Thank you for joining us today. I'll now hand over to Managing Director and CEO, Paul Flynn. Please go ahead.
Morning, everybody. Thanks very much for dialing in to our March 2026 Quarterly Production Report. I'm joined here today, as usual with Kevin Ball, our CFO, and Ian Humphris, our COO. I'll go through the highlights as usual, and try and get to the Q&A section, which I'm sure will be the more interesting part of the discussion today. Broadly, look, we've had a pretty solid third quarter, which we're pleased with to be able to round that out in a way which sets us up well for the fourth quarter. Solid, and I'll go through the New South Wales and Queensland dimensions of that through the highlights section in particular. Look, our safety record continues to be very good. We're tracking well.
Our TRIFR at 3.2 million tons certainly is a continuation of the momentum we've shown to improving our safety, period on period, so very positive. Managed ROM at 9.5 million tons reflects the seasonal nature of Q3. I'm sure everyone's come to expect that a little bit now with us, but now being a couple of years into our ownership in Queensland in particular. Export coal sales have been pretty good at 6.8 million tons for the second quarter. Met coal prices have improved across both fronts, and we'll get to that in a little bit more detail, for the reasons for that. They have moved differentially as you all will know. On track for our savings between AUD 60 million-AUD 80 million for annualized savings for the year.
Now we've given a reference there to net debt at AUD 600 million, but obviously that's a point in time type observation, and we've been pretty busy on the balance sheet, so we'll talk a bit, a little bit about that, not just in the paper, but I'm sure the Q&A as well. Of course, part of the reason for that is the refinancing of our existing facilities stemming from the acquisition now two years ago has rounded out very successfully with a bank and a bond issuance, and we are projecting savings there at AUD 50 million-AUD 55 million annually. Over to just the highlights for our two states. Q3 sales in Queensland, well, ROM production a little bit softer.
Q3 sales have been well supported by good stocks and selling those into the market. We have had some weather up there, so that has caused Queensland ROM production to be a little bit lower, but that's not unusual, as we all know, at 4.1 million tons, so 28% down on December. Wet weather has been very wet up there, and I'm sure we can talk about that too. We have sold relatively well through that period though, so at 3.2 million tons for the equity sales in Queensland have been pretty good. Prices, as I say, have improved. The average price achieved at AUD 242 for Queensland. Our twelve-month average metallurgical coal realization is at 74% of PLV.
New South Wales has been strong across both production and sales, which is very nice to see at 5.4 million tons. The equity sales for produced coal at 3.6 million tons for the quarter, and our average pricing for the quarter at AUD 175, or 101% realization for the period. Over the table, you can see not just the totals that I've mentioned already, but further detail and then also the year-to-date numbers, which is probably the more relevant in terms of where Q3 sets us up for the full year. The answer to that is pretty good. At 29.5 million tons , we're in a decent spot in the managed position on sales.
At 9.5 million tons , as I mentioned, for the quarter itself, reflecting the weather-affected patterns that we have in this quarter, obviously lower than the 11 million tons that we banked in December, but that sets us nicely for a strong Q4. Equity ROM production there at 7.6 million tons. Queensland at 4 million tons, as I mentioned, at 4.1 million tons, and New South Wales at 5.4 million tons . Both good results. Both with decent stocks entering the Q4. We have drawn down, as I mentioned, across them, as a result of continuing to sell strongly into the market, and I'll talk a little bit about where that positions us guidance-wise at the end of the presentation.
Queensland operations. Blackwater certainly has been rain-affected and lower than where we'd like to be, but at 2.6 million tons it was solid. Certainly, with the historic rains that we've had through January, February and March, it has been very, very wet up there. We have been battling a little bit of water there, as I'm sure you've seen others report a similar sort of impact in the region. That we've been able to sell well through that period at 3.1 million tons, and so 50% higher than the December quarter. Daunia has navigated its way through that wet patch pretty well.
For 1.5 million tons ROM for the quarter, even though it's slightly down there on December, that sets us up well up for a good total for the full year. Total sales at Daunia at 1.1 million tons, broadly in line with December. New South Wales has held its end of the bargain up pretty nicely at 5.4 million tons of ROMs the same. Maules Creek done a good job at 3.4 million tons, so setting itself up well for that final quarter of the year as well. Total sales at 2.3 million tons as well during that period.
