Whitehaven Coal Limited (WHC) Earnings Call Transcript & Summary

Welcome, ladies and gentlemen, to Whitehaven Coal's Full Year FY '24 Financial Results. [Operator Instructions] Thank you for joining us today. I will now hand over to Managing Director and CEO, Paul Flynn. Please go ahead.

Good morning, everybody, and thanks very much for taking the time to join us today for Whitehaven Coal's full year results call and presentation for FY '24. As usual, I'm joined by Kevin, our CFO; Ian, our COO; and our IR team with Kylie and [ Karen ]. Kevin and I will go through the presentation as usual, and then we'll move into the Q&A session as quickly as we can. Moving on firstly, first and foremost, our safety and environmental performance. I just want to focus on that. These are very, very encouraging results from our perspective. And I say that because it's made them more pleasing because of the level of obviously distractions that have been going on the business from the nonroutine activity that we have in a normal year. So to be able to land on safety environmental performances that we have as we're particularly pleasing. The New South Wales business, of course, historically has been on a very good trend. It's nice to see to continue that this year with our TRIFR down to 3.3 for the year, which is a great change of 30% improvement. Our new assets in Queensland have landed with a TRIFR of 6.6 for the quarter, and we are working very closely on integrating our business together to ensure that we've got Whitehaven safety management systems rolled across Queensland, and we continue to drive the performance that we've been experiencing from a safety improvement perspective. After the second year running, we've had no environment enforcement actions, which has been terrific. And certainly, Queensland also emulated that top performance with the quarter that we've got in our results here today. I'll go over to FY '24 highlights. And of course, this has been a transformational year for us with the acquisition of the Queensland metallurgical coal assets. We have successfully transitioned into ownership, obviously, and to Whitehaven, and we've delivered successful and safe production outcomes for that first quarter being Q4 of the FY '24 year. Overall, the New South Wales business has performed well, and the highlights of that it is performing nicely. And certainly, Narrabri has certainly turned the corner and performed better in Q4. Looking at the financial highlights, we delivered $3.8 billion of revenue and underlying EBITDA of $1.4 billion and an underlying NPAT of $740 million for the year. This includes Q4 revenue contribution from the Queensland assets by $869 million and $272 million of underlying EBITDA contributed. The statutory impact for the group at $355 million is after nonrecurring line, which primarily related to the acquisition. Kevin will go through that shortly for you. These good results have underpinned the financial stability of the business. It allowed us to declare a final dividend of $0.13 per share to be paid on the 17th of September, taking the total for the year to $0.20 for the year, fully franked. From a TSR perspective across the year, we delivered a 23% return across the 12 months, which is a pretty positive result with ranks us about 30th in the ASX100, hitting above our weight given that we've been hovering between the 80 and the 70 range across the course of the year. From an operational perspective, we delivered 24.5 million tonnes of ROM. New South Wales realized price of AUD 217 for FY '24, the Queensland for the quarter of June at AUD 271, good results both there. New South Wales unit costs ended just above the top of our guidance of AUD 1.4 over, reflecting lower [indiscernible] volumes from our Narrabri production. And then, of course, taking 1 quarter to integrating that into our results, gave us an overall sold of AUD 120 per tonne for the group. Queensland completed that being $147. But before we get on to the financial results too far, I did want to just pause for a moment and talk about the other important announcement that we put out this morning. And that is that obviously, we've announced this morning that we've now signed binding agreements to sell to Nippon Steel and JFE, a combined 30% equity stake in the Blackwater mine, which has been a fantastic end to a process which has been done, not just cooperatively and with a fantastic experience goodwill, but a very competitive process and a very expeditious time line, I have to say. We do feel like we have formed essentially the gold standard of joint ventures in metallurgical coal assets, I have to say. And this marks the completion of step 2 on two-step process, which sets up Whitehaven for the future. And when the transaction completes, Nippon Steel have 20%, JFE will have 10% of the joint venture, and we're out to receive consideration in aggregate of USD 1.08 billion upon the completion of these transactions. It is a strategic initiative that we've been chasing here, and it includes long-term offtake arrangements for both parties. And validates Whitehaven's acquisition of these important assets and the ongoing importance of Blackwater coal to the met coal asset -- met coal, coal market. Whitehaven will manage the joint venture and our partners are supportive of the strategic direction we want to take Blackwater in and our drive to continue to unlock value from this important asset over time. The return metrics for our retained position in Blackwater are enhanced by this joint venture arrangement, and not just obviously selling it at a compelling price per percentage point of equity in the Blackwater mine, but we also repeat the 100% of the free cash flow, of course, from the time that we bought the asset, the 2nd of April right through to, say, an estimated closure period that we estimate at the back end of the year. So for the 9 months that we've held -- that we've hold the asset, we take all the cash flows. And in addition to that, we have a USD 2 per tonne management fee as the operator of the mine, which will kick in -- will be indexed, of course, but we'll kick in and cover all the sales tonnes for the operation. So very positive enhancements to our overall [ tonnes ] of the metric. And of course, taking the money off the table, derisking the balance sheet has certainly enhanced the [ tonne ] metrics for our retained position. The cash proceeds were obviously fortified the balance sheet very quickly and should take away any concerns about generations in coal prices from time to time and our ability to meet all the various commitments we have associated with the original purchase. The buyback remains on hold for 2 years, as we've said. And dividends will flow from the New South Wales business, as you've seen us declare today. But I think obviously, with the strengthened balance sheet and by the time the proceeds for this transaction materialize in the bank account, which is likely to be Q1 of calendar '25, the Board will have the opportunity to review the payout ratio for the final dividend for FY '25. Whitehaven remains the obliger on the look for the contingent and deferred payments. But obviously, the price that we're -- we've negotiated with the 2 joint venture partners include the upfront payment of their share of those payments as well. And so we'll keep that money aside and make sure that we've got all those obligations covered nice and tidy. And as I say, our balance sheet is certainly in very good shape. From our perspective, this is a tremendous conclusion to a 2-year acquisition process and assume the transformation of the company into a metallurgical coal producer and now on a very solid financial footing. Moving across to our business markets. Obviously, Whitehaven has transformed into metallurgical coal producer, but maintains a fantastic position in the high CV thermal coal market. Obviously, the thermal coal market, Japan, Korea, Taiwan, Malaysia are now complemented by our metallurgical coal customers. It's nice to see many of the new customers to us, but it is a much expanded portfolio in that sense. So FY '24 sales revenues, 50% came from Japan, Taiwan was next at 14%, Malaysia 10%, South Korea at 7% of total revenues, India was at 6%, but that will increase as we know, with the greater proportion of Queensland production in this new year's numbers. Beyond the top 5 countries, 13% of the revenue comes from Europe, Vietnam, Indonesia, Chile, New Caledonia and a range of good jurisdiction to be selling into. As we commented at the time of the quarter, the revenue split between met to thermal at the quarter, Q4 was 69-41. We expect that to gravitate to the 70-30 over a full year. Given as