Good morning, everybody. Good morning, everybody. Thanks very much for taking the time to dial in today to the half year results for financial year 2024. As usual, I'm joined by a couple of my colleagues here on the leadership team here, Kevin Ball, our CFO, and Ian Humphris, our EGM of Operations. I've also got here, of course, Kylie and Karen from our investor relations team. Kevin and I will go through the presentation and as we normally do, and then we'll move over to Q&A for further questions. Clicking the page, let's go to our disclaimer, of course. There are some forward-looking statements included in this pack, so I draw your attention to that important statement. Over to the half. I'll just go through the highlights as we usually do.
There's been a solid result from us, as you saw, with the quarters that we've released over the last two quarters, first half of the year, and consistent performance from our open cut operations. Resilient thermal coal pricing, which has been very positive. The realized coal prices for the period, AUD 220, was a very good result as regards to revenues of AUD 1.6 million for the half. We have maintained, of course, a strong balance sheet in anticipation of the transformational acquisition of Daunia and Blackwater, which I'll talk about a little bit further. That clearly was the highlight for the six months in terms of the news flow from Whitehaven. With our October announcement, we are on track for the second of April in terms of completion.
In this pack, it'll obviously give you a insight into the costs associated with the transition and transaction-related costs. A total of AUD 164 million. The tax effect of that is AUD 111.5 million. Our underlying EBITDA for the period was AUD 623 million for the half, and our underlying NPAT 372 for the half. Safety performance has been very positive. Our TRIFR just dipping under the 4 now, which is very, very good to see. More effort required and zero enforceable actions from an environmental perspective during the course of the period. Our balance sheet is in good shape, AUD 1.5 billion in cash at the first of December.
Obviously, we can update you a little bit more on how that's tracking. $1.1 billion facility was put in place, U.S. dollars that is, during the course of this period, obviously to underpin the settlement of the transaction, as I say, expected on the fourth of April. From a return perspective, during this quarter, we were 18 of the top 100, I think, which is a good place to be. 18.5 return from a TSR perspective over the period. And the board has declared a fully franked dividend of AUD 0.07 per share in the half. Obviously, those numbers, the dividend number in particular, is focused on the fact that we have, obviously, cash outgoings planned shortly with the settlement of this important strategic transaction.
But it's nice to be able to deliver a fully franked dividend for the first half of the year. As I mentioned, obviously, the highlight for the period was the announcement about the transaction that we are to acquire Daunia and Blackwater. And that is proceeding very well. I won't go through the rationale and recap on the transaction here because I know we've spoken to many of you about this, but there is, on this slide, a quick summary of the important rationale in terms of why we're moving in this direction. The feedback from our shareholders has been, during this time, overwhelmingly positive, which has been very good, not just about the strategic direction of it, but very positive in terms of price that we paid.
And, of course, the structure of the transaction as well has been very, very well received by the shareholders since the announcement in October. I think that's been very, very positive and nice to see that sort of reaction. We believe we're on track for the second of April, as I say. A number of the regulatory hurdles required have been concluded already. And so that gives us line of sight and good confidence that the second of April is actually the right date to be figuring on the settlement of the transaction. The efforts going into the transition team and the efforts are enormous, but we're in a good position from an IT perspective, from a business planning perspective, from an employment perspective.
We did have to offer a role to all the people across these two sites. We've got 95% acceptance at the moment, which is a very, very good result. The IT build is going well and near completion in terms of the build phase and moving into the testing, the testing phase now. Important contracts and so on have been successfully worked through and handed over to Whitehaven. And the operational readiness and business continuity plan potential for that transition are well in hand and will be moving forward over the next seven weeks to the anticipated settlement date. I'll just move over to Whitehaven's coal markets and a quick reflection on that.
In terms of our business as it stands today, you can see obviously half our business is in Japan, and that will remain an important feature of our business even after the transaction has concluded, given that we will be expanding relationships with existing customers, with new products after the transaction. But in terms of our current business today, 52% sits in Japan. As I've said before, South Korea and Taiwan, always duking it out for either second or third place in the rankings there. But the mover and shaker in terms of our sales mix has obviously been Malaysia, being a double over year-on-year. And so now at 11%, that's actually turned into a very good market for us, which is very positive to see.