Narrabri has had a few ups and downs, and it's down obviously on the December quarter, which was very strong, only totaling 1 million tons for the quarter. We have taken the opportunity to do some work on the wall. As you know, we're committed to a program of more maintenance in this wall now that we've committed to making it last longer. We'll talk about that, but we have had some geotechnical ups and downs there, which has incentivized us to bring a little bit of maintenance forward to bolster the roof supports infrastructure there to manage these geotechnical events. Sales have been solid though, 1.5 million tons at Narrabri, so we've sold down well during that period.
Gunnedah uneventful and solid and consistent across the period. That's also nice to see. From a sales and realized pricing perspective, say for the quarter, 6.8 million tons was a good result. The Queensland operations, as I mentioned, they averaged AUD 242 for the period. That's up. We obviously our realizations and so on will lag in a rising market, and it's risen across both. PLV was up obviously at AUD 235 an average for the quarter, 18% up on December, and our realized pricing at AUD 170 was 72% of the PLV for met coal sales during that period. The average is 74%, as I mentioned a little earlier.
March quarter sales mix comprised 33% of the primary products of our hard coking and semi-hard, and then achieving 75% of its PLV and 35% for the PCI semi-soft. That's our secondary products. New South Wales, 175 was solid, so 7% up on the December quarter. The price improved to an average of $120 across the period, and our realizations were at $121, so just slightly over the average of the GC NEWC for the period. But again, just to remind everybody, in increasing pricing periods, we obviously lag that and get a benefit of that in a falling period. In terms of the market dynamics itself, PLV has certainly strengthened, more related to weather rather than anything else.
Whereas New South Wales definitely has been impacted certainly by energy security concerns and, obviously the conflict in the Middle East has seen a rise in the thermal price since the conflict started, but has moderated since that time. b roadly on expectations that there may be a conclusion to that sooner rather than later. Who knows? In terms of longer-term dynamics, nothing changed there. We see the market still on both sides of our business, met and thermal, to be structurally constrained from a supply response perspective. We think that positions us well going forward. On production costs, as I said, we're on track for our AUD 60 million-AUD 80 million annualized savings for the year.
Our unit cost for the period actually been better than what we recorded for our first half. I'll remind you that it was AUD 135 for the first half. We've actually done better in this quarter, but we are highlighting that, obviously, with the related impacts on fuel prices, Q4 will not be as good as what we've just recorded in the March quarter. We are guiding to around the middle of our guidance in terms of the cost guidance per ton of AUD 130-AUD 145 for the full year impact. We've given you there a quick assessment in terms of you know what AUD 1 means per liter for the cost base of the business because diesel costs generally 8% of our total costs directly.
There's the indirect impact of passthroughs for diesel price movements in our rail contracts in New South Wales. That impact, like I say, AUD 1, you'll get about AUD 10-AUD 11 per ton on our costs. Even though we've done very well in March to bring down our costs below where we've done for the first half, we do feel that it's worthwhile just highlighting for everyone that Q4 may reverse that trend slightly. Quarter four, of course, in this given financial year, it's worthwhile highlighting that.
As I said before, the balance sheet has come in for a bit of work and that 600 million dollars that we've referenced there as net debt at 31st of March is relevant but has obviously moved on since the post-quarter payments have been made to BMA. The refinancing has gone very well. Very successful on both fronts, the banking and bond side of things. Substantial savings will accrue to the business now, and I'll just draw you to a typo there just in this section. That reference to $50 million-$55 million, US is not. It's actually Aussie dollars, so our apologies for that. So that is Aussie dollar, AUD 50 million-AUD 55 million per annum saving, which very worthwhile.
The bond now staggered out obviously in two tranches to 5.5 years and eight-year notes. Coupled with the AUD 600 million bank facility, a term loan, and a revolver as we previously announced. Very, very solid, excellent work from our team to bottom that out and sets the balance sheet up in a pretty good position to go forward. Opening up lots of new capital providers to the company and a very, very well-supported offer, which I'm sure you can ask plenty of questions of Kevin of that. In terms of payments post the quarter, that's the reason why I referenced it. That AUD 600 million probably has moved on.
We've obviously paid the second of the three payments, the second and the last of the large deferred payments to BMA. That $500 million was paid on the 2nd April. The contingent's a little bit more than last year, but that's reflective of an improving coal price. We're estimating that to be about $58 million, which will be paid in July subject to verification processes normal with that underlying mechanism. That puts us in the third and final year of the deferred payments. We've got $100 million to pay in April of next year, 2027. This is the last year, of course, of the contingent sharing arrangement as well.