we said, there was a lot of proportion of sales out of Daunia and with [indiscernible] a little bit later in the presentation. I know these next slides, I'm over on Page 9, you've seen these before, but it's worth highlighting that we are now strategically exposed to structural supply shortages on both sides of our business. And I think these 2 graphs depict that well. Commodity Insights is the source of both this data mix we can see -- that looking at their analysis here, the high CV end of the market, you can see demand is expected to grow by 20% between 2024 and 2040, but supply is expected to fall by 33%. So that's going to do good things for our prices. Metallurgical coal represents a similar sort of dynamic here. And you can see that metallurgical demand is expected to grow 22% over the same period and supply is expected to fall by [ 8% ] over the same period. So that's going to cause compression, which is going to underpin very good pricing for the future. It's not just Commodity Insights, obviously forming these views, Wood Mackenzie views also insisted on the metallurgical coal market side of things. And as you can see here, this is obviously the market itself, looks pretty consistent on the time, although growth occurs. But obviously, the big driver here is India. Within India's demand expected to grow 110% out to 2050. Asia going to grow about 29% through that same period. Daunia and Blackwater, obviously important resources in playing in this market. And as you've seen with the formation of the joint venture, the validation of Blackwater's role in the metallurgical coal market, I think, is strongly endorsed by this important Tier 1 joint ventures wanting to secure their supply of these valuable products. Looking to the external market quickly. You can see there's a range of factors which we called out here playing into the external market dynamic. Demand for hard coke has been strong. India's demand grew, although in the current dynamics, it is a little bit softer based on the weather playing out there at the moment. Thermal markets have remained resilient through the whole market and good pricing has been a familiar backdrop for the year as a whole, which is very positive. Supply dynamics on both sides be a little better in Australia. So good weather has allowed producers to do well in this period. Now the external pricing has seen the PLV hard coking price average for the year at $287, which is certainly very positive. Platts semi soft was about 60% of that number, which is lower than historical years, but we've talked about that many times to understand that; GC NEWC across the year at $136, was a good number, obviously stronger at the moment with about $150 per tonne, which is very good. Now of course, it's not all about just good pricing and so on. The cost side of things has been buffered by significant inflation as everybody understands. And we can talk about that a little bit more when we get through the cost side of our things. And whilst we've talked that labor is more accessible for us, the labor costs are still high. And then we're calling out here, of course, the obvious, regulatory imposts in terms of the inflationary impacts on our business, and I'll just name a couple. Clearly, the safeguard mechanism is part of it, Same Job Same Pay. New South Wales coal reservation policy thankfully finished at 30 June. And then higher royalties across Queensland and now New South Wales has at the 1st of July, all that place is inflationary pressures on our business. So our task is to make sure that we can combat that through cost reductions and productivity across the business. The operational results, I'm not going to dwell too much because you saw them in the quarter, so I'll go through this relatively quickly. ROM production, 24.5 million tonnes, as I mentioned before, was 34% up; 26% being Queensland coals; and 8% increase in New South Wales. Managed sales volumes increased by 22% year-on-year. I'll just move across and talk to the various segments of our business now separately. New South Wales, 19.7 million tonnes year-on-year, did well. The open cuts have performed strongly. Narrabri in total was less the way we want, but there was a very positive turnaround in the recovery in Q4. Maules Creek, obviously finished up production and has transitioned into a rehabilitation site. And we saw the first tonnes come out late in the year on time budget for Vickery. So a small contribution in FY '24, and you'll see that ramp up in the new year. Now just quickly on the sites. Maules exceeded its guidance, did well. We did turn off AHS there, obviously. It did exceed its guidance, which was very positive. Mining has finished in the Southwest area now. So we are 100% in-pit dumping there. Narrabri, as I mentioned before, a tough year, but certainly a good turnaround in Q4, and that continues into this year, which is very positive. Tarrawonga exceeded it's ROM. Next year, it is for this year, it is moving into that hill section in Tarrawonga. So we are entering the high strip ratio here. So that does affect the amount of tonnes that will come out of it in this particular year, whereas, as I say, exceed this guidance, but has closed and now moved into rehabilitation. I'll just -- very quickly, just on Vickery. As you can see, there's a real mine here on the picture in the slides there now. So that's been very positive. So a small contribution, i.e., 100,000 tonnes, obviously, Q4. But this year, we're expecting to be a replacement essentially for Werris Creek tonnes in this year. The construction went very well on time, on budget and safely. So we're very pleased with that. And we have all the approvals in place to continue on with this and the Board's consideration can look at when is the right time to bring that on. But as we've said, that has been off the table for -- will be 2 years from the time of transaction. Focusing on Queensland. We've added in the historic numbers for you, which made up for context, and then called out obviously the period of our ownership here in the bolder colors that has been previous BMA numbers. We had a safe and stable transition into our ownership, which is very pleasing. And the quarter, first quarter under our control is fantastic actually. So we had done very good results from Daunia, 1.3 million tonnes and Blackwater of 3.6 million tonnes. Performance looks pretty good, trending into this new year as well. So we're very pleased with that. So the quarter did actually from a Blackwater perspective, saw a couple of production records hit. And we saw actually quite a few productivity improvements in Daunia as well, which is very encouraging and lays a good foundation for this transition into the new year. Obviously, with the bigger business, Queensland, in particular, for this focus, it does need a bolstered leadership framework to manage this adequately. So we have made some changes. I'll just call this out briefly. Ian's role has been restructured and changed and he's taken on the role of our COO, which is very pleasing. And we put in place a Regional General Manager role, which Dan Iliffe has taken on the responsibility for both Queensland sites and also the ROC, the Remote Operating Centre in our Brisbane office. Reporting into Dan, we've got 2 general managers here now. Tod Mathews is taking on Blackwater, Sean Milfull taking on Daunia. Two very, very seasoned and experienced, Dan Iliffe and Ian Humphris got plenty of experience across all forms of mining in Queensland, and we're looking forward to be seeing the benefit of their leadership on the sites and very well known to many of the people in the Queensland market, being experienced people. So I think this team coming together will assist us in driving changes across the business. Obviously, there's significant opportunities for realignment of this business, and we are transitioning the Queensland operations to a simpler more Whitehaven-style operating model, and you would have seen already last week or so, we've made -- started that process with some changes to workforce with some 200 roles affected by that. But that job will continue. And the team is very engaged in making sure that these sites are rebased in an appropriate way and at all times, ensuring safe and reliable production. We are focusing on top of another $100 million worth of issues, which we're working independently of the guidance range that we're giving. We'll speak to that a little bit later, but that's across a whole range of initiatives, which we think there's very good opportunities here in Queensland to make sure we've rebased the business as quickly as we can. And with that, I'll hand over to Kevin for the financial results.