Split between met and thermal, 9% thermal, 10% met from our existing business. A quick reminder here that Whitehaven does sell the very high-quality thermal product that we've come to be known for, and a quick comparison across other jurisdictions and Australia as a whole. From our perspective, the average energy content of our sales in H1 at 6,100 kcal; it points to the very strong quality that we have and the pricing that we receive as a result of that. The Vickery project, which I'll speak to a little bit later on, will come on and improve that as well, because the product there at Vickery is better again, not just from the average of the country, but the average of Whitehaven's existing portfolio.
And just again, another reminder into the central nature of the part that we play in the energy world. You can see our key markets there in terms of Japan, Taiwan, and Korea, updated in terms of our contribution to their daily energy needs in each of these, these jurisdictions. There's a couple of hundred million people involved in this equation, and more now that Malaysia has joined the tables here in terms of what our contribution is on a daily basis. 17 minutes in Malaysia, I think, is reflective of the fact that that volume into Malaysia has doubled year-over-year. And, and the market's a very good one for us in terms of, pricing as well.
It's, it's a Japan-like pricing environment that we're operating within there, which is, which is very pleasing for us to see that expansion and diversification into, into other markets. Flipping over, as we transform with the Daunia and Blackwater transaction, you'll see that we are going to spread our wings further, obviously, into metallurgical coal, and that is one of the overarching objectives of that transaction, to promote a better business. But our customer mix doesn't really change that much. There are a couple of call-outs that I will make just in terms of the difference, in terms of the market's jurisdictions.
The Indian presence actually reverts pretty much to a particular, a proportion that we've experienced in more recent years, but that has dwindled off, as many as you know, as the sanctions imposed at Russian coal moved Russian coal out of certain markets. And, and for us, the Indian market was a key point of pressure in that regard. And Russian coal being offered into India and China at lower prices obviously meant that our sales into the Indian market had decreased. But that we expect that to jump up again as a result of the metallurgical coal that we would sell, or that is already being sold from these two mines into India, and that we will obviously take over once completion has occurred.
Everybody knows that historically, we've not been a player in the Chinese market. There will be a small presence in the Chinese market that does come as part of this, but it is a relatively small piece of the puzzle for us as an organization. So largely markets that we've been dealing with in the past. Based on the price spread between the PLV hard coke and the high CV market today, we anticipate the spread of revenue to be about 70% met coal, 30% thermal. The backdrop of that dynamic is important to note, again, just in terms of supply-demand dynamics in the market.
You can see here, based on the Commodity Insights numbers, which is, I know, gaining further momentum in the market in terms of their advisory work in this coal space. They are certainly projecting growth in the market, the thermal coal market over time, out to 2040, some 28%. But there's also, at the same time, a decline in the available supply. Just as we all know, it's difficult to bring new mines on, and that mines that are already on foot and producing do dwindle and exhaust their reserves over time. So a 23% decline over that same period. This is the high CV market in particular that we're focused on here.
And so that does point to a very solid backdrop from our perspective, in terms of continued solid, high CV thermal coal pricing, in this outlook period. The same picture for slightly different dynamics, but the same picture presents itself also in terms of the metallurgical coal market. This is the metallurgical coal market as a whole, but you can see growth there is over the outlook period as well. Some 74 million tonnes shortfall created as a result of the inherent growth and the decline in some mines as they run off their lives. Key dynamics here is obviously, China buying Australian hard coke again, but India emerging very strongly in the marketplace. It's not just...
We've seen India growing over time, but you can see it seems to have hit its straps in a way that is certainly drawing in available capacity out of the hard coking coal market. And we expect that to continue as they continue to try and fulfill their objectives here in increasing their steel production as their needs domestically continue to increase. So a very strong backdrop from our perspective, which will underpin good pricing over the outlook period. And so there's a summary of those external market drivers here. Supply-demand dynamic, as I mentioned, the underlying supply-demand tightness is going to play out with decent pricing. In the last six months, we've seen a relatively subdued pricing for or demand for the thermal side of our business.
