Thank you for standing by, and welcome to the Stanmore Resources Limited Full Year 2023 Financial Results Presentation. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key, followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Marcelo Matos, Chief Executive Officer and Executive Director. Please go ahead.
Thank you. Good morning, everyone. Thanks for joining us today for our 2023 full year results webcast. I would like to begin today by acknowledging the traditional owners of the land on which we meet, the Turrbal and Jagera peoples here in Meanjin, Brisbane. I also acknowledge the traditional custodians of the lands on which our operations are based, the Barada Barna, the Jangga, and the Widi peoples of Central Queensland. I will begin with a summary of our highlights on slide number 3. 2023 was another fantastic year for Stanmore, and the first full year of ownership of our new SMC assets, where our focus has been on embedding these operations into the Stanmore culture in our operating model.
Our efforts have translated into impressive results highlighted here, including below average, below industry average safety performance, above guidance saleable production of 13.2 million tons, and below guidance FOB cash costs across the consolidated group of $86 per ton. Financial outcome was a full year underlying EBITDA of $1.1 billion, demonstrating the significant earnings capability of our portfolio in a more normalized pricing environment, and also supporting a dividend declaration of $0.082. Together with capital appreciation, Stanmore provided total shareholders return of over 40% for the calendar 2023, significantly above the ASX 300 average, and adding to significant returns provided since the last equity raise back in March 2022.
Moving on to the detail for today's presentation, we will start with a summary of our safety performance on slide five. Safety is central to everything we do at Stanmore and is integral to our social license to operate. For previous announcements, we have recently shifted our public reporting to focus on the Serious Accident Frequency Rate or, of course, serious accidents over TRIFR or Total Recordable Injury Frequency Rate . Whilst the TRIFR will remain an important metric, particularly with regard to informing our current efforts to improve lead indicator identifiers. The SAFR provides a direct benchmark to the reported industry averages and is consistent with the latest focus of the Queensland safety regulators and will sharpen our focus on actions and initiatives to prevent the most critical incidents.
On that note, we were disappointed to record our first serious accident for 2023, right in the back end of the year in December, contributing to a closing SAFR of 0.19. That's still well below industry average. We are also conscious of the increase in TRIFR over 2023 and aim to provide to improve our processes, quality of the investigations, procedures, and understanding of leading indicators to ensure this does not translate into any serious accidents further, and we can endeavor to get this back on the right trajectory with a goal to return all employees safely home to their families. I'll move now to the next slide, on to sustainability. We are progressing on our sustainability journey, aligned with the expectations of our stakeholders as a pure-play metallurgical company.
Sustainability roadmap developed this year or in 2023 provides the direction for ESG for the next five years. On environment, our focus is on our material matters. We've developed our first decarbonization plan and identified various initiatives to contribute to our emissions reductions. The key one that we are busy with at the moment, it's our South Walker Creek gas to electricity project. We're ongoing discussions with two partners, as well as with the Queensland Government. Also completed a renewable diesel trial as we look to find solutions to reduce diesel emissions while we wait for OEM equipment solutions. We have also costed action plans to reduce our reliance on externally sourced water, and we are working on data collection for the upcoming statutory requirements for reporting requirements, including of Scope 3 emissions from 2026.
In the social space, we developed during 2023 a social performance strategy and action plan, including the development of a community investment framework, which we intend to adopt to assist us in creating lasting value for the communities in which we operate. We continue to deliver on our Reconciliation Action Plan as we look to go from the Reflect phase to the Innovate phase later this year. Finally, in the governance area, we are focused on the ongoing development and implementation of robust governance management processes to match the size and scale of our business. However, ensuring we maintain our strong culture of an agile and entrepreneurial company.
In slide seven, in rehab, following from our very strong performance of over 270 hectares of rehabilitated land in 2022, we delivered another 191 in 2023. Our focus is using also production equipment when not required for production to create good rehab outcomes. There is a great photo on the right here, of some of our newly rehabilitated land in 2023, showing the contouring of, old dragline spoils and truck shovel dumps leveled, contoured, subsoil, subsoiled, topsoiled, and seeded to great effect. The teams are looking into the process of doing our first pilot certifications, and we look to implement that in the coming years. On people and community, slide eight.