Yes. Thanks, Paul. FY '24 is probably one of the more noisy sets of numbers that Whitehaven Coal has produced in the last decade. And so, so let's take a little bit of time and go through it. We reported $1.4 billion of underlying EBITDA. And you said in the top line there, transaction, transition costs and some other things related to Werris Creek accounted for about $601 million of nonrecurring costs. A large part of that was statutory. So that's about $360 million that we expect to pay in the first half of the FY '25. And there was $73 million of other transaction costs and about $125 million of transition costs, which included building an IT system to replicate BMA so that we could put these assets up and start them on the 2nd of April. And we had our Queensland integration team that was involved in that as well. So outside of stamp duty, the transaction and transition costs totaled about $200 million on a pretax basis. In the remainder of the business, we had about $31 million of nonrecurring costs in relation to an inventory valuation uplift. So what that means is accounting standards require us to bring the inventory in at fair value. And that means a normal margin that you would expect to see from those tonnes doesn't emerge in the P&L. That's why that adjustment is made. And finally, when we closed Werris Creek, we had about $11 million of one-off closure costs around redundancies and putting the rehabilitation provision to the right place. After these significant items, EBITDA was $798 million. So that's the statutory number. The DD&A was about $319 million. And I think the brokers and the analysts of the world will want at some point further guidance on how DD&A and interest works. So a file is attached that in the back of this process, and we'll be happy to take people through that. It is one of the biggest differences between people, pretty easy to get to EBITDA, but the NPAT becomes a little bit murky with all these transactions that are taking place in the next few years. We reported a statutory NPAT of $355 million. But if you add back the significant items, the underlying NPAT was $740 million. And as usual, the tax rate was about 30% on that. So you should continue to use that rate in your model. Come over the page, I think on the financial history, and it's -- 2024 was a very good result of $1.4 billion, but 2022 and 2023 were excellent results. And they were the years to push this business into the position to be able to provide increased returns to shareholders and diversify. So very good 2 years. And if you go back 10 years, Whitehaven's 3 highest years of underlying earnings before the contribution of Queensland had been '22, '23, '24. FY '18 and '19 were both very solid years, but they were about $1.04 billion. And the next strongest year in '19, the underlying NPAT was of $565 million compared with $740 million in '24. So [indiscernible], I think structurally, what we're telling you and what we see in the market is that these coal prices that we've been seeing for a number of years between that USD 140 and USD 150 for thermal seemed to be sticky. So -- and if you look at FY '24, you can see the potential of the contribution from Queensland. We are excited by those 2 mines and very happy to see them in this table. Segment financial results on a revenue basis, Queensland, as Paul said, contributed $869 million in Q4 of a total of $3.8 billion of revenue and an underlying EBITDA of $272 million to the $1.4 billion total. It's a good start. There's plenty to do in Queensland, and there's plenty to do with it. So we look forward to that. Come over the page to sales mix and realizations. New South Wales reported equity coal sales for the year of 13.2 million with an average price of $217 a tonne. Queensland reported 3.2 million tonnes of coal sales for the quarter, which, as you know, was below expectation due to the transition-related rail path issues at Daunia and it achieved an average realized price of $271. I think you're going to need to see a few quarters of this play out to see the traditional run rates of product -- quality and product mix. So just be with us on that. Nevertheless, in Q4, hard coking coal and semi-hard coking coal sales achieved a price relative to the Premium Low Vol Coking Coal Index of 81%. But the semi-soft and PCI volumes were lower because of the Russian influencing market. On a group basis, for Q4 revenues were up 59% from met coal and 41% from thermal. And without the rail-related issues at Daunia, we would have expected to see higher met coal revenues. Coming over the page on the margins. It's healthy margins. At a group level, we realized an average price of $228 and a unit cost including Queensland for about $120 before an average royalty of about $24 a tonne. So you can see the margins that are coming out of this business. With the addition of Queensland ops in the last quarter, that unit cost increased, but the Queensland unit cost of production in Q4 was about $147 a tonne. And the first quarter of our ownership, the royalty rate in Queensland was about 15%, while in New South Wales, the royalty rate was 8%, but has increased to about 10.6% from July. So the government is benefiting from the coal industry quite well. EBITDA margins. A little bit -- you can see the FY '23 margin, which was outstanding at $303, not to be repeated as coal prices softened, but a very healthy margin of $84 a tonne in FY '24. And I'll be happy with margins that run around the 50% with a coal price on a normalized basis. So let's go to the EBITDA bridge. No surprises, almost $4 billion in EBITDA in FY '23. And as the coal price came off its highs, that took about $2.7 billion off the EBITDA. And you could see the $138 million change in cost was really around 12.7 at about $10 or $11 a tonne -- 12.7 million tonnes of sales at $11 a tonne. Queensland contributed $272 million, and this is how we get to $1.4 billion. But still -- I draw your attention to the fact that we pretty much out washing -- Maules Creek, Tarrawonga and Vickery and that is helping to support costs, but it's also driving the revenue outcome to see which -- is a positive outcome. Come over the page to cash flows. You'll recall, we held about $2.7 billion of cash, but we knew we had to pay about $800 million to $900 million of tax. So really, there was about $1.9 million, $1.8 million there that was unaccounted for. We generated $1.3 billion in the period. As I said, we paid the tax $880 million from the previous year and about $140 million from the current year. We spent $496 million on expenditures and other acquisitions. We returned almost $400 million to shareholders and those repayments and others are just lease payments before we spent $3.3 billion for Daunia and Blackwater. Now clearly, as Paul said, we expect in the first quarter of calendar year '25 to be receiving USD 1.080 billion, and that's about AUD 1.6 billion. So we're expecting to -- but that net investment there is going to be very attractive. So we finished the year with net debt of about $1.3 billion. And as I said, we look forward to the collection of the proceeds of sale process from Nippon Steel and JFE Steel. Net debt or liquidity. We've got plenty of liquidity. If you look at this at $556 million of liquidity at 30 June '24, we've established a couple of other facilities post that period, and to that liquidity, and we're generating cash flow from the business every month. So that strategic joint venture with Nippon Steel and JFE and the USD 1.08 billion, that will be -- that will effectively turn us into a net cash position before we settle the USD 500 million, the first USD 500 million with BMA on April next year. So I'd say balance sheet in excellent shape. Turn over to the page. I think our capital allocation framework has delivered really solid outcomes to shareholders and the business. It served us well. It's a disciplined process that says we keep the business going well. We've put the balance sheet in great shape, and there's real tension between where do we deploy capital and provide returns to shareholders. For now, the buyback remains paused. Dividends are being determined based on the earnings from the New South Wales business. We've said in light of the acquisition that cash flows from the acquired business will be directed to retire and vendor finance first, and the decisions around major development expenditure will be on hold until the deferred payments are paying down. When we received the first -- or we received a $1.08 billion, the Board will have the opportunity to review this capital allocation. And already informed and as Paul said, we'll look to the full year FY '25 dividend to see where that goes. But overall, our final dividend of $0.13 fully franked takes the full year FY '24 dividend to $0.20, which is pretty easy to remember. And that's about 22% of group underlying NPAT -- so we expect to continue a significant -- or we expect a significant step-up in capital returns when the deferred plans are made and surplus capital emerges from this expanded assets. So I'll hand it back to Paul from here.