Having said that, the pricing, despite that, shoulder period which you saw in December in particular, was actually very encouraging. That structural shortfall, I think, in thermal and metallurgical coal will continue to play out. And as I say, the hard coking demand continues to impress. Although the semi-soft market, particularly influenced by the Russian coal flowing around and being offered at cheap prices, is causing quite a large separation between the prime hard low-vol hard coking numbers and the semi-soft pricing and also the high-vol PCI. So on the pricing side of things, we're seeing $141 as the average for the U.S. dollar for gC NEWC during the period. Metallurgical coal has been very good, $298, so nearly $300 average over the period as well.
Realized pricing, as I mentioned earlier, for Whitehaven's thermal coal of AUD 220, has been very positive for us. On the cost side, labor has moderated to some degree, although, and I'm talking about availability rather than actually pricing. The pricing, I think, of labor is still yet to... There's a little bit more time before we see a moderation in that. Electricity prices have gone up substantially during this time. Diesel costs stabilized, although that's continued to move around, and the Safeguard Mechanism costs will be increasing over time. Now that we've covered off the external, let's go quickly just to the first half results. Safety, as I say, our TRIFR just under four now.
Tremendous result from our team to continue to deliver, you know, real structural improvements here in our business that see our TRIFR rate declining, continuing to decline. So that's a 16% improvement. So very pleased to see that. And as I mentioned earlier, the environmental side of our business also continuing to be well-managed. So more effort required, of course, to try and continue to squeeze out further improvement here, particularly with the enlarged business. After the settlement of transaction, our focus is to make sure that we take over those two mines in a safe way, and that the safety improvement that we've seen in our business continues to wash over their business as well. Financial results, again, just a quick recap. 10.3 million tonnes for the six months of raw production.
AUD 220 per tonne in terms of realized coal prices, revenue AUD 1.6 billion, and our unit cost at AUD 111 per tonne for the first six months of the year. We have broken out some acquisition costs for you as well. So you can see here the underlying EBITDA, as I mentioned to you before, AUD 623 million. The statutory NPAT at AUD 258 million, and the tax effect of those transaction costs gets you back to that underlying NPAT number I mentioned earlier of AUD 372 million. But just quickly, over at the business, I won't labor this, given that we've seen the quarterly reports that have gone out.
In any event, 10.3 million tonnes for the first half of the year for the business was actually a pretty solid result, with obviously the open cuts doing well and Narrabri underperforming as it deals with some geological issues in Panel 203. A quick look at the sites. Maules Creek has done well, and we're very pleased with the run rate for the first half of the year. They're at 6 million tonnes for it, so that's very positive. From our perspective, the news here, some people may have seen already, we have made the decision to conclude the trial of AHS at Maules Creek, and so we will move back to a fully manned frame of operation there in Q3, so the March quarter.
And expect productivity improvements to move, now that we're predominantly focused on in-pit dumping and we'll be completely in-pit dumping, very shortly. But that is tracking towards the top end of its range, from a guidance perspective. Maules Creek, going well, but we have made that call just to move out of that trial phase of AHS and move on in a manned form. As I mentioned earlier, the Gunnedah Open Cut's doing well. Tarrawonga's done a solid job in the first half, and Werris as well. Werris will be finishing up, though, at the end of the quarter, and so that will be a point to mark, just in terms of transition of the business. But it is tracking along well to that end date, and remaining sales out of Werris.
We will see those in the Q4 period as we wrap up the financial year. The Vickery Early Mining Project is going well, on time and budget, so that's very positive. First coal, you'll see that in Q4. You'll see some small amounts of coal coming out there as expected, so that's very positive to see, and we'll see the benefit of that. Obviously, will spill into the new year, FY 2025. Narrabri, as I mentioned and as we talked about before in the quarter, obviously there were some operational challenges there with geological conditions in Panel 203, as we're in the panel that obviously borders the washout of the coal seam on that eastern flank. And so that continues at a slow pace.
