, trucks, et cetera. Can we now assume that that's the end of your quest to go autonomous? Or do you try to get a different supplier on site? I'm just trying to think about medium term going to 16 million tonnes, or higher than the 13 million tonnes, let's say, at site, and that was dependent on Autonomous?

Yes. Yes. Yes, that's a good question. Yes. Look, you've seen the open, we've terminated our trial of Autonomous. Now that's not something that we did without examining all the options first. But from our perspective, it was the right decision. And obviously, we wanted to do that in junction with our friends at Hitachi because we obviously have a very strong relationship with them, and they have a lot of gear operating across South -- New South Wales site. The challenge there, as we've spoken about before, is that this is a big mine from an output perspective, but in a relatively small footprint, which is compounded by the fact that you've got 15 teams there. So the inability to integrate manned and unmanned equipment there as we have now essentially transitioned into complete in-pit dumping, that penalty that I've mentioned before about the productivity [indiscernible], that would have imposed on us was just unpalatable. And so we made a difficult call to finish up that experiment. Now that doesn't mean that our journey with Autonomous is over, far from it. Obviously, we bought Daunia, which is fully autonomous. And uses the CAT system, which, obviously, is, has had more time for development than Hitachi did. So it's not whether ones beat on other. The other one started later in their journey than the other. And so the product that we've acquired there with Daunia is more mature, and we see upside in thinking about how we could deploy that across the business. But in terms of Maules Creek, for its immediate future, we'll be running that manned. And with the labor market loosening a little bit, we've been able to man -- or return to a fully managed status pretty quickly. So that is now done.

Your next question comes from Lachlan Shaw from UBS.

Congratulations on closing out the acquisition of Blackwater and Daunia. Two questions from me. So firstly, just on Narrabri and the geological issues there, is that as expected? And I guess, how should we be thinking about what lies ahead in coming quarters? I'll come back with my second question.

Yes. Yes. Thanks, Lachlan. Look, it's disappointing, but it is, it's not inconsistent with what I said before in December. I mean we forecast essentially [indiscernible] of the first half repeating itself in the second half. And we're obviously going through a challenged quarter in the December. That has -- that obviously didn't change miraculously by virtue of crossing over to the 1st of January. That has continued through this quarter. As I said, the issues there, the equipment has taken obviously, a bit of extra wear and tear as you've had more of these intrusions falling onto the face and being ground up across the AFC. And that has caused wear and tear related matters, which have, as I mentioned, highlighted some weaknesses in our current chain. Now we have changed that chain out. So we went through a process of obviously removing the links that were the faulty ones. But we then called on those, a third one of our peers who's got a long haul similar to our own, had a chain on available in spares. So we got that quickly to put it in there, only to find that they had some of those issues as well. So there's obviously a quality control-related matter there that needs to be dealt with. We have ordered a new chain anyway for replacement purposes as well. But we are moving into less intruded ground. And so our run rate over the last few weeks have been on the up and up, which is good. So we're thinking that the worst of it is behind us now, we're moving into a better phase. So as we said in our guidance, we're tracking below where we'd want to be, but Narrabri is offset well and truly by the performance of our open-cuts to keep us within our overall guidance on ROM and South.

Understood. That's helpful. And then my second question is just on, I guess, system inventory, quite low at the moment. And certainly, if I think about BHP speaking to similar issues across Queensland coal, do you foresee a period where you will look to perhaps sort of rebuild inventories across your supply chains, both in New South Wales and Queensland?

