Welcome, everybody, to the Whitehaven Coal September Quarter Production Report Briefing. All participant lines are currently on mute. Following the presentation, we will open the call for questions. To queue for a question, please press star one on your telephone keypad. I'll now hand over to our host speaker, Managing Director and CEO, Paul Flynn. Please go ahead.
Thanks for joining everyone, and thank you for joining us for the September 2019 Quarterly Production Report. As usual, I'll just go through the highlights and a quick discussion on each of the operations and our projects, and then we'll move into the Q&A session. Just on the front page, I'll quickly go through the highlights. Our safety performance has been very, very good. I'm pleased with the result, but I am conscious of the fact that it's just the third quarter, and we need to be ever vigilant on our safety. September quarter ROM production of 4.4 million tonnes is a decent result, period on period, but we are comparing ourselves against a period where there was a lot more change. September quarterly total coal production of 4.9 million tonnes is similarly up, period on period. Coal sales of 5.5, about 14% up, period on period.
As many of you know, we've announced that we have entities that we're agreeing to purchase the 7.5% Narrabri from EDF, which will give us an equity position of 77.5% in the Narrabri mine. This acquisition is in sight now, and so we'll soon be commencing our ramp up to 3 million tonnes of ROM. Rocglen, as you know, closed in the last quarter, so we have commenced rehabilitation there, and our guidance for the full year remains unchanged, so just on the safety, obviously the results here at 5.14 compare well to our last quarter or two years' total at 6.16, but obviously there's a myriad of reasons why you would need to be focused on safety and constant reminders within the industry that we need to continue to push our performance, so I was pleased to see this improvement.
We are very conscious of the fact that vigilance is required at all times in a business like ours. Our managed total sales are just at the bottom of the first page at 4.4, which I'll say versus 3.6, 22%, 4.9 on the sale of coal, versus 3.9, and total coal sales of 5.4 versus 4.1. But again, just remind you that these increments are relative to a period which had a change out in it a year ago. And as you know, our guidance for the full year maintained as it is, is flat year on year as we wait for production from our next projects to come in. The equity totals are across the page, as we usually present themselves there as well, reflecting similar sort of changes, period on period, again with the change out.
As we've been producing now for some successive quarters, our analysis there and just the realised pricing is there for you all to get a steer on our realised pricing versus the average for the period across gC NEWC, the JSM quarterly semi-soft price, and then average semi-soft prices as well. In this period, gC NEWC pricing at 68 average was the index average, and we've achieved $73 US price by comparison. As far as our net coal products go, the $100 US has been the average outcome that we've achieved. Obviously, that's a blend of both JSM pricing through the period of 115 and the average semi-soft spot price during that same period of $86, so a decent outcome at the average of 100.
Down into the management now in September, of course, period on period again reflects this change out that we've had in the previous corresponding periods, so I won't go into too much more than that other than to say that pricing realizations have been relatively solid, and of course, Maules Creek has been calculated to premium at 17%. And as many of you know, that's a function of the fact that we have a fixed component of those premiums that are received, which on the lower base of an average coal price do represent a higher premium relative to the average of the spot price for the quarter.
So 17% above does reflect that fixed price component, particularly for the ash component, whereas in the energy it's variable with the base gC NEWC rate, but the fixed price component will tend to inflate that premium calculation as the underlying gC NEWC price has softened. Over at Maules Creek, Maules Creek's had a solid start to the year, and as many of you know, we talked extensively through the investor day and our inaugural investor day, which was, thank you for all and sundry, was well supported, and certainly will be part of our ongoing investor relations activities. But as we said there, that Maules Creek will have a slower first half versus the second, and the splits will more be like the 14-16 period on period.
Our focus in this first half, as you know, is to get to the bottom of the pit in the southwest area so that we can create the opportunity for in-pit dumping, and that won't occur until the second half as we've reiterated. But production, as you can see, has been about a 2 million tonne mark for the first quarter. That will continue to ramp in the second quarter, and obviously the second half will be much better again. When the Greta Seam in particular, I think 30% of the resource is better represented in that second half rather than this first. Mainly metallurgical sales, 360,000 for the quarter, representing about 17% of our product mix, and overall. Back on the table across the page, you can see metallurgical sales are about 20% of our sales overall for the company.