We revised our guidance for Narrabri specifically, although we held our guidance for the group as a whole, when we revised this back in the quarter. And in order to underpin that guidance range, we've assumed a replica, essentially, of the first half performance at Narrabri. And we know we're heading into some better terrain there in terms of the balance of the Panel 203. So we feel that that's the right position for Narrabri's guidance, even though the overall guidance for the company remains the same from a raw production perspective. I'll skip over this slide because I think you've all, you've all seen that one plenty of times before. So with that, I'll hand over to Kevin, and we can go through the financial results for the first half. Kevin?
Thanks, Paul. So what you see here is the five-year graphs, and I think first half underlying EBITDA of AUD 623 million is a pretty strong result. What they do show on this graph is really how strong FY 2022 and 2023 were, with realized prices well above where we currently are. Really great results. I think this is a more sustainable level of performance out of the Whitehaven Coal New South Wales business, if I can call it that. Delivered AUD 1.6 billion in revenue, underlying EBITDA of AUD 623 million, underlying NPAT of AUD 372 million. The cash generated from operations in the first half was AUD 523 million, and we finished the year with AUD 1.6 billion in cash and AUD 1.5 billion in net cash.
We'll talk a little bit more about what cash we're holding at the current moment, because as I said at the quarterly, the unwind of the receivables in the first half has delivered some more cash in the first quarter. EBITDA margin, a 46% EBITDA margin is something that I'm quite pleased with. Coal price better than gC NEWC average for the period. Average cost of sales up, and we'll talk about that in a minute, which is really around the volumetric impact of Narrabri. It's lower than last year, but I don't think anyone's terribly surprised by that, given the fact that coal prices have come off from the highs of the Ukraine.
So if we look at the EBITDA movement, again, what you see here is we made $2.6 billion in the first half of fiscal year 2023. Compare that to the first half of fiscal year 2024, and about $2 billion of that decrease comes out of price. $35 million benefit from sales volume. So we sold a little bit more in the first half relative to FY 2023, and costs were up on this from I think it's $96 - $111. So $623 million, a good result, and we'll go over the costs in a little more detail. So if you turn the page to the next one, Paul. You can see from the chart, the costs have moved from $96 a tonne in half one, 2023.
There's a little bit of a blend mix here. There's a bit more Tarrawonga in this product. There's a little bit more Maules in the open cut, and Narrabri hasn't delivered the tonnes that we thought that it would have delivered in the current year, and because it's proportionately less, it helps to drive costs higher for the group. AUD 4 in the open cuts reflects higher diesel prices mainly, and together with increased labor costs, and again, you can see the safeguards mechanism there coming in at AUD 1/tonne to get us to AUD 111. As we say, you can calculate, this is the whole of company cost.
This is not a mine cost, so a little bit different from some others in the market, but you can calculate this off the face of the P&L, and we've done that for the last 10 years. Let's go to cash, because I think cash is where people are gonna focus here. At 30 June 2023, we held about AUD 2.6 billion. We generated AUD 500 million in cash from operations, and again, we've had a bit of an unwind out of the receivables at 31 December. We settled the tax. There's no surprise in that conversation. We paid AUD 927 million to the federal government, and they happily took it. And we spent about AUD 360 million, including the $100 million deposit, to BMA for the acquisition of Daunia and Blackwater.
Again, we paid out the dividend at the end of the year, and there was, I think, there was a slight top up there about roundings on a buyback. So all in all, we finished the period at AUD 1.5 billion in net cash. On top of that, we've got about AUD 100 million in financing, finance leases and ECA facilities. So our gross cash at the end of that period was about AUD 1.6 billion, and today we're holding circa AUD 1.9 billion in cash because of that unwind and the cash generated in the first 6 weeks of the business. So hopefully, that'll help explain some other comments we'll make later in this about net cash and liquidity and how we plan on solving et cetera.