Touching briefly, we remain proud of the positive impact we have on the communities and regions in which we operate. In 2023, our impact to the regions was significant, with 67% of our total employed workforce living and breathing these communities. While from a procurement perspective, AUD 223 million was spent in these local communities. Contributions to the state government via royalties were AUD 835 million, demonstrating the sizable impact of the increased royalty regime introduced from 2022 in Queensland. This figure represents almost 30% of our market cap and over half of our underlying EBITDA in U.S. dollar terms. Moving to slide 10 on metallurgical coal markets.
Starting from our product mix, our product mix continues to align with our strategy to be a leading met coal producer, with PCI and coking coals comprising 93% of production and over 97% of revenues. Geographical demand trends have proven to be dynamic over the last couple of years, with the trade flows adjusting to the Russian sanctions and continued growth in demand from India and Southeast Asia. Stanmore's customer mix remains stable and focused on traditional markets such as Japan, Korea, and Taiwan. We have seen European demand stay strong at 21% amidst ongoing Russian sanctions, albeit North American volumes have returned to the market, the thermal prices reducing back below metallurgical coal. India and Southeast Asia continue to grow, as we will highlight in the coming slides, are forecast to be key drivers for growing demand going forward.
In slide 11, we have included a few slides summarizing key trends in steelmaking and metallurgical coal demand from key research houses such as Wood Mackenzie. As you can see here in slide 11, world steel production capacity is forecast to continue to grow, increasing by almost 17% through to 2020. And obviously, we see a decrease in China of 22%, which, to be fair, to scale is quite significant. Thus, we still see a net positive growth. And as mentioned in our last slide, the clear drivers for this expansion are India and Southeast Asia, which are projected to more than offset the decreasing output from China. Slide 12 shows the forecast change in global blast furnace steel production outside of China.
While traditional steelmaking countries are expected to increase output from alternative methods such as gas-based, direct iron reduction, and electric arc furnaces steelmaking, the expansionary phase in India and Southeast Asia is forecast to be primarily driven by the more competitive and scalable conventional blast furnace steelmaking route. Wood Mac has projected total BF-BOF steelmaking, ex-China, to increase 23% in the next ten years and 54% to 2050. While India's share alone is expected to increase almost 200% over the same horizon. Zooming in on the PCI market on slide 13, which, as a reminder, currently comprise around 60% of our production.
Demand is projected to steadily increase, with India's share of export, export demand forecast to increase three times to 2050, driven both by India's steelmaking growth, but also by the increasing PCI injection rates, which also grows with the maturity of steelmaking operating practices. PCI remains an important input to conventional steelmaking, improving costs by reducing the amount of coke required, something which has become increasingly important in light of the current 40% discount of PCI to premium coking coal. At these price levels, we are also seeing increasing demand for PCI as a blend filler in coke making, creating a new source of demand and providing some support for prices. In slide 14, with Australian exporters set to benefit from growing demand out of India and Southeast Asia....
This naturally leads into the conversation of supply we can see here in this slide. Projected growth in demand will require increasing supply for seaborne met coal, of course, especially from Australia. Same as current operating portfolio and future development is in step with these projections, with development opportunities like Lancewood and Eagle Downs, providing potential, potentially increased exposure to the coking coal market. Of course, growth in supply remains subject to sufficient investment, supporting the development of new mines, as well as consideration of the logistics network and challenging regulatory environment in Australia. The growth through 2033, out to 2050 above, includes Wood Mackenzie's expectations for possible and probable projects. Hence, still lots of uncertainty considering all regulatory and funding challenges as well.
On the short-term dynamics from slide 15, which shows the historical price of premium coking coal and the discount to PCI in the area chart. Premium coking coal prices have remained strong over the last 12 months, with PCI relativity softening from the middle of last year and remaining soft and well below long-term average of around 75%-80%. Weaker steel market sentiment and compressed margins continue to weigh on demand environment. However, we see the current price and disparity between Australian coking coal grades to be primarily a function of supply. On the PCI side, exports are concentrated to Australia, around one-half to two-thirds, and Russia, around one-third of the market, with any significant disruption from other markets impacting prices.
Following lower volumes from Russia in 2022, which aided very strong relativities, volumes normalized in 2023 and have increasingly provided competition to Australian exports in key markets such as India and Southeast Asia, while traditional markets still with ongoing trade sanctions. Nonetheless, in our view, tightness in prime coking coal and supply from Australia will, with many large operations performing at lower levels in the past 12 months, has kept the premium coking coal at elevated levels and is the primary driver behind persistently low relativities for lower PCI and semi-soft grades. This trend is clear on slide 16, showing that 2023 was the lowest annual metallurgical coal export figure in over 10 years, with various supply interruptions from, major producers.