Entering the third and final year of those arrangements, which I think has served us well with this acquisition, it'd be nice to close those out in 12 months' time. Our buyback has been proceeding, of course, in a modest way. In the quarter, 1.4 million shares have been bought for a cost of AUD 11 million. Year to date, 7.7 million shares at AUD 56 million expended on that. Nothing to note for you on the development projects that I'll draw out to you, and I'll steer you to our guidance as the final piece of the presentation. That is that we're in the right side of the guidance range here. No changes to our guidance at all.
Steering towards the top end of our ROM and sales both doing very well. Of course, the one that I've called out already that's moderating is despite the good performance in March on the cost side of things. We are expecting those fuel prices to flow through into Q4. We're saying we'll probably be at the midpoint of guidance on the cost front for this year. Capital remains on track to be at the lower end of our capital guidance range. With that, I'll round out the presentation. It's been a very good quarter. Sets us up well for Q4. I'll hand back to the operator now to get the Q&A started. 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 speaker phone, please pick up the handset to ask your question. Your first question comes from Rahul Anand with Morgan Stanley. Please go ahead.
Oh, hi, Paul and team. Thanks for the call. I've got a couple on the operations side. If you start with Narrabri, please. F rom memory, you were in panel 204 and if I think about the cover there, that's likely to be around 200 meters. Please feel free to correct me if I'm wrong. M y concern is that the mine potentially is facing geotechnical issues as we sit today. As we get deeper in the later panels, I'm just worried, does that continue to get or become a bigger problem as we sort of progress into those sections of the mine?
Holistically as well on Narrabri, given this is an asset that's been somewhat problematic, how are you thinking about it in the whole set, in the portfolio? D oes it still remain core given you've got the optionality in Vickery now, and then also you've got plans for Queensland, in the later years? That's the first one. Thanks.
Thanks, Rahul. Well done sneaking in front again as the first question. Look, Narrabri does, it has its moments. There's no doubt about it. Underground mining generally does. I'm sure you've got equally interesting observations about underground mines generally, pretty much across the country. Narrabri does have its place in its portfolio. It's we have made those decisions as I mentioned, obviously, to put more effort into the maintenance of this particular wall to make this one last longer rather than replacing it. We think that's still the right decision. We are in relatively shallow ground, and we'll still be for some time.
Not to worry too much about the increasing effect of the depth of cover change that we saw in the 100 series panels. You will see that over time, but we're not gonna go to the extremities that we went to before in terms of the depth of cover. We will revert over to the 300 series panels before we get too deep in Narrabri, either. We're talking about just extra support and then lower productivity in those deeper areas. Not that they can't be mined, of course. That's all within plan. We will be optimizing staying on the shallower side of the mine for as long as possible before migrating into those deeper terrains.
With that, we've spent some money on putting some more work into the longwall as well. As you know, we've got a longer changeout as well to be the final piece of the puzzle to the refurb of the longwall in the new financial year. Midway through the new financial year, depending on when we pull up. Overall, look, it's been a little bit up and down, there's no doubt about it. The team's working hard to make sure we get consistency of production there. But yeah, it still remains an important piece of the puzzle. Even though, as you mentioned, Rahul, we've got good options, both with obviously the balance of capital to ramp up Vickery to its approved level, of course.
That's certainly an important thing. Queensland, you've referenced also. The company does have good options in that regard. We do see that the capital reduced as it is from what the original budget was going to be for the Stage 3 capital is still a worthwhile investment in Narrabri. In fact, very complementary with Vickery once that balance of capital, the Board commits to that and gets more coal available to us to blend with Narrabri.
That actually is a very value-enhancing addition to our portfolio. Let's not forget that Narrabri, even when it has its moments, it's decent quality coal that customers like, and it's cheap on an average cost basis. It does play a role in the portfolio.
No, that's fair. Okay, Paul, the second one's just on Blackwater. Obviously, that was the second asset that had a bit of a softer quarter.
You talked about water management and weather impacts there. I guess, just to probe that a bit further, and to understand, is there any further detail you can provide in terms of, specifically, what actions we can take stepping into wet season next year, if there's anything that can be done? O bviously, everyone has suffered the impact of the weather there, and your neighbors et cetera as well. If you wanna provide a bit more color on that. Thanks.
I reckon Ian loves talking about water. He's been talking about water for a couple of months now. Why don't I just hand over to Ian, and he can tell you what we're doing both in terms of anticipating, which the team has done good work in anticipating the onset of the weather. I think in relative terms, we've done well to our neighbors. T here's ongoing work here to manage it. Now two years in, we're understanding what's there and what isn't there from an infrastructure perspective, and that's helping us map out a plan for the future.