Yes. Yes. I think that's a fair question. We've certainly taken the opportunity to monetize some stocks that we had laying around, something laying around. We did have some higher ash stocks, particularly in Tarrawonga, which we view is the opportunity to convert into cash. Obviously, cash being important ahead of the settlement. So we took that opportunity to do that. And then Narrabri itself, of course, with its lower volumes means that there's less stock to play with there, of course. So there will be events that we will be building that back up, not just in this quarter but into the new year. The Queensland operations, as I mentioned earlier, actually not -- they are not in a position where we've got concerns about continuity of stock there at all. So Daunia did what was intending to do, which is very good and has delivered us into a position where there's very low risk in terms of the sales outlook from that perspective. And I mentioned earlier, just Blackwater, although there's less -- clearly, there's less dirt moved and less tonnes have come out. But in terms of the inventory position that we have purchased, that is healthy, and there is -- and there are healthy stocks in the pits yet to come out. So that also bodes well for a good sales program and a very positive sales pathway in the opening months and quarters and years of our ownership here. But there is, as I mentioned earlier, there's an investment in broken ground that we need to make. And that's just part of our plan to open the various pits up further to make sure that the drag line swing for longer before they move. And that's not a new issue. That's one we spoke -- referenced a number of times since we signed up to buy Blackwater in particular, and that will be an investment we can outline in the full year's discussion.

Next question comes from Paul Young with Goldman Sachs.

Paul, just to expand on the Blackwater comments a little bit with respect to the stripping, just to clarify. So I mean looking at Blackwater performance in the last quarter, I think it was a tough quarter, but also for all big open-cuts in Queensland. I think it was the second lowest production number from Blackwater on record. But as far as best investing in the strip and where the strip, waste stripping profile looks like for Blackwater. I mean, BHP yesterday said that any continue to invest in stripping across their assets, and they won't really catch up on stripping until calendar '25, is that the same case for Blackwater, i.e, the next 12 months, waste stripping will continue to increase?

Yes, Paul. Look, they definitely wish they were, as I mentioned earlier, we had obviously requirement that they continue the investment in that stripping because this is not a new issue. They'd identified this pre -- the process opening up. and had embarked on an investment in that. And so the strip ratio was actually higher as a result during the last 12 months and obviously leading up to the period of our ownership. That will -- that investment will continue to be made. I mean they're [ partway ] through that process. But as you've referenced and they've already spoken to in their results. The weather, obviously, through the [indiscernible] across all their sites, but the relevant piece is obviously Blackwater for us. So we will continue that process in the next 12 months. So yes, there will be an investment required there. It's not huge, but it still needs to be made. And there are some other nuances there, which go hand in hand with that. We know that explosives have been in short supply out there. So that's also something which we have been working with BMA to address over the last month or 2 and have come to some arrangement there to ensure that we've got the continuity of supply of explosives to ensure that we can fill the holes and blast the ground as soon as that drilling is completed. And so that will be an investment that we need to make. I'm clearly not just -- clearly, it's not just overburden in advance. It's actually the capacity to actually drill the ground out, let it off and then open up the benches so that the draglines can operate more effectively.

Yes, that's helpful, Paul. And then maybe switching to pricing and particularly on thermal coal, which you achieved a pretty good price in the quarter. And yes, I could just see the settlement with the Japanese utilities by Glencore around [ 145 ], and thanks for selling your sales into that -- into JPU. Paul, the question is around the underlying spot market, though, like those volumes are not sold into gC NEWC around -- what percentage of your volumes at the moment, you're selling into spot. So outside the contract price outside the gC NEWC platform? And what sort of pricing you're seeing within the actually underlying spot market?

Yes. Well, the spot market is the gC market, right? I mean that's, they're 1 and the same. We don't sell generally into anything spot outside of that framework. So obviously, the Korean [indiscernible] obviously agreed on an annual price. Taiwan uses a combination of gC NEWC and also JPU pricing. But the spot market for us is the gC NEWC market. And we settle on the average of the month of the scheduled shipment for those tonnes. The 1 or 2 which have a variation that were like 2 months average. But otherwise, we're doing pretty well in that regard. So it's nice to see an 8% premium lever above, which is a very positive thing to see. I mean, obviously, the market itself, as I mentioned earlier, it's in balance. It doesn't feel like there's a great movement forward, although we can see some tightening further out. Part of that is going to be contributed as we've noted in our report by a further tightening of sanctions. And so there have been some further tightening sanctions in Russian individual organizations rather than the industry as a whole. And then you've seen the Koreans, the Koreans obviously have taken a step to limit their exposure to Korean coal, which they haven't been doing since the invasion started, but they've now taken the step to exclude the Russian coal from their intake. And so you can see the effect that that's having on forward curve. And so I think that will be moving into a tighter scenario going forward, which is positive.