Export figures from Queensland ports in January 2024 show supply is still tight, with wet weather holding back any recovery in supply and distorting prices for premium products in the short term. Moving on from markets and on to our operations from slide 18. Total sellable production for the year was 13.2 million tons, exceeding the upper end of our guidance by 0.2 million tons, and once again, demonstrating the output capable from the portfolio in a full year of full ownership of our new asset portfolio. Consolidated FOB cash costs remained steady year-on-year, notwithstanding continued challenge from inflation and labor, while our average sales price was $76 per ton, lower year-on-year, following the record highs in 2022. Focusing on each asset and starting with South Walker Creek on slide 19.
It's been another very strong year, with sellable production increasing 5% compared to annualized 2022 volumes. CHPP performed exceptionally well, delivering nearly world benchmark operating levels at close to 8,000 hours, with zero coal delays, and underpinning the strong production result and feeding into our strong sales performance with only a steady increase in unit costs. We look forward to how South Walker Creek will continue to deliver in future years, with multiple ongoing projects to improve and expand this foundation assets. On slide 20, we see that Poitrel also had a robust year, achieving multiple records, including drilling meters, explosive tons loaded, and impressively, a mine record for total material movement.
While the first half was challenged with wet weather early in 2023, catch up of inventory stripping and logistics constraints, we are pleased to report a very solid second half in 2023, with sales volumes increasing almost 50% in the second half. Unit costs were up $9 year-on-year, which is primarily a factor of inflation, but also lower yields due to the mining of lower seams with higher ash thermal coal product recoveries, as per the previous discussions. But also the fact that coal flow was maximized in the second half of 2022 to leverage from the record high price environment, and some stripping catching up was required in the first half of 2023.
Stockpiles were proactively healthy at the end of 2023, with 900,000 tons of ROM, providing buffer and de-risking the plan for wet weather impacts in early now in 2024. Lastly, at Isaac Plains, on Slide 21, we achieved an all-time record for saleable production and sales, supported by healthy opening stockpiles for 2023, maximizing utilization of the recently upgraded CHPP, as well as the washing of some volumes at Poitrel earlier in 2023. Preparation was increased as anticipated, with the mining sequence continuing down seam at Isaac Downs, whilst waste movement at Pit 5 North commenced in the second half ahead of first run, right at the end of the year in December. Nonetheless, unit costs remained relatively steady year-on-year, given the high volumes.
I'll hand over to Shane now to discuss our financial results.
Thanks, Marcelo. Let's start with a summary of our key financial performance metrics on Slide 23. It's important to remember here that all 2022 comparative figures include the SMC assets, South Walker Creek and Poitrel, only from May 2022 onwards, so 2023 is really our first full year of consolidated reporting, including these assets. As always, too, I remind everyone here that all financial figures used are quoted in US dollars, which is Stanmore's functional currency. Total income was 4% higher year-on-year, with the additional 4 months of SMC sales, which helped overcome a reduction in coal prices in 2023 relative to 2022's record levels.
Costs remained largely steady year-on-year, flowing through to an underlying EBITDA of just over $1.1 billion, and operating cash flows of $737 million, which supported significant deleveraging, funding for value-accretive organic growth CapEx, and a $52 million special dividend declared in November, all while transitioning the balance sheet from a net debt to a net cash position during the year. Further to the special dividend declared last year, by reference to 2022 cash flows, we are again pleased to return cash to shareholders with today's fully franked dividend of $0.084 per share, calculated by reference to 2023 cash flows, with our commitment to creating value for shareholders, further demonstrated with total shareholder returns of over 40% in 2023.
Moving on to a more detailed summary of our financial performance on Slide 24. From a P&L perspective, full-year underlying EBITDA translated into net profit after tax of $472 million, and EPS of $0.524 per share, reflecting normal course of business earnings. Noting that the 2022 figures were affected by significant one-off, non-operating adjustments and deferred tax benefits related to the SMC acquisition. Looking at the underlying EBITDA walk forward, as you can see here, the primary driver for lower EBITDA was the normalized price environment, following those record high coal prices in 2022, partially offset by the additional four months of production out of South Walker Creek and Poitrel.
Isaac Plains was slightly lower year-on-year, due to anticipated strip ratio increases and non-capitalized overburden in advance removal for the development of Pit 5 North, where first run of coal mine was not actually produced until December. Turning now to the dividend determination on Slide 25. As previously highlighted, we are pleased to announce the fully franked final dividend of $0.084 per share, following careful consideration of our dividend policy as it applies to our results for 2023, which, when taken together with a special dividend of $0.0582 per share in November, has generated dividend yield of 6.2% in just under 4 months.