The autonomous fleet preparation continues, and we are in the final stages of testing, commissioning, and also the necessary interaction with the regulators in order to allow the first fleet to commence operation later in the year, but that is proceeding well, and we look forward to seeing the impact of that first fleet in autonomous form at Maules Creek. Now, right, here's the year. Obviously, with the solid quarter, we'll continue that form, pretty much replicating that last quarter's result again in this new first quarter. 0.8 million tonnes of ROM, you can see the sales and also sales reflect that number, so we've held the stock position largely that we carried into this new year, which is a good thing because we're rapidly approaching the commencement of the longwall, the change out from longwall panel eight to nine.
Sales have been very positive and continue in that good form, so that bodes well for the full year. Roadway development, both the cut fit and also conventional roadway development, 7.2 kilometers for the period was a solid result also. The project to replace our chock cylinders during this upcoming change out is on track, and our normal change out, as you know, is about six weeks, and we've said that we should allocate another two weeks just to ensure that we get to the not just the change out, but also the full pre-fitting of these new chock cylinders into our chocks during the course of this change out. So the total period for the longwall change out, we're budgeting an eight-week period without production. Hence those low stocks and the ability to sell coal during that period.
Gannon does look a little bit differently from what you've seen in the past. Of course, Rocglen production is no longer represented, and in fact, Sunnyside has also come to a completion from a production perspective. So we've had ROM tonnes for the quarter at 665 versus 800 for the previous corresponding period. We have drawn down the stocks at Rocglen in their entirety, and there's a few remaining stocks left at Sunnyside, which have bolstered the saleable coal production and sales of produced coal numbers for this quarter. Tarrawonga numbers are relatively flat period on period, as I say, but the key focus of Tarrawonga is preparation for the ramp up to 3 million tonnes with equipment arriving during this quarter and next.
Maules Creek, as you know, after it has its flurry at the end of the year, generally falls into a more subdued period, which it has according to plan in this period, and it continues to build as we're actually quite a bit of stripping as we lay that next strip at the top of the pit at Werris Creek. Rocglen and Sunnyside I won't really spend too much time on giving the sales of the remaining stocks we finished at Rocglen, as I say, Sunnyside does have a few more high ash stocks, which will be sold during the course of this current quarter.
I'll move the page to a six, and just to really color, I suppose, around what you're familiar with, given that the investor day was just recently and that many of you attended that, not much has changed at Vickery in terms of the process or where the project sits in the approvals process. Currently, we are awaiting the report from the Department of Planning on their recommendation of the project and associated draft conditions. We're told that that's on track for an end of November delivery of that report. If that turns out to be the case, I think you would predict that then the IPC hearing, which is one of the necessary key remaining parts in the approval process, will probably fall into the new year.
In the meantime, there's various elements of work going on there with drilling being undertaken on site just in terms of definition of final box cut location, and of course, our existing approval for the 4.5 million tonnes, it was required to do the necessary works to qualify for the commencement of construction during the course of the quarter, which we undertook and completed via the necessary timeline. Winchester South moved forward with lots of work going on in terms of assessing not just the quality from the drill program we did earlier in the year, but there's also more drilling going on to define geological structures within the proposed pit footprint, and then there's the associated negotiations with various regulatory authorities and neighbors on infrastructure pathways for necessary things such as electricity and water. They're all going well and proceeding according to plan.
At the corporate level, for the record, just for our hedging position, we're going to be just focusing on the acquisition of the 7.5% of Narrabri, but that agreement is dated at the 1st of July from an economic interest perspective. So once settled and the key remaining pieces—this is ministerial consent, which is just a process-related matter, which will be completed soon—that we will be essentially recording an economic interest in that 7.5% from the 1st of July. Exploration, we have no agency because we've certainly been spending a few more dollars on exploration as it relates to Vickery and Winchester South, and of course, our Narrabri phase three project, so the AUD 8.6 million during the quarter is worth noting.
On to the outlook, and I know this during the course of the investor day, this will be subject to much discussion, and I suppose in a sense the summary of the factors that we see as influential in the outlook are the same as we mentioned during that time. There are of course obviously ongoing concerns about trade relationships. There's certainly some slowdown in unloading the coal into China, and of course, influential in some markets is obviously a low LNG price. All these things combined certainly have provided some uncertainty in the market, which seems to have certainly brought down coal prices to what appears to be somewhat of a floor or some support around the $65 level, and in more recent times that seems to be recovering back through the $68, and I think overnight we've reached the $70 level.
On the mid-cal things, clearly there's the impacts of those above matters that certainly affects those as well, but we do see some players who are not normal participants in the Asian demand to both on the PCI and mid-cal retreating as a result of subdued pricing, which I think will have a firming impact in the market. Now, for the sake of completeness, we have provided the table of guidance that we provided as part of the year-end results, and with that, that concludes my presentation. I'll hand back over to the operator in order to get into the Q&A session. Thank you.