Thanks, Kevin. Turning over to the full year guidance. In FY '25, of course, everybody will understand that we're focused on continuing to integrate the Queensland assets, and setting up a robust base against which we can deliver strong results and sustainable outcomes. We have deliberately taken a measured approach to guidance with these new assets, as you would imagine, being the first year of our ownership and having had them now for nearly 5 months. I think we all want to ensure that this year ends well. And to that end, you will understand that we've taken a level of conservatism, and that has been prudently applied in the construct of our guidance for this year. We expect to produce 35 million to 39.5 million tonnes of ROM production for the year and to deliver a range of 28 million to 31.5 million tonnes of managed coal sales. We believe this is very achievable. Queensland ROM production reflects a focus on increasing the blasted inventories and pre-strip inventories to optimize operations and set a base for improved performance of Blackwater and deliver ongoing AHS productivity at Daunia. New South Wales ROM production reflects the closure of Werris, of course, and the ramp up of Vickery. Mining -- there is a high [indiscernible]. We're heading through the hill there. Tarrawonga [indiscernible] many people have observed, and we have allocated an 8-week longwall move for [indiscernible] informing our guidance for this year. That will be in January '25. The reason why it's 8 weeks longer than normal is we do have some jobs that we want to bring to service [indiscernible] maintenance can't be done downstairs. So we will bring them up to surface, so that we can get up some of that reported work. We expect coal cost to be the range on route based from AUD 140 to AUD 155 per tonne, certainly reflects the underlying -- cost increases continuing as [ BBAs ] are rolled out across the business. The Queensland cost base obviously represents a lot of opportunities to improve. You see us attack some of that already. You will see us continue to do that as we move through the course of this year. The capital guidance there at $450 million to $550 million, I think it's pretty judiciously configured. We have pulled out the microscope and had a good look at that across the business. And so I think given the scale of change in the business, that's a pretty responsible way to configure our first year of ownership of the broader business. Queensland will be accounting for about 40% of that, New South Wales 60% of CapEx for FY '25. And closely, just coming to our focus for the year. Predictably as we described, we want to see, obviously, a first year of expanded business to go well. So we're very much focused on sustainable operational performance year-to-year and improved cost management across the entire business. In New South Wales, our efforts will be directed to consistent and reliable operations at Narrabri as well as our overcut operations and ramping up early mining at Vickery. In Queensland, we want to set a strong foundation in FY '25. And we know we can deliver significant value, not just in this year, but in years to come, and it's all about setting that up for the future. So further alignment of Daunia and Blackwater will be in the focus to Whitehaven's simplified operating model. And as I mentioned just briefly, rebuilding blasted inventories and pre-strip at Blackwater will certainly be a point of focus as will be further productivity gains at Daunia with the AHS system. And of course, overall, as I mentioned earlier, there's a $100 million bucket of cost and issues that we're looking at in Queensland. And our target is to rebase the run rate of costs at the end of the year by that measure. So just to be clear, not delivered within the year and turned to those sales, but rebased the run rate of costs by the time we get to 30 June 30. And of course, we want to see the terrific trajectory of safety performance going across the entire business and also the environmental compliance that you've seen in more recent years. At group level, we obviously will be focused on completing the sell down, a very exciting transaction as that is. And as we've said, we expect that to complete. There are 2 separate transactions, so they can compete at different times. We hope that at around the same time. But we think that will be in the first quarter of calendar '25 when the commission occurs and the cash will be in the bank, a terrific result as that is. And to that end, I'd like to thank all our people who have worked tirelessly during the last year or 2 actually to transform business into what it is today, and to our Board for the [indiscernible] support to be able to navigate our way through this transitional 2-year period. It's very satisfying to see the business in a steady -- and derisked as we chart our course into the future. So I thank you all for your support, and I particularly thank our shareholders for their ongoing support during this period of change for us. So with that, I'll hand over to the operator, and we'll get to Q&A going. Thank you.

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

Paul, Kevin and Ian, congratulations on the deal. Look, my first question is perhaps focused a bit on the unit cost going into next year. So if I look at FY '24 and I back out what Queensland did in terms of your actuals, I arrive at about AUD 164, AUD 165 per tonne. And if I look at FY '25 and I try to hold Queensland at about that level, it would imply that your NSW costs have gone higher to about $130 a tonne from about $115. So I guess what I'm trying to get at is, is there a mix shift here in your NSW production guidance numbers? Is it more coming from Maules versus Narrabri? I mean, what's driving this cost increase into next year? Or has Queensland cost actually gone up significantly into next year? So that's the first one, and I'll come back with a second.