Importantly, as the special dividend was effectively determined by way of application of a policy on 2022's results, today's announcement demonstrates 100% commitment to our dividend policy since our equity raise for the SMC acquisition last year, rewarding our shareholders for what has been a very successful few years for Stanmore. With regards to this dividend calculation, specifically, you will notice that we have opted to reserve funds for the upcoming fully accrued BMC acquisition earn-out payment, which will be made mid-2023. This represents just a portion of our major cash commitments coming up, and we consider reserving this amount to be prudent, to ensure the business remains adequately funded to meet future cash requirements, as well as our ongoing CapEx program. On that note, we have provided further detail on our cash position and balance sheet on Slide 26.
As you can see on the waterfall, a major achievement in 2023 was transitioning to a net cash position in just under 12 months since the SMC acquisition, overcoming almost $800 million of debt raised at the time of the acquisition in May 2022. Cash generation since that time has been used to solidify balance sheet strength, with deleveraging of almost 50% in 2023, and following the debt service payment of $77.5 million in early February this year, increases our total deleveraging of the acquisition debt facility to $385 million or 62% of the facility since its commencement. As mentioned on the previous slide, we do have some significant cash flow requirements this year, which have been previously guided to market.
They include a catch-up tax payment of between $155 million and $170 million. The SMC earn-out, as mentioned earlier, of $150 million, and upfront consideration for the 50% Eagle Downs acquisition of $15 million. These commitments are expected to be partially offset by the $136 million in proceeds for the sale of the southern portion of Wards Well, which is expected to complete and therefore be received this year. Before I hand back to Marcelo, slide 27 includes some additional detail on the breakdown of capital expenditure. As you can see here, there are numerous significant capital projects going on, which are largely, roughly 60%, related to growth and improvement projects.
When aligned to our 2023 capital expenditure of $200 million, the sustaining portion of around 40% sits at that $70 million-$80 million mark for the portfolio. I'll now hand back to Marcelo to provide a more detailed update of some of these key capital projects from slide 29.
Thanks, Shane. Starting with South Walker Creek, we have a significant pipeline of growth projects which will strengthen South Walker Creek's status as a world-class asset. I would also highlight here that the dollars quoted here represent the original budget for each project, with the percentage being the amount of that budget spent by the end of 2023. The MRA2C project, involving a major creek diversion to open up an area of 58 million tons of ROM coal, is progressing well, with significant infrastructure advancements occurring in 2023, with the completion of the 66 kV power line relocation, the majority of the required water infrastructure. Importantly, the material movement commenced in August 2023, and is on track with the current plan, with project being ahead of schedule and well under budget at this stage.
The South Walker Creek CHPP expansion and mine expansion is progressing well, with some key achievements of 2023 being the award of the CHPP upgrade contract and the dry hire contracts for the additional truck and excavator fleets, with the mobilization of the first additional fleet well underway. We commenced access to the Y South pit in 2023, with clear and grub and site preparation ahead of the majority of the work expected to occur in 2024, which will enable access to high quality, low strip ratio coal during 2024. The last major project we wanted to highlight here for South Walker is the Dragline 27 AC upgrade, which will be completed in 2024.
This upgrade has been in planning phase since 2022, and in 2023, we were able to complete the factory acceptance testing of the major electrical equipment required for the AC upgrade, ahead of the major shutdown and upgrade to start in May this year. On slide 30, Poitrel had a very positive 2023, with the progression of the two major projects currently in progress, being the Ramp 10 North development and the Ramp 3 levee. The Ramp 10 box cut is very important for Poitrel's production profile and for the strip ratio competitiveness.
And despite some wet weather challenges early in 2023, project recovered and was able to move over 80% of the planned box cut volumes by the end of 2023. The Ramp 3 levee project is a critical project to enable us to continue mining towards the southern part of the mine, and sustain strike length with a large set, certified flood mitigation structure. The team were able to reach one in 1000-year flood height in November 2023, well ahead of schedule and under budget. We also commenced revegetation of the levee and disturbed the area, prior to the wet season. In relation to our development project on Slide 31, at the end of December, we acquired the remaining 50% in the MetRes joint venture, which owns the Millennium Complex.