Thank you. Please note questions from media will not be taken on this. Information is available on the Whitehaven website for all media inquiries. Thank you and welcome to the Q&A session.
To ask a question, please press star one on your telephone keypad and wait for your name to be announced. We'll now pause a moment to assemble a question queue. Your first question comes from Lyndon Fagan from J.P. Morgan. Please go ahead.
Thanks very much. Paul, just wondering if you could perhaps explain Maules in a bit more depth. I guess if I look at your guidance, if you're going to do 40% of ROM in the first half, we're looking at around 3 million tonnes for the December quarter or more even. Is that sort of the run rate we should be expecting, or it looked as though it was sort of a fair bit lower than that, obviously, in the September quarter? So I'm just wondering if things are already back on track there. That's the first one.
Yeah, thanks, Lyndon. And sorry, just for all, I understand there may be some sound quality issues, so just bear with us. I know it's just being looked at, but I'm hoping you can hear me. So Lyndon, thanks for the question. Yeah, look, we're certainly guiding, certainly a heavier second half than at first, and as mentioned just now, the 60/40 split, I think, is the right way to look at that, and that's okay in terms of our current plan. So we are stripping quite significantly in that southern corner there. We obviously want to make sure that we pull out this last element of run-of-mine in that area, and as you know, or as many have come to know, when the run-of-mine appears, obviously coal arrives thick and fast, given it's such a big proportion of the overall reserve, which will occur.
It's better represented in the mine schedule in the second half of the year than the first, hence the waiting towards that. And obviously, the priority here is to get that in-pit dumping opportunity by getting to the floor as quickly as we can. The southwest area is the first place we can get to the floor to grant that opportunity, but it's on track, but it is certainly weighted to the second half, no doubt about it.
I guess just following up on that issue, so we expect lumpiness for the next several years as you sort of move to in-pit dumping as far as ROM output per quarter goes, or is this really the last of the volatility in that? I'm just trying to understand what it looks like over the next few years.
Yeah, certainly this year in terms of the split, first to second, is a little bit higher than next year, and then the three years thereafter in terms of the five-year plan that we've talked about in-pit dumping for, because at the end of that five-year period will be 100% in-pit dumping. It certainly moderates. Part of the challenge here, and I know we've talked about this in the past, Lyndon, is the fact that Maules Creek's production is measured on a calendar basis, and then our financial is on obviously a financial year basis. So if you're doing as we did, we had a very recorded presentation of the Greta Seam in all its glory in the last half of the year. You did seven million tonnes in that part of the year, and so for this year, then that influences how it impacts.
So if you've done more in the first half of the year, then you'll do less in the second and vice versa, just by virtue of this anomaly between when the total ROM production is recorded on a calendar basis versus the financial year. Have I explained that well enough, William?
I'll just take that one. Yeah, thanks.
Sorry. Yeah, so if you've done seven million tonnes in a calendar year, say for instance, if you've done, as we are saying, the second half of the year January to June, we'll see the rainwater present itself in a greater proportion than total ROM production due to the mine sequence. So if you're going to do seven then, the first half of the year you're going to do five. Does that make sense in terms of?
Yeah, I think I'm with you. Yeah, I think I understand what you're saying. Yeah, thanks for that, Paul.
Yeah, but it's just a matter of, for everyone's sake, because when the rainwater turns up, it's such a big, thick seam relative to the other seams. When it comes in your mine sequence, it comes with a lot of coal, and so you get a distortion in the sense that the strip ratio is obviously very low during that period because you've got a lot of coal that appears in a very quick period of time. And by implication, the balance of the year stripping is a little higher on average to get to that overall 6.4-to-1. Now, you know in this year we have guided a 7-to-1 strip ratio, which gives most of that cost increase we've talked about at the investor day.
Yeah, thanks for that.
Thank you, Lyndon. Just a reminder to ask a question, please press star one. Your next question comes from Peter O'Connor from Shaw and Partners. Please go ahead, Peter.
Good morning, Paul. Two questions from me. Just following up on Maules Creek, just the ash premium, could you just take me through that again and how that changes with the moving price? And then secondly, just the exploration charge you talked about and focused on, is that expensed each period?