Yes. Thanks, Rahul. That's -- I'm going to try and answer some of that, and I'll hand over to Kevin for a little bit of this as well. Couple of the numbers there you have implied, they're not quite out our numbers equate to what you are -- but you're -- thematically, I think you -- that's a reasonable proposition. We've certainly got lower volumes in New South Wales that we would otherwise like. We've taken a relatively conservative position there. Of course, we're going to have less tonnes out of -- a little less out as long as we go through this pre-strip zone, so there's something -- so that's less than last year, whereas Creek obviously is broadly replaced by Vickery. So that's relatively neat. Maules, no particular change there, volumetrically from there. But to say we're continuing to work through the inflationary impacts on our business. So we've got that rolling through. But lower volumes overall in New South Wales does lead to a higher cost per tonne as a result of take-or-pay absorption across the tonnes that actually are produced and then washed and sold. Queensland, we have taken a conservative position there. I think that definitely influences this. We've only had the business now for 5 months, and we had to step scramble pretty quickly to put a budget together, which I think the team has done an admirable job on, given that I suspect the budgetary processes occurred at various levels above the mine site level, where it's obviously our approach is to do that from the line cycle forward. So we have taken a good position there. We want to make sure this all goes well. We think there's upside as the same in the costs. We have given a relatively wide range on costs, as you note. So a [ $15 ] spread across that is wide. But again, it's really just the fact that we want to take a relatively prudent course in this first year of ownership to make sure that goes well. Obviously, we called out separately on top of that, the $100 million initiative on top of the bucket of savings that we're looking across various initiatives in Queensland. And you've seen us already addressing some of the elements of the cost base of Queensland with the restructure we embarked on last week. Those ones are -- those ones that you source in, it starts last week are in the government where the [ $100 ] is on top of, just to be clear. Do you want to add anything there?

Yes -- no -- Rahul, I'm going to say to you that I think there is a mix change. There's definitely a mix change because Werris Creek tonnes come out. And as you know, there's a 100% yield there and they're closer to the port. They're going to be replaced by a high-quality product out of Vickery. The Vickery is -- the way I think about Vickery is that it's simply a box cut that's being developed for a future mine. Unfortunately, accounting standards require me to push the costs of Vickery through the unit costs. So that's contributing to this. I've also got -- we've got early days in safeguards mechanism of Narrabri. So we've got an estimate in there for what that might cost us, and we're obviously working hard to work our way through the whole process. So that's coming in. But you would have seen us unwind some stocks out of Tarrawonga last year, and that contributed to sales volumes. Those sales volumes aren't being used or aren't there this year to come through in use uptake or pay. So there is -- there's a volume impact that in the long run get solved by a bigger Vickery and point in time in the future and by a return of Narrabri to a better level of production. So there are...

Yes. That's very clear. Just a quick follow-up there before I move on to the second one. You've also talked about NSW still being circa 90% of your development spend. I guess within that, you've got Narrabri Longwall 203 now going to FY '25. So I mean, at what point do you actually decide whether this development CapEx now starts going into the bigger Vickery or to Narrabri Southern ops considering that 90% development spend going there?

Yes. Rahul, I'm not sure where that 90% comes from. Queensland's 40% of the CapEx guidance, new South Wales is 60%.

Got it. I might have got that wrong. I can follow that up off-line.

No, so you're referring to the subset for development CapEx only.

[indiscernible] development specifically?

Yes. Got it. Look, Narrabri, obviously there's an area obviously transitioning between stage 2, if I can call it the 200 panels and the 300 panels. the CapEx to 300 stage 3, which we're hoping for imminent approval, given that the -- application specifically for federal court has been dismissed. The ball firmly sits in the hands of Federal Minister now to approve that. But we have curtailed. We've had to curtail the CapEx spend on stage 3 capital and push that out. But there is still a bunch of work which needs to be done, obviously, in the 200 panels, and that's where we're currently mining 203. And so that work is required to continue until we have some clarity on stage 3 full approval for the EPBC approval. We'll continue to be prudently pushing the capital out for as far as we can responsibly do so.

Got it. Okay. All right. Final question, just around your balance sheet. Kevin, you did mention it briefly. In your introductory comments, the Board will have a strong position early next year if the deal goes ahead as expected and you'd probably be in a net cash position. Is there a -- if we assume that it has gone ahead and you are in a net cash position, I guess 2 questions that come to investors' minds are obviously how to think about that 20% to 50% EPS range and if you think that's still relevant for the business going forward? And then secondly, you have previously said that the Anglo deal is something that you're not going to look at. Does that change your views on that side of the equation as well?

I'm going to let Paul answer the Anglo deal because I don't think that's a long sense.

It's a simple one, no.

Okay. And then the second one, if you have a look at the slides that Kyle [indiscernible] in the back there on guidance, you'll see that there's an awful lot of noncash charges come through. So I think the 20% to 50%, we'll consider that as we get through the process. But I do think as the -- as we expect to settle this in the first quarter next year that the Board will have a good look at what are we -- what are the competing uses for capital. And given that we've had a -- we've been at the lower end of distributions to shareholders, I'd not be surprised if they actually looked upon that in a way that said that recognize the support shareholders provide. I don't think I'm saying anything untoward there, Paul?

No. I think I've just been told that we've got quite a few people in the question queue, Rahul. So we're going to have to hand them and over to somebody else and keep it relative to [indiscernible]

The next question comes from Adam Martin with E&P.

Paul, Kevin, just like a similar sort of follow-up question there. I mean, you've also got this net debt-to-EBIT target range, 0.5 to 1.5x, you will be sort of at the lower end, maybe even below it. Should we think you're going to sort of want this deals complete? Will you look to sort of guide almost a net cash position? Or do you think you're going to stick between that 0.5 to 1.5 and potentially give better returns over the next couple of years around dividend?

Look, I'm happy to say I got no plans to retire the debt, right? So we've relevered the balance sheet modestly as a result of this process. We always -- we believe that the balance sheet and the business should maintain a level of debt that's modest, and that's what those credit ratios say. So I would suggest you should not model the retirement of the debt as your base case at all. Does that makes sense?

Yes. That sounds good. And just back on the cost, can you give a bit more of a split between New South Wales and Queensland? You sort of mentioned in the April pack that you give us a split. Can you give us the split?

Taken the view that the cost is best managed on a group basis and to dive into more detail in that regard is not going to be particularly useful given that you don't make profits out of one or the other you make profits out of the business. And so we're going to stick with this and simplify your life by just giving you 1 cost.

Your next question comes from Paul Young with Goldman Sachs.

Kevin, first one on the Blackwater sell-down. Kevin, I think you mentioned that there's a USD 2 management fee associated with, correct me there. But also on the other side, is there -- with the offtake, is there any impact on pricing to benchmark? Is there an agreed discount to any type of index being flat, et cetera?