Millennium concluded conventional open cut activities in 2023, with the operation focused on underground coal mining activities going forward. The achievement of 2023 for the Mavis Underground was the completion of the underground construction and the transition to operations with two continuous miners place change units. Studies for the Lancewood development project continue to progress, with exploration activities commencing after EA amendments, focusing initially on water bores for groundwater modeling, as well as baseline ecology works. The study team completed further optimization of open cut mining operations and refined infrastructure and coal processing optionality. We intend to conclude a pre-feasibility study within this year to be able to make some decisions on how to approach the project, including infrastructure options to support all the regulatory approval submissions.
Lastly, I just wanted to do a quick recap of the deal we signed with South32 for the purchase of 50% in Eagle Downs, announced earlier this month on slide 32, which of course remains subject to completion. This is an asset that has done the rounds over the last decade, being owned in various 50/50 joint venture structures, originally between Vale and Aquila, and more recently between South32 and Aquila, which is majority owned and controlled by the Chinese giant steelmaker, Baowu. For Stanmore, it is a transaction that makes sense and aligns with our strategy, adding a large hard coking coal deposit to our reserve base, providing optionality at low upfront cost. Unlike previous owners, our neighboring assets allow us to auctioneer development pathways, potentially utilizing neighboring infrastructure at Poitrel and Isaac Plains, and reducing start-up development CapEx.
And our enlarged rail and port contract portfolio via both the DBCT and NQXT are also critical enablers for our potential development. The transaction remains subject to the satisfaction of conditions precedent, and we are also in discussions with Aquila to consider the purchase of an additional 30%, which may take us to 80% ownership. As it stands, the asset comes relatively unencumbered from any previous rail and port take-or-pay arrangements, and have all the regulatory approvals required for start of construction and future operations. We look forward to completing this transaction and bringing it into a stage where we understand the development requirements and the potential it can offer to our portfolio in the long term, including as a growth opportunity, but also as a future replacement through the shorter life of mine at Poitrel and Isaac Complex.
I'll now hand briefly back to Shane to close out today's presentation with our updated 2024 guidance.
Thanks, Marcelo. On Slide 34, we have the update to guidance. Given we provided 2024 guidance as part of the market update and special dividend declaration in November last year, this is really just an incremental update following the acquisition of the remaining 50% of the Millennium Complex, which was previously equity accounted for as an investment rather than fully consolidated into our overall results. As per the table on slide 34, we are guiding to saleable production of between 500,000-600,000 tons out of the Millennium Complex in 2024, coming from the Mavis Downs Underground, which has been ramping up through the back half of 2023.
Being an underground operation in a development phase, it's naturally a higher cost than our open cut portfolio, and therefore has a slightly inflationary impact on Stanmore's consolidated free on-board cash cost per ton, with guidance therefore being adjusted to between $99-$104 per ton, while CapEx has also been adjusted to include the remaining development activities at Millennium in 2024. This concludes the formal presentation. I want to hand back to the operator to commence Q&A.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Jim Xu from Barrenjoey. Please go ahead. Pardon me, Jim, your line is now live. Thank you. Your next question comes from Tom Sartor from Morgans Financial. Please go ahead.
Morning, Marcelo and Shane. Well done on another strong set of numbers, and thanks from our network, who certainly appreciate the dividends flowing now also. Just had a couple of questions on the asset deals. You had a busy few months. It looks like the Millennium Complex spent a chunky, chunkier than expected amount of development capital in 2023. Can you just remind us of the scope of the opportunity there in terms of sustainable annual production, maybe life of the underground? And maybe, Shane, you can update us on how the debt to the JV from Stanmore was or is being accounted for in the balance sheet, please?
Hi, Tom. I would start maybe with 2023, and probably the easiest way to explain the additional capital is that, I mean, that's -- it was mostly working capital. I think the ramp-up challenges that we faced just basically required more injection of working capital, given that we were not getting the tons. So, I mean, development, the actual development capital hasn't been higher than the previously anticipated, and hence, that's, there's still a similar situation now for the first quarter of this year, where we, I mean, we are still, we're still, let's say, expecting ramp-up volumes to get to the levels we want.
You've probably seen in our guidance slide that we have derated the amounts for product coal in Millennium to around 500,000-600 ,000 this year. That's basically to Reflect the still, let's say, ongoing ramp-up, okay? I think we are probably gonna get into more benign conditions soon, both from a geological, I mean, structural or geotech standpoint, but also some water that we faced in the last 45 days, ingressing from some of the s- all the high wall mining plunges, okay, that were mined in that epit. I think we're confident that we should be able to achieve those 0.5-0.6 this year, hopefully, increasing slightly from that going forward in 2025 and 2026.