With the balance sheet in rude health, in repaying all that senior bank debt in FY 2022, we bid on those BMA assets and our view on how we settle that is we have a cash balance today. U.S. cash today is about $1.15 billion. We're holding a $1.1 billion facility with financiers that we announced in late December to the market. So we are really well positioned here to settle this transaction and have adequate liquidity to move through this process. So our expectation is we'll continue to generate cash through the back half of this year, and these assets are highly accretive in a transaction, and they come with quite strong stock positions to start with. So we're really pleased with the support from the range of financiers.
We were substantially oversubscribed on that, and we are taking the time and the opportunity to reposition and open discussions with a range of financiers along the way. Because I think this transaction does transform Whitehaven from being a predominantly thermal business to being a predominantly met coal business, and that does change the appetite for credit providers. On to the next stage. This one I don't propose to talk a lot about. This has been well canvassed in all of our presentations to people. You know, we do run a business that's all about maintaining a balance sheet in rude health, maintaining the business so the business can continue to operate, and providing returns to shareholders. We've said through the acquisition of Daunia and Blackwater, that the buyback will remain on hold, and that's our expectation through this.
We also expect to see dividends continue to come from the existing business to shareholders, and once that vendor finance is retired, then I'm expecting to see quite strong cash flows flowing through to the shareholders of Whitehaven Coal. And as Paul said earlier, the beauty of this transaction is that this transaction doubles the size of the business without tapping equity holders. So, FY 2024 guidance. Paul, I'm gonna turn back to you.
Thanks, Kevin. Just a quick recap on the guidance, as everyone saw, unchanged from what our previous statements were. You saw back at the quarter, we refined the guidance on Narrabri specifically, just at a mine level, given the challenges that we've been experiencing in this panel. Our overall guidance, from a ROM perspective, remains the same. We pointed to the fact that, Maules Creek and the Opencast generally are pointing to the top end of their guidance, which is very positive to say. But with, Narrabri underrepresented in the overall weighted average mix, the cost is trending towards the top end of that range there. And you can see the AUD 111 that we printed for the first half is towards the top end of that range.
As we've assumed Narrabri to duplicate the run rate of the first half into the second, that is staying at around the upper end of that cost range for the full year guides, but within our guidance overall. CapEx. Well, CapEx, we're just the business is so busy. Execution, I think just on that cap, you can see the AUD 171 the first half versus the AUD 400-AUD 450 that we've given you as part of the Q2 revision. Look, I think it's gonna struggle to get to the bottom end of that, even at this point in time.
There's just a lot of work on, with all that tightness in the market, tightness in suppliers, tightness in delivery of gear. I can see some of that slipping into the new year, quite frankly. So, but our guidance remains the same as we previously published, and looking forward to executing this second half to make sure we deliver on the balance of our targets. Our focuses for this year, no changes in terms of this, of course, the safe management of our business, the environmental compliance is a must. So we want to continue to drive our guidance, as I say, and deliver on the targets we've set here.
Early works for Vickery is going very well, so very pleased with that and look forward to that making a bigger contribution next year, given that Werris is rolling off. And we'll continue to push for our approvals. And I know we didn't mention the Winchester South approval at the state level during the course of this presentation today, but obviously, that's very positive to see that. Another important step forward to see that piece of the puzzle come together, particularly given that Daunia is adjacent there. So the opportunity there is very exciting. The transition effort for the completion of the transaction, as Kevin's outlined, we feel very confident about our financial position to make sure there's a seamless transition through completion.
We are expecting that to be the second of April. As I mentioned, the competition and regulatory requirements are all solving themselves, which is good. So our anticipation is that we'll be able to settle that on the second, but for some other peculiarity of some bureaucracy somewhere, but otherwise, they all look in hand. The safe transition into these operations is obviously front of mind for us, and the operational readiness planning that we've got going on in the business now, including business continuity plans, is an important focus during this period. We have obviously mentioned that we are opening the door, have opened the door to a sell down of up to 20% of Blackwater, the Blackwater asset.