Yes, Paul, that's correct. You've got it on the management fee at USD 2 indexed for sales tonnes. That's value enhancing on the metrics of the deal. And of course, the cash flow until the time of completion [indiscernible] that as well. So that takes, I think, the metrics on the return on Blackwater from our perspective, even at the broker consent [indiscernible] I think it's some [indiscernible].

On the offtake?

Yes.

Yes, no, you should be modeling what we've told you. There's customer market arrangements with long-term offtake -- long-term customers that have been taking this product for decades. So...

All right. Okay. So to confirm there's no discount attached...

To put it in my language, there's no cross subsidization between future earnings and purchase price.

Okay. Okay. And then maybe back on the cost, Paul, I mean, I think you used in the presentation, harmonizing Queensland, New South Wales, interested in what that word actually means? Is that just sort of inducing Whitehaven culture, so interested in your thoughts there, but just more broadly around the opportunities on the cost out. So you said 200 people leaving the business, you've also got additional savings of $100 million per annum by the end of FY '25. Where are these opportunities? Are we talking around tech services? Are we talking associated with systems like OneSAP? Are we talking about [indiscernible]? Can you provide a bit more information about the cost out opportunity across [indiscernible]?

Yes. Thanks, Paul. I'll just quickly say, look, we just run a simple operating model than what these 2 mines have been used to be running under, not to say better or worse or whatever it is, but from our perspective, there certainly is a more complex model. We want to streamline it. Part of the headcount reductions, as you've seen as part of that, there will be further additions to that going forward. And -- but we do obviously, we don't have the complexity of the operating services model, obviously, but we did take all the people on originally to have a look at what's really going on there. That was just part of the deal. Ian is obviously focused on a whole range of initiatives in an operational sense. So I might get Ian to cover off some of the headline items that we're tackling.

Yes. Thanks, Paul. So just to give you a little bit of color, you asked some areas. So maintenance would be one of them. Traditionally, that's been done on a sort of calendar basis. We're going to look for performance management and extending the life of components. There's a balance to, I guess, capital replacement, what we're going to look at there. Just the whole equipment rationalization based on productivities, fleets we've got, the ratios of ancil equipment and also a look at the suitability of some of the existing equipment and looking to optimize there. When you look at all the sort of the contracts we inherited those in the short period, we had to stand up, we basically took on board sort of what was there. But there's no doubt that there's room to work through those and rationalize some of those arrangements, both probably in number and value. In and around sort of -- and sort of a byproduct of the people space, the whole what I call logistics accommodation planes and all of that area. Again, we basically stood up what was in place and duplicated that, and there's a whole lot of room for some improvement there. Paul touched on continuing to look at, I guess, structure and optimizing structures that never goes away. I mean, that is in both businesses, Queensland and New South Wales. And maybe one of the other ones is in the explosive space. We changed. I think we made you aware earlier on, we changed the Blackwater, the explosive supplier, that transition is going well. We've beefed that area up. But as far as sort of technical expertise to get in there and start on some of the new products, electronic detonation timing and all the rest of it, there are a number of sort of opportunities there to save money. So maybe that's a bit of a look at the laundry list that we're tackling.

Your next question comes from Daniel Roden with Jefferies.

I just wanted to understand the sell-down from Blackwater for $1.08 billion. What, I guess, cost and tax implications you're expecting in FY '25?

Cost impact -- the short answer to that is that there is about a -- there'll be a tax. The net proceeds will be down by about USD 100 million. So the $1.08 billion, there's about USD 100 million tax bill attached to it.

And just confirming regulatory processes [indiscernible]

It's the customary approvals and FIRB is one of them, and the other one will be some competition authorities in some other jurisdictions. But we think that's a 3- to 5-month process, further probably 3 to 4. The competition depends on who you talk to and how it goes and where you have to go, but typically done within 3 to 5 months.

But nothing controversial in any of that.

You look at [indiscernible] India, Japan, Korea, and [indiscernible]

That's perfect. And maybe just, I guess, concerning how I've interpreted when that transaction does close, and let's assume it's around the March quarter '25, there will be an update on the capital management, I guess, policies and figuring out what's going to happen with the additional free cash generated by the business kind of post that period? Is that understanding generally in line with what you said?

Yes. Look, I think we'll settle the transaction and then we'll look at the run rate for the balance of the year. And I think as we've highlighted there, the Board will have an opportunity to review for the final dividend, the settings. The buyback still on pause, just to be clear for everybody. But the Board will certainly have the opportunity to look at the final dividend, and whether or not that -- the payout ratio that you've seen us declare now a little bit above the bottom of that guidance, the [ 25% ] of the thermal business. I think there will be an opportunity for the Board to revisit that, and look at where they want to calibrate that going forward based. But it will be at the year-end rather than that in March or something early and depending on when the settlement of the transaction occurs. So I'll be wanting to see the run rate of the business for the full year.

Your next question comes from Rob Stein with Macquarie.

Just 2 quick ones. The offtake. Is it 30%? Or does it extend to a materially greater loss of volume for Blackwater?

Yes. Look, the offtakes are consistent with their performance generally for historic. They've been big consumers of the product. And obviously, that's driving the attraction for them to come in and take the equity slice. There is the opportunity to scale up and down there. But the key point here is these are both important and material consumers of both products, the semihard and the semi-soft out of Blackwater. And it's obviously important enough to do their business that they want to put serious money to work to ensure that they have consistency of supply over time.

And sorry, is that a 50% offtake? Is that 60% of production under [ uptake ]? How can we sort of think through that?

I don't think we're able to tell you that. So the other thing I'd probably get you to do is because we don't disclose commercial and confidence contracts with customers. But I think I'd encourage you to go and have a look at Nippon Steel and the JFE announcements to their own market. That's been -- it will give you an insight into why they wanted a stake in this business, really informative slides.

No problem. And then just a final question. The op cost build looks working capital in nature, especially in the Queensland assets. Are we expecting that to revert back to a certain number across FY '26, '27? And now we're expecting once you build the [indiscernible] that production is going to be up to that guided rate as disclosed at the time of the transaction.