Yes. Got it. And sorry, just to round up the conversation on pricing. The JSM quarterly settlement for semi-soft, the $279, which was a really good result in the last quarter. Any thoughts around where the semi-soft JSM quarterly price is going, to June quarter?

Yes. Yes. Look, I think it's a positive backdrop, isn't it? That's definitely the last number to see. There's -- I don't want to get into the predictions of where the next quarter will be. But obviously, our realizations there we put in pricing there have been a little lower than that. And that market is the one most heavily affected by the Russian interventions. So given that they obviously have semi-soft and given that they are excluded from certain places, you know that they've been slamming the market in there and offering at a lower price, which is causing the spot market for the semi-soft to be more subdued than the quarterly contract across.

Your next question comes from Paul McTaggart with Citi.

So I just wanted to ask about, and I know you may just got the keys. So BHP has left behind the kind of thermal portion in the past of those assets. And so I'm wondering if you got to a point yet where you might be able to consider whether there's kind of the viability of getting a little bit more coal out. You probably got washing capacity. Is it just too early to comment on that? Or have you've been able to kind of consider that?

Yes. Look, look, Paul, I think it's a bit early for us to be commenting on that. There's no doubt that they've had more or so Blackwater than Daunia, wouldn't -- the Daunia, if I could call it by product is very, very minor in volume. So it's almost a rounding error there. Obviously, Blackwater has at times in the past, not in recent years, though, produced much thermal. It does have the capacity to do that. But I think it's just too early for us. We're not focused on that right at the moment, but it's probably too early for us to be making too much of that quite now. They obviously use infrastructure there is as you know, Paul, that can be used for that purpose with a separate crushing bypass circuit and train load out facility that can be used for that purpose. But in the short term, that's not the immediate focus. We want to bed down the current operations here and get these draglines working rather than thinking about opening up new fronts in the short to medium.

Next question comes from Chen Jiang with Bank of America.

Paul and Kevin. Two questions from me, please. So firstly, on the follow-up on the JSM quarterly average. It's well above spot semi-soft index. I'm wondering how should I think of the semi-soft price realization from Blackwater because you, from Black water, you still got 30% of semi-soft, is that -- is JSM or good reference? Or we should look at the semi-soft spot?

Yes. Thanks, Chen. Look, at the moment, obviously, the tail of contracts that we've inherited definitely have a mixture of these. So I wouldn't I don't want to give splits out right now about where the historic performance has been. But I think you probably should think about a location between that. I mean the current number is a big number and as you can see. And relative to where the PLDs would represent a large -- a very high realization compared to historical trends if you're comparing those 2 numbers. So I would think you'd be better off taking a movement on average of those 2 rather than actually saying we're all going to go out in that number.

Sure, sure. That makes sense. Just a follow-up. What contributed to the higher JSM quarterly average? I guess do you think this is a one-off versus the spot semi-soft price?

Well, I can only just say it's a one-off. I mean I'm not sure whether or not we're going to -- what value is going to be made of predictions or anything further out than that. So I think it's best to just think of it currently has that will play out as further sales into this market are achieved and then further settlements in further quarters are settled.