Yeah, thanks. Thanks, Peter. The ash premium, just again, just to pull apart this a little bit for everybody, there are two components of that. There's the energy benefit, which rises to the full proportionate to the underlying GC NEWC price. And then the other component is a fixed dollar premium that we charge for other qualitative aspects, including ash. And obviously, if you've got a $5 premium and your underlying coal price is $65, that $5 is a greater proportion than $65 to $100. It was six months ago.
Is that a quarterly or monthly or yearly negotiated number, Paul, or is it a life of mine? How does that work as per contract?
Are you getting some feedback there, Peter, through your speaking?
Yeah.
Talking, but that's okay. It's not us, but I think someone needs to be on mute, I think.
I don't remember. I wanted to ask as well.
I'll try and answer your question in the meantime. It's relative to the contract term, so some of them are annual payment. Very few of them are shorter term than that attract that premium. So it's in the second part of your question, exploration. The exploration for the projects is generally capitalized in the projects. Exploration around the operational sites is fixed.
Yeah, so I'll give you that number for that period, what we did before we get on with the spend that we had on the different inventories to South of Narrabri phase three. If you look at the guidance table on the bottom of that page, you'll see that we have great projects in that capital guidance of 95-105. That capital of 8.6 in there is half of that guidance on the bottom of that table. It will stay on the balance sheet. That will stay on the balance sheet.
Thank you very much.
You're all right.
Sorry, did that land with your question, Peter?
Yeah, thank you very much.
Thank you. Not a problem.
Did someone else need to go on mute here and there? I think we're getting a lot of feedback here through the mic.
So no, everyone else is muted. I think that was coming from Peter's line. So I'll just move on to the next question now. Your next question comes from James Redfern from Merrill Lynch. Please go ahead, James.
Yeah, hi, Paul. Good morning. Just a question on Maules Creek, please. Just want some guidance around the proportionate met sales, maybe for the second half of FY20. So 17% in the September quarter compared to 27% last year. And I understand as you move into the Greta Seam, the met coal sales will increase. So just wondering how we should think about that as a proportion of total sales. And then at the investor day in September, Maules Creek is still being referred to as moving towards 50/50 met sales and met to thermal in the coming years. So just wondering if you could please provide some guidance on that going forward. Thank you.
Yeah, thanks, James. I think you've answered your own question mostly there, so I'll just reiterate that. Certainly, the Greta Seam when it turns up, that brings with it the greater proportion, as you know, of met coal. Absolutely right. And so you should see the 17% from Maules will be relatively subdued. It'll be higher than that during the course of the year. Last year, we were running about 30% at Maules, and we certainly think that will be replicated in this year. But it will be. It's timing related in terms of when that Greta Seam presents itself as to when you actually see that kick up.
Okay, thank you. So maybe for argument's sake, the June 2020 quarter could approach 30%, do you think?
I think that's about right.
Okay. Yeah, cool. Okay, thanks.
Second half, sorry, James.
Second half will be the stronger of all of this. Again, once you get to that Greta Seam, the Greta Seam its proportion is higher in the second half, hence the extra coal that comes out, and the semi-soft comes with it. So that proportion will be higher from back end than it is the first half.
Yeah, okay. Thank you. And looking into sort of FY21, FY22, I mean, are you still thinking you can move that, well, I shouldn't say that, but move towards the 50% target?
There's no reason why we can't. I think, again, this comes back to this dynamic which we've been discussing now, these forums now for probably near on two years, where we've had quite a distortion between the hard coking price and the semi-soft price relative to thermal for those premiums. And so coming back to that discussion we just had before with Peter, obviously, that premium's looking high on the thermal at the moment relative to the spot semi-soft price. But as far as the quarter price goes for the JSM quarterly price, there's definitely money in that to make the semi-soft. So we're still chasing any contract on the quarterly price, but less enamored with the idea of a spot sale in semi-soft unless it's a part of a two or quarterly base contract.
Yeah, got it. Okay, Paul. Thank you. That was all.
Thank you.
Thank you, James. We have no further questions at this time. I'll now hand back to Paul for any additional or closing remarks.
Thanks, O'Brien. Thanks, everyone, for dialing in. I know, given that we've had the investor day just recently, that you've got a lot of the information, but if there's anyone who's got any particular questions, of course, you've got Sarah McNally's number now taken over from Ian McAleese. And I know many of you've met Sarah, but if there's any questions, you know where to find us, and media, of course, can make their own way to the company. Thanks, Paul, once again.
That concludes the Whitehaven Coal September quarter report briefing. Thank you once again for joining us today. You may all disconnect.