Yes. Look, I think we're still satisfied that the 5-year averages that we've given you, we're happy with those. And the physical and the pathway to those physical outcomes and the costs related to them, we feel comfortable with. Obviously, we've just been through a competitive process, and we've shared our views on that with our incoming joint venture partners, and they've also satisfied themselves in the same way. So yes, there is we've highlighted and neither Blackwater in particular full build in image blasted ground and also pre-strip inventories ahead of dragline utilization to make sure those draglines can come at all times. And then, of course, Daunia is all about efficiency, efficiency of the AHS system. But yes, there will be a buildup on those inventories to sustainable levels, then should moderate as you settle into a more rhythmic basis of stripping.

Your next question comes from Jon Sharp with CLSA.

Paul, Kevin and team, congratulations on the sell down. I'm sure it's been a busy time. Just another question on unit cost, more to do with this new legislation, Same Work Same Pay. I know you briefly called it out, but I'm hearing from key contracts, particularly for the coal mining industry that it's having a much more dramatic impact than most people probably realize. Can you just discuss how much effect it's having on the unit costs and I'm also interested to know if there are any other unintended consequences that you're seeing other than, of course, pushing up the unit costs.

The spectra of Same Job Same Pay affects each producer differently, depending on their configuration of labor hire to own workforce. And obviously, when we took over the Queensland assets in particular, we obviously collapsed the labor high component of that into our workforce. So it's not to say there's no contractors there. It's just to say that the operating services environment doesn't exist in our ownership as it did before. And so there is an inflationary impact generally of converting labor hire across to our own people. And that is -- that will be evident in New South Wales as it would be in Queensland. So we're not quoting numbers in terms of that, but we are at the very early stages of this. And so let's see how that sells across the year. We have noted a couple of forays of these negotiations have already taken place within the industry, not with particularly favorable outcomes, I have to say from a cost perspective. So we're watching that very closely to see where that goes. We do have our own exposure in New South Wales to a collective bargaining case, which Narrabri has been drawn into. So we're watching that very closely to ensure that we can minimize any inflationary impacts from that collective bargaining claim.

Okay. And just to follow up, are there any other unintended consequences of that, that you're seeing?

No, I wouldn't say so. No, I mean as I mentioned before, labor availability is better. And so -- and you're seeing us obviously addressing some of that in Queensland already, and we'll continue to work on during the course of this year. So -- but we do expect, if labor is more available, then the inflationary aspects of labor should actually come down. I've called this out before, we are not seeing that yet, although it should come in time. And we're not the only ones thinking about the efficiency of the operations in the sector, and we know there's been some changes announced from other producers in Queensland in particular. And so that should assist in the moderation of inflation in the labor component of that business. But as I say, we're just not seeing it yet.

Okay. And my second question is just on the cut-and-flit in Narrabri. Will you continue this indefinitely? I assume there's a certain price that you would stop this operation. There's little doubt that its increasing unit cost, and I would imagine it's taking focus away from the money maker, which is the longwall. Just I'd like to know the strategic perspective. Is it due to reducing risk for take-or-pay, just interested in your thoughts there.

I'll jump in there. So look, I mean we've got an area at Narrabri that is approved to mine cut-and-flit. It's not suitable for longwall. So we will continue to do cut-and-flit, while it's providing, I guess, a positive outcome, and I don't foresee that changing anytime in the near future. And we actually have a number of other areas of, potential areas around Narrabri that could become cut-and-flit and they will be part of the body of work we've got going forward. So -- and yes, you're correct, it does assist with the table pay, but that's not the only driver in that, I guess, decision-making process. And then we've added in there for a period of time. And I guess, say, over the last 6 months, we've really started to see it hitting good, steady delivery and results. So we're pleased with it, and we'll continue to keep going for the foreseeable future with cut-and-flit.

Your next question comes from Lachlan Shaw with UBS.

Just a quick one with Blackwater and the blasted inventory and pre-strip catch-up, can you help us with a bit more insight around how much of the OpEx guidance is accounted there? And secondly, how long is that whole process expected to play out there?

Yes. I'll jump into [indiscernible]. I mean, we've already ramped that up and progressing and the good aspect is it's the pre-strip -- going really well, too. So trying to get that in advance, it's a good problem to have they're chasing us, but we've got the resources up there. We've got a new team. So it's probably -- it's going to continue to grow to get to where we want it to be is probably at least 12 but maybe 18 months and then that should stay in a sort of steady state.

Yes. I think that's -- as Ian is saying, the performance has stepped up, and so it's sort of chasing us down. So as we've stepped up to pre-strip, the actual production has stepped up as well. So the dragline is working better. And then -- but we are -- we do have -- you may recall that we've taken the decision to bring a bit more tripping capacity on to site. And so the first of those large excavators is on site now and being assembled. And so we are not at the full enhanced stripping capacity on site yet. So that commissioning process, the build and commissioning process will go on still for a couple of months. And then we'll have that capacity on the ground plus the trucks to be able to get further ahead. So it's nice to see us making better strides to strip more efficiently and greater volumes. But in actuality, the draglines are chasing the pre-strip fleet down, which is not a good problem to have.

And then just in terms of the cost, I mean, is there a way to think about that, but that's just kind of the additional cost of resetting that sort of falls back into the cost savings you might find elsewhere at the asset? Is that the right way to think about it?

I think you're always going to blasted inventory. There's probably a bad way that, that coming, which is, I would have said the number like what have we got, 20 million to 30 million [indiscernible]. They're going to need to put some volume.

Yes. So we're targeting to have sort of that 50 million [indiscernible] and maintain that consistently.

Okay. That's helpful. And then just quickly, second question, just on the met coal market. The coming out of monsoon in India, we're all looking for the buyers to come back. There's some interesting tax changes going on with the steel mills there. I mean, what are your team telling you with hard PLV sort of just above $200. What are you hearing from the market and what's the view going into end of year and next year?

Yes. It's -- look, we're doing the same thing. Obviously, with Indian buying a relatively subdued at the moment. I think there's a bit of sentiment -- negative sentiment, I think, generally for the Asian market. But we are seeing inquiries out of India coming in now. So that is a change as we expect to see. So as they emerge from this period. We see them get -- we want to see them getting more active in the market, and we are seeing it. So that's nice. And the inbound inquiry is starting to kick up. So that gives you some comfort that you're going to see some buying activity, which will tighten the market. Of course, we'd like to see greater than $200, $205. We'd like to see that, of course. But we're here for the long haul. And the focus will be to make sure that we rebase the business's cost to ensure that the margins are the healthiest possible and resilient through the cycle, not just when things are good.

All the stories that you see in the Indian growth, they're real. When that place is growing 6% to 8% and that demand is going to grow. It's just slowly...

Your next question comes from Chen Jiang with Bank of America.