Mavis was always meant to be a short-life asset, Tom. And, and our target is to prove up the reserves in the Millennium side of the complex, okay? Move the existing equipment into Millennium to be able to extend life. To do that, we require some EA amendments because the, I mean, there, there was only open cut mining approvals on the Millennium side. We are busy working on that as we speak.
Yeah, Tom, just on the, on the loan between Stanmore and MetRes. I mean, obviously that now is 100% owned entity, so it eliminates on consolidation. But previous and immediately prior to the acquisition, we did need to, assess the fair value for accounting purposes of that loan. So you may notice in the accounts that there was a provision set aside, for potential credit losses on that, just based on where coal prices are at long term from some of the, some of the research houses.
So for accounting purposes, we had to provide around $18 million against that loan for that purpose, but now that it's 100% owned, it fully eliminates on consolidation, and we'll continue to support that asset, you know, based on where we see the future for Millennium going forward.
No worries. That's clear. Thank you. And just a reminder, it's a prime hard product, more or less from the underground there, and it, it gets close to 100% realization. Is that right?
Not really. I think it's at the-- We have around 60% as a, as a low vol hard coking coal, but it's not prime hard, Tom. It's, the Mavis coking coal has been marketed for, for many years, right back in the days, and it was always attracting, a 100% of the T2, low vol index, not, not, not the prime one. And, and the balance, which is around 35%-40%, is a, is a 20 VM, PCI.
Got you. No worries. Thank you. Just quickly on Eagle Downs, appreciate it's a, it's a longer dated option. Just curious about what drilling and/or evaluation expenditure you might want or need to spend there over the next few years, or is it too early to say?
Tom, the project's been extremely, let's say, studied and the results are extremely well defined. It's been a lot of exploration from all angles possible, from drilling to coal, I mean, coal quality, structure, seismic and gas. So it's very well defined, two very robust bankable feasibility studies done by the owners in the past. The 40% build access drift. So we don't expect that any significant amount of data acquisition is required. What we are looking now is really to do optimization studies to see, I mean, what's the entry capital to get the project started, okay? Of course, starting with drift development, getting to coal, and of course, longwall mining, ventilation, and all the infrastructure required.
Our aim is to minimize start-up capital, but as I said before, I think first we need to get the acquisition completed and, let's say, the final format of the joint venture aligned with the joint venture partner. I think it aligns well with our strategy. You know, it's next door to our assets. It's a hard coking coal asset. It has all the approvals in place. It's a potential long-term replacement for Poitrel and Isaac Plains, and puts us into the high co-coking coal space and adds another 1 billion tons of resource, you know, to our portfolio. Three years ago, we were a company with 20 million tons of reserves ahead of us.
I think we are now in a very privileged position, if we complete this deal, to have 4 billion tons of resources with multiple options to choose from.
Understood. Thanks, guys. I'll pass it on.
Thank you. Your next question comes from Brett McKay, from Petra Capital. Please go ahead.
Morning, gents. Thanks for your time. Just on the growth options going forward, when do you expect you'll be in a position to, I guess, clarify what the optimal approach is to the optionality in the portfolio now? I know that Eagle Downs hasn't closed yet, but just in terms of a longer dated timeline, if you could provide a little bit of guidance around when we may find out a bit more about, you know, Lancewood. Obviously, you're doing a pre-feas there this year. Eagle Downs, you've still got Isaac Plains underground in the portfolio. So you do have lots of optionality now in the portfolio.
But can you give us a bit of a feel for when we would know exactly how you're going to approach all of these options, and then understand how not only the capital is spent, but also the production profile, how it might develop over time?
Sure, Brett. I think it's quite relevant, and I expect that that's, that's, important information. I think there's a bit of work we still need to do to be able to provide better visibility. What I can say is, Lancewood is a project that will need to go to its own, let's say, the full regulatory approvals. Our conclusions to date is if we stay under the 2 million ton run of mine per annum, which is the, the, like, the threshold for us not to require an EIS in Queensland, it, it doesn't seem to be economic. It's quite a large box cut. It's a very compact pit. And we start at, you know, more than 9:1 strip ratio compared to Isaac Downs, where we were at 3:1 - 4:1 to start.