Sure. Sure. I understand. And then second question, just a follow-up on the Queensland met coal. I understand that you -- a lot of questions got asked, and you pointed out to strip ratio, dragline, et cetera, essential. Maybe just a high level, generally speaking from what BHP reported about the BMA Queensland met coal in the last few quarters. It seems like Queensland met coal operations in general are getting harder and harder to manage from production and cost perspective? So costs have been kept increasing to record high and the production have been -- BHP downgraded a few times. I'm just wondering if you could help me or anyone who never worked at a coal mine as an other engineer or geologists, why met coal or Queensland met coal in general is getting harder and harder to manage, why production cannot produce after capacity and cost keeping, and what cost initiative reduction initiatives we should think about in the next few quarters?

Yes. Look, that's a difficult question to answer. I'll try to give you my sense of it. But look, I don't think there's anything systematically wrong with the met coal business up there. So I wouldn't be ensuring that met coal has suddenly become harder I wouldn't do that. I mean clearly, the weather up there has been influential. So that's made things a little bit more inconsistent certainly, then I'm sure the producers up there would like. We can only speak to what we've observed in the short period of time. We've been focused on the 2 assets that we've procured here. And I can see the weather has been influential for them. I think Daunia has done pretty well, and it appears to have been less weather affected quite frankly in terms of output performance, whereas Blackwater, Blackwater has been a little bit more disrupted in that sense. But I don't think there's anything systematically wrong. And if the yard stick, if the data point that you're using to pose that question our, our M&A from BHP perhaps best to focus the questions on them in that regard because our exposure to this is really just limited to the ones that we've been obviously dedicating our focus to acquire.

Your next question comes from Glyn Lawcock with Barrenjoey.

Paul, I wonder if we could [ disagree ], take the focus back to Maules Creek. Now that you've gone back to fully manned. I mean, one of the issues in the Gunnedah Basin has been bums on seats. Could you maybe just comment a little bit about the workforce across the Gunnedah Basin? And are you now fully manned or do you have vacancies and so forth? Because obviously, you're going to need more workers now as you go back to full manned?

Yes. Thanks, Glyn. That's a good question. Yes. Look, the market definitely has eased up a bit. And so in the sense that what labor is more freely available. It doesn't mean inflation is improving there yet, I have to say. But people to be put in equipment to make sure that it's operational, that is more freely available. So we are fully manned now at Maules Creek. And it's -- it's obviously a good question given that we've been talking about shortages in more recent times about that. But no, look, we've been able to put all the people we want to into the equipment. So we're planning on running that as hard as we can.

And so just to follow up then, Paul, I mean, if I look back, I mean, it's been a disappointing asset, I guess, you almost did nameplate 3 years ago in fiscal '21. And while you're guiding above the top end or even above your guidance for this year, that's low 11s, when do we get back to nameplate now at Maules Creek? You mentioned you're doing in-pit dumping. You just mentioned you're fully manned. And can we get there? Or is there something else that needs to happen before we can get back to where we were 3 years ago?

Yes. Look, I think that's also a good question. And our expectation is certainly to return to that those run rates, obviously, without the experiment that was AHS in the mix. That simplifies the operation. There's no doubt about it. And in-pit dumping generally will be a positive for us. And one of the keys to improving that was obviously to release the area in the southwest, which we've talked about a number of times. And that area is all that finished now. In fact, we are dumping in that area very good. So we would expect the run rate to start to improve. And the only counter to that is obviously, the mine is getting deeper. And so -- but that's natural and should be part of just the management of this important asset. So I wouldn't necessarily characterize it as disappointing. It is where it is for a range of different reasons. Some of those reasons have now been alleviated, if I could say that. And we are expecting positive momentum here to trend back up to the 13 million tonnes as you mentioned.

Does that mean you need more people, more equipment that you're getting deeper and the strips going up then? Or you feel you [indiscernible].