I think you'd be aware that we had just under AUD 500 million there in the quarter, which is probably about twice what we would have expected. As Paul said, we did a good job last quarter getting the ROM stocks up there, which we saw as far as the sales processing this year. It has had some impacts on us just with the sequencing and draglines as we've worked through this. We've got the site got good infrastructure in place. We continue to work on that.
A little bit in and around the sequencing. The site we're able to discharge water during this period in compliance with all of our various sort of limitations, et cetera, and we continue to work on that. That's probably the first time that's been done and managed well for a period of time. We've got good water balance models. We continue to work on this, and we'll put the money into the infrastructure as required.
Got it. That's clear. Thanks, Ian. Thanks, Paul. Cheers.
Thank you. Your next question comes from Rob Stein with Macquarie. Please go ahead.
Hi, Paul and team. Just on the unit costs. F lat QoQ, to be honest, quite a good result, all things being considered. Can you just walk us through the inventory impacts that sort of led to costs achieving that rate? Because there was obviously impacts at Blackwater. Diesel, the well-known diesel impacts. Can you perhaps give us a bit of a feel for how those were avoided in 3Q and potentially accrue to 4Q? I've got a follow-up. Thanks.
Rob, I'll give you to Kevin.
Thanks, Rob. I'd say to you, look, what Ian said is, in Queensland, we prepped really well for the wet weather. We had strong stocks at the top of ramp, so we're able to take those stocks and process those. Now, those stocks came with a cost. R eally, you've not really seen the impact of the inventory come through the unit cost. The unit cost in the quarter was a very strong result, good cost control in Queensland. The difference I think that you're trying to find is you've got an increased balance of New South Wales in that mix in that period, and that will help to drive the unit cost in the total business down towards the unit cost out of New South Wales.
As Paul said, I think what you'll see over the year is you'll see that swinging back in that fourth quarter with a little bit of diesel coming through and then coal prices, or sorry, costs should rise in the fourth quarter. But all of that fits with almost like a 50/50 product mix between Queensland and New South Wales. We think that cost guidance but for the diesel rise, would've been probably, I think, we say AUD 2-AUD 3 lower, right, out of the fourth quarter. That'll give you an idea as to where we think costs were going. I think we're in really good shape to deliver that at the bottom end of guidance, but for the rise in the price of diesel.
Now, the other side of that, the question that was asked an awful lot in the last few weeks has been, what does that mean? While costs have gone up, the revenue line in New South Wales has gone up by more than the cost. At a group level, it's not margin- destructive, it's actually margin- accretive.
Thank you. Maybe just calling out cost- out initiatives broader in the portfolio. I mean, you've still got that AUD 60-80 target. T he refi which I think beat even your own expectations, mid-7s% I think you said or a 7% handle, and it's come in with a 6%.
If we look forward around the cost of capital for the business and what you're thinking about going forward, do you see? W as there really good appetite for that financing package? How do you think about being able to roll that in the future and maintaining a capital structure that does maybe run at a little bit of high debt given it's so competitive?
Look, I'm probably gonna say this to you this way. That whole refinancing piece was really well received. The funding for that predominantly came from outside Australia.
The ask on the bond side of the world, the peak volume in that was something like $10.7 billion. There's something like more than 200 investors in that bond who've seen a bond trade up since issuance, which is good to see because it means we've priced it reasonably well, but we've left enough on the table to make money out of it from people who invest in it. It's really well anchored. Here's a stat I don't think that's in the papers. Seven of the top 10 real asset managers across the planet participated in the funding. To your point about WACC, I do think, and I've asked Kylie to look through this and get a bit of work done.
The WACC that I think the business is being valued on by analysts has got a little bit of history to it, and that probably needs to be refreshed. The capital stack requires the business to maintain a strong balance sheet and prudent metrics, which is what we intend to do. We see ourselves having first entered the space as a debut issuer and at investment grade, we see ourselves working hard to maintain that position through the balance of time because we think that's the better part of the world to access capital. As you can see, it comes at a competitive price.
I think the other side of that is what we have in the market is an instrument that you can now compare pricing on, and you can see on a day-to-day basis where coal trades from a funding perspective. Well received, well supported, we'll continue to be cautious and prudent.
It's the outcome of several years of work in transforming the business, and it's nice to see that recognized by the debt capital markets in the change that obviously the acquisition in Queensland has brought to the business. Not just the change, the scale, but our ability to integrate that, restructure it in a way that improves the margins of what we bought and diversify the business in a way that lowers the risk profile. I think coupled with the capital allocation framework that we've been running for quite a few years now.
I think that's positioned as well, and it's nice to see that that's been well supported by the markets when it's come our turn to particularly enter the bond market and the bank piece as well.