The inbound interest in that asset, given the long history, the well-established nature of that coal quality in the market, has brought a very strong inbound interest level into the company. So we are looking at that. So process is ongoing, now that that's been launched, so that's very positive. As Kevin says, we've gone through the capital allocation side of things. We'll continue to maintain a prudent and strong balance sheet as, not just as we move through completion and then into the settlement, the costs and so on later in the year. The dividend declared today was a very good result. It is obviously, as people can back solve that, it's basically 20% of the thermal business.
As we said, we'll be funding dividends from that during the course of the next two years as the metallurgical coal business repays the vendor finance. So that's nice to be able to ensure that we continue the dividend paying to our shareholders. And from our perspective, I just want to round out our comments and just thanking all our employees and contractors and advisors and so on, for all the effort that's gone into this last six months. You know, I think our employees have put a huge effort in, our board, and the support we've been getting from that in order to drive this transformational period for the company is greatly appreciated, and we, and we very much appreciate the continued support of our, our long-standing shareholders in, in supporting the company through this journey.
With that, I'll hand back to the operator. We'll get the Q&A started. Thank you.
Thank you. Thank you, sell side analysts. 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 Chen Jiang with Bank of America. Please go ahead.
Good morning, Paul. Good morning, Paul and Kevin. Thank you for taking my question. Maybe first question to Kevin, please. For that transaction phase reported today, $92 million, you excluded from underlying. Is that transaction cost including the stamp duty in total of $276 million, announced in October last year?
No, because the stamp duty, from an accounting perspective, the stamp duty arises on completion of the transaction in the estimate. And that, that stamp duty then gets settled with the Queensland State Revenue Department over the next three to six months, as we work through what the final allocations are. So, and I don't think it'll end up being that same number you've got there, but we'll give you a better number and a better guidance as we move through this. I think you just need to, we'll work the number out over, that June quarter, but I expect it'll be lower than that, Chen.
Right. Thanks for that, Kevin. That AUD 92 million you reported today, that was the transaction cost you mentioned in October last year?
It's a portion of the transaction cost, so this will be the piece-
A portion. Okay. Right. Okay. And, and I guess, as you mentioned, it's, it's a portion of the transaction cost. I guess the rest of the transaction cost, plus stamp duty, are you going to report it as significant item like today or, or include it in your underlying? Thank you.
We'll break it out of underlying so you can see the impact. I mean, what we're trying to show you is how the New South Wales business is actually performing, which is really where people are interested in from a dividends perspective moving forward. And where we've got costs that are coming through the financials as a result of this transaction, we just want to highlight them and be transparent about it, Chen.
Yeah, sure, sure. Understand. I understand. Thank, thanks for that, Kevin. Second question, to Paul, please. Well, focus on the, on the sell down, sorry, sorry, the sale of, of 20% of Blackwater stake, to, to a global steel producer. And, well, Daunia is not mentioned in the presentation and also to recall, the conversation from, on your quarterly reporting in January. So, is that, is that fair to assume you will keep Daunia at 100% of ownership?
Yeah. Thanks, Chen. I think just to recap, the last announcements we made around this, we specifically mentioned that Blackwater would be the point of focus for us from a sell down perspective. And as I mentioned before, the clear focus on that is just the inbound interest on that, given that the well-established position it has in the market. You've got lots of people who have lots of consuming parties who are reliant on that quality and would like to secure that into the future. So we're looking to leverage that interest level in the Blackwater asset. And as we talked about at the quarter, in terms of Daunia in particular, it's very nice to see Winchester South receiving a state-based approval.
I mean, the federal approval obviously needs to be continued to be pursued. But in terms of Daunia, the future of Daunia involves Winchester South as well. So it'll take a little bit of time to plan out beyond the conceptual how those two assets come together. So we're going to take that time to do that rather than rush into something now and then try and back solve a Winchester South solution into that at a later point with the then joint venture partner.
So our focus is really just to focus on Blackwater, get that process concluded, move forward, and we can look at Daunia at a future date, in a more orderly fashion once we, as I say, plan out what the integration approach looks like for those two sites.