No, it doesn't mean either of those, thankfully. So strip ratio is consistent, pretty consistent over the first 20 years of its life, which is good. So we're not anticipating extra gear in any material form there other than obviously replacements and so on. And we don't need another wave of people to get in there either as a result. So no, look, it's just opening the pit up. That is a big volumetric mine so we made the point a number of times, but it is in a relatively small footprint. So I'm sure we'll be able to with the next site visit whenever that is for people to see. We are reorienting the pit to obviously increase striking that we're operating across to be able to drive greater productivity in the space that we have. And as I said, the only account of that is it is getting deeper. But at least it's all in fit dumping now. So we're not having to haul from low to very high or vice versa. And so that will simplify the operations of Maules, which is positive.

All right. And just finally, can I just switch gears back to Queensland, maybe one for Kevin. He's been awfully quiet, just -- I know it's early, but any thoughts on what you will need to pay out in the second half of this calendar year, in terms of stamp duty in any other payments before we get to the BHP payment in 12 months' time? Or is it too early to put a number around the second half of this calendar year?

Yes. He's been waiting for a question.

I couldn't wait. So the, you should think about USD 200 as a stamp duty number. And you should think about it in the September quarter, I think would be the answer there, Glyn.

Okay. Nothing else on top of that, then you're going to -- coming out since you did the, I guess, the true-up at the 2nd of April.

That will be [indiscernible] so I think it's coming back to me, to be honest with you. that's a rounding error. The completion payment was included the estimated change in working capital. And there was 44 -- sorry, $54 million in that and then $10 million net against it to a net USD 44 million. So that's all been cleared and settled. If anything comes back, it will be [indiscernible].

The next question as a follow-up question from Lachlan shaw with UBS.

My follow-up question. Maybe it's a little too early again given you've just got the cave, but just wondering on, I suppose, capital and projects phasing with the Vickery full scale, Board approval has been held off as the deferred payments continue, but Winchester continues to advance across the fence from Daunia. I just wonder if there's any further thoughts on maybe changing the sequencing of Vickery and Winchester given, obviously, Winchester's proximity and a higher net cost traction.

Yes. Thanks. Look, that's a good question. Vickery, we've said no change that to what we said before. That will continue along in its early mining version, which is essentially Werris Creek replacement tonnes at low level for at least 2 years whilst we repay the deferred -- the pending finance, I should say. No change in that thinking. On Winchester South, that naturally is still quite a few years away. And the quick summary of that is, we still need an EPBC approval and state-based, as I mentioned, sort of court-based activity still needs to run its course. So from the aggregate of those two things, state-based court activity and then the EPBC stuff, that's going to be a couple of years away before you've got a fully approved project on a stand-alone basis. And so now the job for us on the approval side of things, aside from just pursuing those 2 avenues is to develop up the what will be the modification required for the Winchester South approval to be received in 2 years' time, so be ready to go with the modification that actually contemplates the integration of Daunia and Winchester South. Now we've got plenty of good ideas at a conceptual level, but there's lots of work to be done to turn that into a detailed plan that forms the basis of a modification to be able to do that. And then [indiscernible] will then take time in terms of its own approval. So I think naturally, you're talking probably 4 years before you're able to do anything in that regard that would be the start of deriving synergies between those 2 sites. And so I think 4 to 5 years, you should think about it in that way. Now that's just the nature of it, unfortunately. The approval that we'll receive in 2 years' time once the state and federal are out the way, won't allow you to actually do anything with next door. And so that modification is necessary to be able to integrate and start to drive synergies from the proximity of these assets.

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

Thanks very much, everybody, for your time today. Really appreciate it. If there's any further questions, you know where to find us. From our perspective, nice to round a solid performance with our open-cuts once again and that compensating for Narrabri. But obviously, very exciting the transition we'll make from here on in. So you'll see the next quarter obviously, it'd be very interesting with a full quarter of operations from the Queensland assets. And as you can see from the guidance we've given you, it's essentially a doubling of the volume from this quarter to what you'll see in June. So I think that's going to be that's going to be very, very positive to be talking about that, particularly with the backdrop with very good pricing in front of us. So we look forward to catching up with you all in due course. Thank you.