Thank you very much. I'll pass it on.
Thank you. Your next question comes from John Sharp with JP Morgan. Please go ahead.
Good morning, Paul and team. Just another question on Narrabri. So you had the 10-day cylinder changeout, and you'd mentioned the eight-week longwall move scheduled for the next one. Well, actually, probably more importantly, how should we think about longwall moves going forward? Will they all need eight weeks for a little bit more maintenance? Your comments, Paul, maybe suggest maybe not eight weeks, does it slightly increase maybe to six weeks? Just trying to understand how we should think about it moving forward. Thanks.
That's a fair question, John. Look, when we made the decision to reprofile the CapEx spend at Narrabri and obviously put off the idea of a new wall for at least another 10 years, we obviously committed to a maintenance program which was gonna give the wall a serious birthday. That was a serious birthday that goes over two years. We obviously did the first piece of that with the eight-week changeout we've already had. You couldn't get it all done in one tranche. That's why it was gonna be a two-year thing.
Given the vulnerabilities we've seen with just some of the geotechnical issues, we've taken the opportunity to bring forward a couple more of the elements that we weren't able to do or which were part of the second longwall change. We brought a few components of that forward, and that's really just replacing hydraulic cylinders in the chocks, which we felt were just not able to deliver the full strength into the roof that we were requiring. That's been a good piece of work that's well done.
The next longwall change, as I referenced and that you've cited, certainly is we're allowing eight weeks for that because that is the second and final piece of this rebuild process that we're going through. Now, that's November, December, of this year. But then after, changeout should normalize back to
Normalize and we do have some options if we wanted to spend a little bit of capital to get a small set of cylinders and chocks, you can then run a progressive changeout. That's all out there. I t we should go away from the eight weeks back to the five or six, I would imagine.
That help, John?
Great. That's really clear. Thank you for that. Just a second question, just on Queensland stockpiles. Y ou drew down about 1.1 million tons in the quarter, which was very helpful just with that wet weather. Can you just talk us through the strategy for Blackwater and Daunia? Just trying to understand, is there a strategy there? 'Cause it was really helpful. I s there an actual strategy to carry stockpiles for insurance, or is it more than that? T iming, stronger pricing. Just trying to understand the stockpile strategy up there. Thanks.
Look, drawing down the stocks was obviously part of preparing for the wet season. That's that strategy sees us trying to build stocks in the first two quarters of the year, knowing that Q3 is gonna be variable. That part of the plan was executed well and allowed us to sell through that period. The only thing I'd say that our observations now after two years of owning these mines is that we probably are gonna carry a little bit more stock than what we've carried in the past. Or when I say the past, only the last two years. We've learned a little bit more about the coal quality and the intra-seam blending on site.
Our conclusion there is that we should actually carry a little bit more stock on site to manage that because they, the customers have different requirements. If anything, we probably were a little over, a little bit hand-to-mouth in the first year in particular. Our second year, we wanna actually keep a bit more stock on the ground to be able to manage that. We are ramping up at the same time, as you know, t hat says keep a little bit more on hand. That is a deliberate strategy to try, and make sure we can keep adequate stocks during the course of the year to allow the blending, but also the seasonal impacts of production.
In addition to that, the two coal chains work slightly differently. C oming out of Daunia, you've got a cargo assembly, so you've really gotta have your stocks there ready to go when it's available. Whereas at Blackwater, n ot only have we got more capacity at site to store that, the stocks, but down at Gladstone, we also have a far greater capacity, so we can manage it slightly differently.
Okay, great. Some great detail. Thank you for that.
Thank you. Your next question comes from Lachlan Shaw with UBS. Please go ahead.
Morning, Paul, Kevin, Colleen, Kieran, and team. Thanks very much for the call, too, from me. I just wanted to start in terms of diesel. Maybe just a quick comment on your supply visibility. I just wanted to double-check. The sensitivity in terms of cost increase for every AUD 1 per liter, is that roughly what you've seen in terms of diesel that you're procuring today versus what you were procuring before the Middle East crisis? I'll come back with my second question.
Thanks, Lachlan. L ook, diesel, in terms of the first part of that question, we've had no disruption to diesel supply. I suppose, which is consistent with not what regional petrol stations are saying necessarily, but what the government is saying more generally in terms of the logistics, consistency delivering supply to Australia, for the imported component of that, which is the majority as you know. Fr om our perspective, despite it all the functions, we've actually have not had any issues associated with receiving the supplies required. This is obviously a conversation we're having every day with our two suppliers, and the assurances that they give us continue to be consistent with how it's been from the beginning of the conflict.