I'd probably add to that, Paul, by saying that the Blackwater asset has a multi-decade life. The, the Daunia life, as it currently stands, runs to the late 2030s, I think. But the consideration of Daunia and Winchester South gives you two assets that are multi-decades in life, and that's really what we're trying to work out, what, how this thing looks like.
... Yeah, I mean, just the simple answer there is, there's no point in forming a joint venture on Daunia alone when you know that Winchester South has to be integrated into it. So you're better off forming a joint venture if that's what you want to do after you have laid out the plan for that integration. And so that's why it's Blackwater first, Daunia at a later date will be considered.
Sure. Sure. Thanks, Paul and Kevin. That is very clear. Thanks for the color. And then for the Blackwater JV partners, would you please remind us what are you looking for? Is financial your focus, such as, you know, are you looking for partners who will provide the highest multiple of EBITDA or the premium over what you are going to pay for BHP? Or strategically, you are looking for JV, as Kevin mentioned, you know, Blackwater is a long life. Or strategically, you are looking for JV who can provide Whitehaven the best, like, long-term offtake agreements. If it's financial focus, then what's your selection criteria? Thank you.
Yeah, Chen, I think you've summarized it pretty well there. I think all those dimensions are important to us. The financial component, we won't be selling for less than what we paid for. In fact, we've done all the work, so we feel a return is due on that. So the parties who are inbound looking at this are well aware of what we paid. And, but look, I think you've got to look at the qualitative dimensions of this as well, not just the financial return. You know, and using large scale, well-recognized steelmakers are the answer to our question here. You know, forming partnerships long term, over time, you've seen, has been very good for our business overall.
And to strategically position ourselves over the next, the coming decades with the consuming parties in this, in the supply chain, is really the right, the right model for us. It endorses the quality, it endorses the project, it endorses the life of the project. Obviously, it's going to endorse the price that we paid, of course, because, you know, coal prices, long-term coal prices, have gone up since the time that we bought this asset for a start or agreed to buy it. So all, the blend of all those attributes together is what we're looking to solidify in terms of a long-term joint venture arrangement.
The other point I'd make to you, Chen, is that graph we show you where there's a long-term structural shortfall in met coal, that's the same thing that steel manufacturers are observing. So access and security of supply is a key motivator for participants in this process.
Sure, sure. Understand, Paul and Kevin. Maybe last question, just, in regards to your coal sales. Paul, you mentioned, your coal sales to Malaysia has doubled in the last six months. And in the pie chart, it's interesting to see, you had a 5% sale to Europe and even 1% to Indonesia, which is a major coal exporting country. I guess your sale to Europe and Indonesia would be temporary, but can you maintain the sales to Malaysia going forward? Thank you.
Yeah. Thanks, Chen. I think you have taken your three questions. We better hand it on to someone else. But quickly, Malaysia is a long-term contract year. There's multi-year arrangements there. Very, very positive. They've got brand-new power stations there, ultra-supercritical power stations, match beautifully with Maules Creek Coal in particular, and Vickery then after. So as you say, nickel, nickel smelting, sales into, into Indonesia actually has been a feature of our business for quite some years. But the more the European exposure that you referenced there is, is it will go over several years, but that will come and go, I suspect, over time. But, but I, I think that that will be replaced by coal out of Daunia and Blackwater, and I think there will be penetration into Europe over time from a metallurgical coal perspective.
Thank you, Paul. I'll pass it down. Thank you.
Thank you. Your next question comes from Paul Young with Goldman Sachs. Please go ahead.
Morning, Paul and Kevin. Hope you're well. Kevin, a question on the capital allocation framework slide again, and a question regarding your leverage target of 0.5-1.5. I'm still struggling to, you know, sort of work through how projects might be resequenced between thermal and met coal. And, yeah, can you do all the projects that you outlined when you were just a thermal coal company? And maybe the question is around on your coal price deck, both met and thermal, can you do all the projects and the sequencing you want to and stay under the 1.5 x leverage ceiling? Thanks.