Paul and Kevin, congrats on the Blackwater sale. A lot of production and cost questions could ask. Maybe if I can have 2 questions on the Queensland coal. It's been, I guess, 5 months since you acquired Blackwater and Daunia. I'm wondering for -- I had a look at your management change, you had a new general manager for Blackwater and Daunia. And also I think you made around 200 people redundant from Daunia recently. I'm wondering is there any extra capacity or room to streamline Daunia and Blackwater? And also that $100 million per annum of the cost sale, is that included in FY '25 cost guidance already?

Yes. Thanks, Chen. The Queensland operations came as they were. And so there is a lot of opportunity there for improvement of the assets and the teams on the ground are doing a very good job in that regard. Yes, we have put new leadership in at both sites. One of the sites came -- the team who was there before chose to move on to do other things. And so there was logical replacement there. We had 2 excellent acting people there and taking carriage of the assets until we transitioned in. But now we've got stronger teams there, and they are doing a very good job in focusing the operations. So the opportunities are significant at both sites. And the challenge here is to just to make sure we prioritize -- reprioritize ourselves here and focus on the big things that matter. The initiative you saw us start with last week, they are beginning. There is further opportunities for streamlining and improvement going forward. So you'll see us during the course of the year address that. To your question about the $100 million, that is outside the guidance. So that -- that's in addition to. So better volume, lower cost. That's the way the guidance works for sure, but the $100 million on top of it is outside of that.

Right. So it's outside of guidance and that can you implement that from FY '25? Or will we have to wait until you've done pre-stripping? And then because your Queensland coal as well as New South Wales coal on a unit cost basis in FY '25, you guided higher than FY '24. I guess for Queensland, that's due to pre-stripping. But for New South Wales, I guess, you mentioned longwall movement and lower volume. I'm just wondering how the benefits coming from that beyond FY '25?

That's a long dissipation there, Chen. So I think what you're looking for is look, we need to get, obviously, in Queensland, particularly Blackwater to the levels of the volumes of inventory that we want to be able to run those 7 draglines harder, and that will result in more coal being produced. And so getting to a stable level of inventories to allow those draglines to be deployed without delay to new areas is our objective here. Daunia is very different. Daunia is all about productivity. It is an established commercial AHS operation. And so we do need to work on that. It's not where we would like it to be. But they have made very good progress, in particular, Q4. Also again, as indications of encouragement there. But both those sites will be subject to further review to reduce costs from the business. But as Ian said, the build in inventories will take -- certainly won't be done within 12 months, it's more like 18 months for sure. So once that is done, you should see the volumes start to improve outside of that period.

Sure, understand. So around 12 to 18 months integration and all the work. Sure, yes, understand. May I have another follow-up just on the Queensland coal. Are you -- is that part of your plan to change your -- I guess, your marketing strategy, including the mix of how you sell the met coal product versus BHP's time?

I'm not sure what change you're referring to there, Chen. So no, we have no...

Like a customer base -- sorry, yes, I apologize. Just like a customer base. I know you have very good relationship with the Japanese mills. But I guess India is where the incremental met coal demand coming from. I don't have details on how the Blackwater, Daunia customers like versus BHP's time. I'm just wondering if you have anything under your plan to change how BHP used to operate from the marketing or customer or even coal mix perspective?

Yes, I think we just need to keep these questions relatively succinct, if we could, Chen. Whatever BHP did from their market perspective is a matter for them. We have a good relationship with these markets. We have established an office -- a representative office in India. And so as you rightly pointed out, that is significant upside from a met coal demand perspective and will continue to leverage that. We know a lot of the players there already having sold semi-soft and PCI into that market for many years, and we'll continue to focus on that. But we'll be running the marketing and logistics component of our business the way Whitehaven does it as opposed to whatever may have happened in the past. I think we're running out of time, and we've got 1 more question. So can I just ask that next person to come on, ask that question if they could be succinctly, that would be great.

Your final question is from Glyn Lawcock with Barrenjoey.

Paul, I'll try and be succinct. So look, just quickly, talking around all your peers in Queensland, they talk about the below rail being an issue. The system is running about 12% below what it did at its peak 5 years ago. Can you just maybe talk a little bit about how things are traveling for you? You had some issues in Q4, so are you comfortable that below rail can actually step up? And then just any weather because it's been quite above average ran for the last few weeks?

Yes. Thanks, Glyn. That is a good question. So I'm surprised it didn't come up earlier. Daunia, as we commented before, we had something in that first quarter of not receiving the pathways necessary to move the sales tonnes we were preferred in the first quarter. Obviously, we've elevated that significantly with incumbent, but we've also brought in an additional provider there to help us out provide further pathways. Since that time, we are flowing back actually some of the lost growth, which has been pretty positive. And so this quarter is looking much, much better. And so credit to all those parties, the incumbent and others involved, that is improving. So you're quite right, though, that everybody is complaining about the same thing in the system itself. Our issue was more a situational issue. We're extracting Daunia out of the centrally managed BMA contract, caused a bit of a glitch in the allocation of pathways in the internal of Horizon Networks. That is being addressed. So I appreciate the change there. I think you've got to be actively managing this going forward. So we've got to be on our game here. Daunia is a relatively small piece of the puzzle in that system. And so we've got to be on our toes to make sure we're always getting our share of the pathways or our contractual share of the pathways that we're paying for. The challenge here, as you know, is the system does require maintenance. And there's a tricky balance there. I know that the argument has been in the past. If you pay us more for maintenance, we can provide more pathways. That's not an unfamiliar proposition for any regulated asset. So we just got to make sure that we're getting all the pathways that we serve. But we are recovering ground in this quarter, which is very positive.

And I think, Glyn, I'm assuming everyone understands this, but obviously, that discussion is in and around Daunia. I mean, Blackwater and that rail chain is plenty of capacity, dedicated stockpile type arrangement. So we don't foresee that some challenge out by the way.

The dealers are having 2 rail lines.

And any weather impacts from the rain we've had above average?

Look, this month, it was a little bit of rain and around, but we kicked off July really well, and we're not seeing any overall challenges for Q1, falling out of that.

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

Yes. Thanks very much, everybody. I appreciate you taking the time. It's been a lot. I know we sent a lot of documentation this morning on this excellent joint venture formation opportunity and the results for the year. I know that we got some more questions, but we can see many of you over the course of the next week, too. But if you have any questions, you know where to find us, and we look forward to engaging you on all the aspects of what we've announced today. Thank you.