As you know, those assurances are only as good as the assurances they're getting, of course, because we're a majority importer in this country. Those assurances are generally coming from places that are processors rather than producers. They are also captive to the same assurances that they are getting. So far so good. We don't see any issues at the moment in terms of being able to maintain our consistency of production based on the supplies we're receiving. Now the sensitivity analysis we put that in there for a guide. I don't think, Kevin, correct me if I'm wrong, but we're not paying the full extra AUD 1 over and above what we are. We're just trying to give you a sense of the sensitivity on that.
We're not expecting that. That has not been banked in a full extra AUD 1 into the Q4 estimations we're giving you. There's no doubt it's higher than where we were and you just have to look at the bowser. It's what, 50% more than what you were paying at the bowser. That's if you're down the street. You can see that that's going to have its flow on impacts through the business more generally at these sorts of levels.
Great. No, thank you. That's great color. My second question, changing tack a little. This sort of goes, I guess, to portfolio and what's next. The business is now beyond the lion's share of the BMA acquisition costs. That's gone well. You're well on the way to fully consolidating those assets into the portfolio. I do wonder, though, given the Middle East war and emergent focus on energy security, with said ongoing M&A in the sector, and you've obviously repeatedly spoken to the organic growth. H ow is the Board. H as there been any change in the Board's thinking about what comes next, and I suppose ultimately balancing returns versus growth?
I'm not quite sure how to answer that one, Lachlan, 'cause that's a big question. Look, I'll try and give you what I can. Look, our Board hasn't changed its mind as to where it's been. It's been pretty consistent over the many years that the business we're in remains an essential piece of the energy puzzle. Obviously, our expansion and into Queensland diversification to met coal reinforces our view of the integral nature that met coal plays in the production of steel and construction and growth around the world more generally. In the short term, obviously, this conflict has focused everyone's minds again on energy security and the thermal side of our business has benefited from that.
As Kevin said earlier, the price of thermal coal has gone up faster than the inflation impacts on our cost base. Metallurgical coal has tightened, but for unrelated reasons. Let's say more weather- related than anything related to the conflict. T hat also remains a supply constraint market as well. We feel pretty good about that. I was wondering whether there was some other question that was coming from your discussion there, or your question. It hasn't changed our focus in terms of where we see the growth of our business. Certainly, Queensland is prospective, we need to see changes in royalties there before we do anything too much there. 'Cause that's pretty consistent with what everybody else would tell you as well.
Changing assets, changing hands, as you can see in the market from time to time, factors that in. Our optionality obviously, to bring on the balance of the production at Vickery in the fullness of time is something the Board can turn its minds to once we feel like we've bedded down the process of the integration of Queensland into New South Wales. It's really refinement of the business now. As you say, the heavy lifting has been done, but there's still plenty of work to be done, as far as we're concerned. We're busy doing that over this year and the next.
Thank you. Your next question comes from Glyn Lawcock with Barrenjoey. Please go ahead.
Morning, Paul. I might have joined a little bit late, but I just wanted to try and understand exactly what are the geotech issues at Narrabri. T he last panel, it was because you were at the edge of the seam. What is it this time, and is it now behind us? Do you have visibility over the rest of the panel? Thanks.
Thanks, Glyn. No, we didn't talk about that before, so the question is relevant. Well, it's the same. It's the impact of the same. It's being on the edge of the seam and those intrusions from above which squeeze the seam into a height was obviously not conducive to longwall mining. We're further away from those impacts. They are less than the panel before, for sure. But that doesn't mean they've gone away magically in and of themselves. There's still an impact of that, and we've mapped out the panel, so we can see it's less intrusive than the previous panel. But that hasn't disappeared magically, so there's still the impact of that.
The convergence of the gear needing its birthday and the incomplete nature of that. Of course, we didn't do it all last panel, as you say. We divided it up over two years and two changeouts to get that work done. There's areas where the geotech plays up, and obviously the area where you're most vulnerable to that is the area where you haven't finished all that work yet. That's why we brought forward a couple of these hydraulic cylinders and the changeout that we did over the last 10 days to bolster that, whilst we proceed through this panel and do that next changeout in November, December at the end of the year.
Paul, sorry, do you have any visibility then for the next, it is what, two to three quarters? Like, 'cause the variation's quite stark. Y ou look at the December quarter and then almost down 50% into the March quarter. Can you pick them at all or is this? It's only as you progress through the panel?