It's quite a large, a large box cut, which will require more capital and at a scale to be justifiable, that's gonna be probably above that 2 million ton run threshold. That means that we, we will need to go through a full EIS and its own, let's say, environmental approvals. So I don't, I don't think we would be seeing start of construction in Lancewood, you know, in less than three years, for example. And that provides a bit of visibility because in Eagle Downs, for example, conversely, is ready to go. It's- It has all the approvals in place. It's a question now of us understanding, you know, the attractiveness of the project, you know, what's the...
How low we can bring the CapEx to be able to get started, and how staggered is the investment until we get to first coal, right? Because we're gonna have to do drift development, development on the ground to get to a more longwall box, developed and ready to be mined. Fortunately, there's a lot of the gassing that was done in Lancewood, sorry, in Eagle Downs. And so, I mean, we believe that we may be able to start mining a lot ahead, that we would otherwise if we needed to get to start gas drainage from scratch.
So I think we need a bit of time, Brett, but I think we may find that there's probably a way for us to stagger these investments, given Lancewood will, I mean, inevitably will take another at least three years until we are able to start disturbing ground, until we have approvals. And Eagle Downs, likewise, is not a project that's going to be built in a year and a half or two years. It's a large development, and we should be able to spread it, well. But it's again, focus now is to complete the transaction, doing the work to be able to get to that point.
So I hope to be able to provide that visibility sometime in the second half of this year, Brett, to the market about what we can expect in terms of timing, in terms of, you know, general options for Lancewood. And obviously subject to us completing Eagle Downs, you know, get to a point towards the end of the year where we know what the project can be for us, and we may be able to start taking some decisions sometime soon.
Okay, yeah, that, that makes sense. Thanks, Marcelo. Just quickly, can you provide us an update on the weather events that you had earlier in the year? Clearly, that was a topic of conversation on the quarterly call. Just looking at what's happened since then, it doesn't look like it's been overly wet. Do you feel like there's potential for you there to catch up any of those lost tonnages, that we spoke about a month or so ago?
Yes, I think catching up is already happening as we speak. So you're right, I think it hasn't been too wet recently. But January and the first half of February were quite difficult. Poitrel was very well set up, as I said earlier, since late last year, brought a lot of coal forward. We had a lot of ROM inventories, which helped a lot. We had shipped around 800,000 tons in January. February, it's looking really strong, okay? So we will have caught up quite a lot in February already from the lower January, both from sales, but also on production.
I think by the end of Q1, we should be back to where we wanted to be as part of the plan or the budget for this year.
Yeah, great. Thanks, thanks for that. And just lastly, on the dividend, just noting that you pulled out the $150 million that you need to pay for BMC. On an ongoing sort of forward-looking basis, is that something that the company will continue to do, is to sort of X out big chunks of, well, not even big, you know, modest chunks of expected outgoings from that dividend pool? Just trying to understand the board's decision around those upcoming payments, especially considering the growth profile of the company and how it will evolve over the next sort of 12-24 months. Just trying to get a read on how the dividend outlook will, you know, morph or evolve over that time.
Yeah, Brett, Marcelo, this one. So it was a bit of a unique situation with the BMC earn-out, in that it was a confirmed, committed payment that related to a past transaction. We do have other cash commitments coming up in 2024, as mentioned on the call around, you know, large tax payment expected in mid-year, and some other payments as well. But we thought that this one was more unique in the sense that it did relate to a past transaction, and it was known and committed to at the time of making the dividend declaration. So, you know...
I don't expect this to be something that's really repeated on an ongoing basis beyond the cash flow sweep adjustment that we make each year, which, as you know, is connected directly to cash flows generated from the prior year. And I'd also probably point out that it is timing in nature, for example, if we were to sit down at this time next year and have a look at this calculation again, because we have reserved or preserved this $150 from the dividend decision for 2023, you know, we'll have to adjust that back for when we look at cash flows that were generated in 2024.
It's really just about timing of maintaining adequate cash and liquidity for those big one-off, sort of, chunky items, which we don't expect to see too many of going forward.
Okay. That's great. Thanks, Shane. I'll, I'll hand it over. Thanks.
Thank you. Your next question comes from Jim Xu, from Barrenjoey. Please go ahead.
Good morning, Marcelo and Shane. Hopefully, you can hear me this time. So maybe just another-
Yeah.
Oh, awesome. Maybe just following up on the balance sheet. So understand your acquisition debt facility is non-callable up until May of this year. Given it's got fairly restrictive cash sweeps in that facility, are you looking to refinance it, and how advanced are those discussions? And then further on, just to that, if you do refinance it, and it becomes a kind of interest-only payment, how will you provision for the debt repayments when you think about your dividend?