I think the short answer to that is yeah, Paul, because what we're going to end up doing is reprioritizing timing. So we said we'd take a pause on Vickery, Big Vickery. So Big Vickery, as it comes, will replace tonnes lost out of Werris Creek, Rocglen and Sunnyside over time. So that just basically keeps us steady in the Gunnedah Basin and helps to absorb take-or-pay. I think Winchester South gets pushed back a touch because we're gonna have to do that integration period, integration assessment with Daunia. And together, I mean, when I run the model, I see EBITDA out of both of these businesses, that's gonna be with a two, if not a three in front of it in years to come.
So I think the beauty of this acquisition is it gives us a scale, diversification to different markets, different levers and drivers of that, a much stronger cash flows in years to come, and so our ability to execute on projects, and these are two well-developed assets that have got all the capital installed to deliver the tonnes that are there, really. So the cash that comes out of that comes to shareholders or goes to projects, if those projects deliver a better return than going to shareholders. So I think on my modeling, I'm in pretty good shape, is the way I'd say it to you, Paul.
Okay. All right. Thanks, Kevin. That's the project update that we all wanted, so thank you. Then, I guess the next question is around Narrabri and the lease versus buy decision on the longwall. Can you just step through again the timing around that decision and the sequencing around that CapEx? Thanks.
Yeah, look, I think that Paul and Ian have both talked about whether it's quarterlies or halves. Narrabri's underperformance in the first is pushing out any timetable we need for commitment to a longwall at Narrabri. And clearly, our commitment to that is to source a longwall out of, it's probably gonna come out of China with European controls and European suppliers. And we're expecting to see facilities provided by a range of people in that process for Narrabri, given that our joint venture partners are Asian, our product goes to Asia, and we have a good relationship anyway with the suppliers of the legs that are already in the existing wall. So I think we'll work our way through that. I would expect that it's gonna slide right, if that's the case.
We'll give you an update, I think, when we get back through the back end of this year and give you guidance for next year. That's as much as I want to say on that one at the moment.
Yeah. No immediate commitments required there at all?
No.
Yeah. Okay. All right. But the bottom line here, guys, is that, you know, the thermal CapEx are suited, you know, to your point, Paul, around, maybe coming under some CapEx guidance, but everything's sort of sliding to the right, it seems.
Yeah. Yeah, yeah, that's right. Just I think just in terms of reprioritization, we always said when we announced the transaction, we'd have a look at everything. We revised the guidance down in the last quarter. But just to... in the execution capability, it's just, we're just not spending the money, which is no bad thing, on the various projects. And the one you've obviously highlighted, the Narrabri, that's as Kevin summarized, as a product of the slower transitions through this panel, there's no need to make any commitments on, on, on a replacement wall, anytime soon. So we'll, we'll work through that, and we'll say more at, at the year end about where, what we think the timing for that looks like.
Yeah. Okay. All right. Thanks, gents. That's it.
Thank you. Your next question comes from Adam Martin with E&P. Please go ahead.
Yeah. Morning, Paul, Kevin. Just, Kevin, first, clarification question: Could you, just talking about additional debt facilities, can you... Did I get that right, and sort of what's your quantum and, and timing there you're thinking, please?
I think we've put a $1.1 billion U.S. facility in place in the met coal side of the business, which was really well oversubscribed. We're holding, as I said today, $1.15 billion in cash, together with some another AUD 100-odd million in cash. We're making cash through this process, and we've got a program and plan on how this gets settled. So I think we're really, I'm from a balance sheet perspective through this transaction, it's playing out the way we expected it to play out. What we're going to get is two pretty good businesses with a good supply of inventories at the time of the sale, is our expectation.
We're expecting these businesses to continually or to continue the sales program they've been running for a while. Additional debt facilities, I think that might have been a client question back in the quarterly. We'll work our way through those things, but at this point, we're well set to settle this transaction, and anything else that comes along, it's not gonna be material.
It's not gonna be. Yeah. Yeah. Okay.