I'm not hand-holding, but yes, we can. Well, can you predict them? We map them out. Yes. The intensity of them, we map them. How they actually behave on the day is not. I would say that it's underground mining. You don't have the clarity of that. We've mapped out all these structures and they are certainly less than what they were in the previous panel. We know when they're coming, so we prepare for them. How the ground behaves when you get there can be as you say and you're pointing out, it can be variable.
I think in addition to what Paul's saying, those structures, the washouts and things we've talked about, they're at roughly 50% of what we saw in the first panel. We are seeing, as you and I think one of the early callers asked, a little bit more depth, a little bit more cyclical loading. I think the combination of those two is where we're starting to see these failures. I guess the condition of the legs and not being able to get the force into the roof is what's compounding that. The structures in themselves and the cyclical loading is all manageable if your longwall health is in the right condition.
That's why we agreed to stop the other day and improve a few of the areas on the wall where we knew we had a swarm of legs that weren't working as well as they should have been.
We had access to legs that we could swap out mid-panel.
No, that's great, Paul. Just if I look into the next panel, so for next calendar year, when we get through this next longwall move, does it drop by 50% again or in terms of the washouts and the intrusive nature? Can you see that far out?
When we do the development roadways, that's probably the best exploration tool that you've got. They're largely gone in the next block. T hen when we do the work in this extended longwall move to get the condition of the longwall to where we want it to, we're expecting to see far less delays associated with those geological conditions.
Okay, that's great. Paul, if I could just change tack and maybe just push you a little bit more on the answer you gave to Lachlan's question previously. You said Vickery, once you've bedded down Queensland over this year and next year, do you think you've got another couple of years then before maybe you can tackle Vickery? Is that how I should interpret that? Is there anything you need to do on Vickery if you wanted to accelerate it? Can you go to the Board imminently or is there more permitting or anything else you need to do re-testing the CapEx, et cetera? Thanks.
That's a reasonable question. I was trying to leave myself some space to move there rather than put the Board on notice about something there, Glyn. No, look, the simple answer to the question is that the project's fully approved and can go ahead tomorrow if the Board sanction that. The Board's seen the feasibility study and likes what they see, but they haven't obviously committed the balance of capital 'cause we've been busy with Queensland. It can go ahead at the right time. I'm just not putting a deadline on it because that's the board's decision. We're in good shape. We are fine-tuning as we continue to obviously, proceed with just the early mining version of Vickery today.
That refinement and also the financing of Vickery, because that's an important piece of the puzzle. How would we do that? We're exploring the various offers of support from customers and suppliers who would like to assist us in financing the balance of capital at Vickery. We're using the time now, whilst we're not doing anything more than early mining, to explore the financing package so that when the time comes, we have not just a feasibility study that the Board likes, but a financing package that matches.
Just finally, how much money is left to spend, do you think? How much are we roughly talking?
I think it. Look, we've talked about AUD 1 billion, and that's roughly where it is. Aussie dollars, I should say.
Okay. Wonderful. Thanks a lot, Paul.
No worries.
Thank you. Your next question comes from Lachlan Shaw with UBS. Please go ahead.
Thanks team for taking my follow-up. I just wanted to round out on inventory across Queensland and New South Wales. Obviously, there's been some moves that supported production, et cetera. How are the open cuts positioned in terms of overburden in advance and inventory through the chains? Should we be anticipating any restock or steady state or build or drawdowns in the next couple of quarters of drier weather? Thanks.
Look, the next quarter should be good mining conditions. Typically, that's been the case, and Q4's generally rounded out as being pretty solid. We're expecting that to be the case. It's certainly been better weather in Queensland in particular. New South Wales has obviously had the better of conditions of the two states over the last three months. Having drawn our stocks down, we certainly wanna make sure we replenish the stocks for sure. That will come naturally with the better production and better mining conditions. In terms of overburden in advance, we're continuing to build that as well. Nothing too notable there, Ian, that you wanted to draw out?
Actually, nothing.
B etter mining conditions. As I said, we wanted to keep a little bit more stock on the ground and so we will be building some of that backlog level for sure.
Okay, great. No, very helpful. Thank you.
Thank you. Your next question comes from Paul Young with Goldman Sachs. Please go ahead.
M orning Paul, Kevin. Paul, we've covered most, pretty much everything on the ops. Just wanted to ask a question on the coal markets. Firstly with thermal coal market, any observations you can share just recently, with respect to increased demand trends or interest on for spot cargos in Pacific region. I know that the Atlantic coal price has really given up a lot because we're in shoulder season and haven't really seen probably the oil-to-coal switching that maybe some have thought. Just any observations you've seen recently in the thermal market?