Yeah, thanks, Jim. So the, the acquisition financing, as you pointed out, can be repaid at par value following a two-year anniversary, which is the third of May this year. So we are free to, to refinance at any time, but if we do it after the third of May, it'll be at, at par. So it is something that we have been considering. I think I've maybe mentioned that a couple of occasions previously as well. It just gives us a good opportunity to, to have a look at the market, and consider, I guess, our optimal debt structure, and, and more normalized debt facilities as well, for the, for the whole company as, as a corporate.
So to that end, it is something that we are considering, moving forward with, in the first half of this year, and doing some planning for that as we speak. In terms of how that looks like and what that looks like going forward, that's really something that will sort of play out through that work. I think the objective for us is to have facilities that are at, that are normalized for the size of company that we are now, and also looking for improvements on where that pricing has come in as well, given the change in our credit profile and risk profile as an organization.
They're probably the two keys, together with allowing the capacity, too, to consider future growth, you know, if we wanted to start to develop some of our organic growth platforms or otherwise.
Yeah. Maybe just to add to that, Jim, it's, it's reasonable to assume that, yeah, this restrictive sweeps that we have as part of the acquisition facility wouldn't be something that we would be looking to add as part of a more normal-
Mm-hmm
Let's say refi structure. Having said that, you know, depending on the structure, it, we may not necessarily see only interest-only type of structures. We may see some more normal amortizing profile as well, depending on the, let's say, structure of the overall facility and the profile of the lending group. Okay? So I think that's more, there's a lot more happening as we speak, as Shane said. And yeah, we look forward to update you guys when we have a bit more progress.
Yeah. Understood. Thank you. Maybe just a follow-up question on safety. Your SAFR is still, you know, well below industry averages, but both SAFR and TRIFR have increased over the past year. Has there been a main driver of the increase in the TRIFR? Anything that the management team would like to focus on in particular?
Jim, I normally would like to talk to safety as a rabid dog. It will keep your foot on its neck, otherwise it goes and bites you. So it's... You can never take the foot off, and I don't think there's any fundamental structural issue. I think the culture is good, it's positive, the systems are in place. And we were working at a TRIF level of 1.5, is extremely low, right? So it's not very unusual for you to see some of those, you know, those recurrences happening. And I think what we need to do when they happen, is understand the drivers, the lead indicators, and that's what we are working hard on.
Is to make sure that we focus on leading initiatives to be able to see them coming, you know? And as I said, the focus on SAFR going forward is really to prevent the serious one. Those are the ones that we really need to be on top of, that we cannot afford them happening, okay? I think, as I said, a lot of work, good work going into that, and I hope to see those trends reversing soon.
Okay, thank you. If I can just sneak one more in, it'll be a quick one. Just wanted to confirm, with the Eagle Downs acquisition, are there any take or pay liabilities associated with that, or have they been all held at the Eagle level and cleared by them?
No rail and port take or pay. There are some existing commitments for power infrastructure. This was a part of the implementation of the transmission lines and the power infrastructure available to the project. There's no power supply, but it's not a long-term payment of infrastructure. And water supply is around just above 600 megaliters of raw water. There's a contract which is fundamental for the project. I don't think in terms of carrying costs for the project, they are significant. And, but we also gonna be talking to the JV partner, because even when our existing business, we should be able to absorb some of the, for example, water requirements, given that we also have a lot of reliance on the Braeside Borefield , okay, to our, to South Walker Creek and Poitrel.
So again, water, power, and minimal site carrying maintenance at the moment as we speak. That's all.
Okay. So are you able to give any guide on the size of the carry cost of the project?
At the moment, between AUD 12 million -AUD 14 million per year. That's the, that's the basic carrying cost at the moment, as we speak.
Okay. Thank you.
On a 100% basis, okay, Jim?
Thank you. There are no further questions at this time. I'll now hand back to Mr. Matos for the closing remarks.
Well, thanks everyone for the questions. It's been a privilege to present such a fantastic result today. I would like to take the opportunity to thank our employees and our major contractors. Last two years has certainly been a dynamic period, and at the end of the day, it's our employees who show up each day. They underpin our business and its successes. So of course, I would like to thank our major shareholders that have been with us through this journey and continue to show their support for the fundamentals of our business. We look forward to engaging with all of you in the coming days. Thanks everyone for your time. Have a good day.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.