YT hanks, Paul. L ook, there has been an interesting market. I would say almost entirely across our portfolio of customers in the thermal side of our business have asked for more tonnes. Obviously, that's energy security concerns, that's obviously price of LNG. That's a whole range of factors in there causing them to want to bring forward tonnes. They've asked us for more tonnes firstly. Most customers have asked for option upside tonnes. Then pretty much consistently across the portfolio, everyone said, "Can you bring stuff forward?" Now, as you all know and as we've been talking about just now, I mean, it's a game of truck movements or, in Narrabri's case, slightly different.
You can't bring forward everybody's request to advance tons a month or two earlier at the same time. We're doing our best to try and help our customers in that regard. The strong sales position is evidence of that. We can't meet everyone's needs. That is indicative of the concerns that people have and obviously the rising cost of LNG that is causing people to want to focus more on the thermal side of their generation portfolios, which is obviously good for us. That's what we're observing thus far.
Now, the market's been up and down, as you know, and it's, at the moment, it seems to be, if you would be so bold as to interpret what the market is telling us, the market seems to be pricing in a conclusion to this conflict, soon. I hope for the sake of everybody concerned, that's true. If that's not the case, then the price will probably gravitate back northwards again. Let's see how that goes. I hope less conflicts in the world is a better thing, I would say.
T hanks, Paul. Just on the met coal market, the same views. H ave you seen supply side perspective, I'd say that Queensland is looking pretty well set for the next six months, and production should increase. T here are obviously some concerns around steel demand in the Asia region over the next six months. On the flip side, we might have hearing snippets around Mongolian supply being impacted because of diesel costs and shortages, et cetera. Any observations you on the demand side, specifically on met coal?
Nothing noteworthy other than to say that again, on that side of portfolio, people are asking for more tonnes too. That was happening before the conflict, so that wasn't a new observation and certainly not driven by the advent of the conflict itself. Certainly, China's production and consumption seems to be improving domestically. The interest out of India for our coal and sales into India have been firming. That's probably an observation that's now at least six months in its duration, I would say. That's a positive underpinning force on the met coal side of our business.
Okay. All right. Thanks, Paul. Appreciate it.
Thank you. Your next question comes from Chen Jiang with Bank of America. Please go ahead.
Good morning, Paul and Kevin. Most of the questions have been asked. Just a follow-up on Vickery. From understanding, Vickery is a semi-soft and thermal coal mine. Probably the sales price is not as attractive as most met coal mine. From the financing perspective, is Vickery considered a second-tier met coal mine or it's a thermal coal? And also if there's a better option of other inorganic met coal mines in the market that adds value to Whitehaven, would you prefer that over Vickery? Thank you.
Thanks, Chen. That's an interesting question. A couple of things I might just sort of lay out there for you. Thermal coal, as far as the thermal coal world is concerned, Vickery will be at the top of the pops. Its quality is excellent, better than Maules Creek. I should just say that. The other thing to note, which is interesting, is the semi-soft quality out of Vickery is excellent also. It's better than Maules Creek's and a very good competitor for the Hunter Valley semi-softs. No concerns about being able to sell and price that in comparison with those coals, in particular. Now, it's not, obviously, Blackwater semi-soft.
That's an incrementally better product altogether, coming from, y a coking seam. Just in terms of how you're thinking about that, and where it's positioned. Vickery itself, obviously, there's lots of embedded value in Vickery, not just of course, the standalone proposition itself, but also all the other benefits that are related to the Vickery impact on our portfolio, particularly in New South Wales. W hether that be take-or-pay absorption, whether that be blending, as I say, and that's on top of the return that the standalone asset itself would represent. There's a lot of group benefits for that. In addition, which we can outline at the time when the Board wants to think about sanctioning the balance of capital.
As you rightly point out, we should always consider it relevant to other opportunities that are around. Certainly, that is the way we think about allocating out the incremental dollar of capital, including returns to shareholders. Is it better off deploying that dollar to the buyback, say, for instance? At these prices, we should look very closely at that as we do. It's relevant to that. There's nothing else in the market that we're looking at that we like. We look at everything as you know. From an M&A perspective, there's nothing exercising our minds along those lines. It's nice to be a company with good options and a capital allocation framework which informs how we should best deploy that extra dollar.
Sure. Thank you very much. Thanks, Paul. I'll pass it on.
Thank you. There are no further questions at this time. I'll now hand back to Mr. Flynn for closing remarks.
Thanks, everybody for all the good questions and extensive conversation. Thank you. If you have any further questions based on the results for the quarter, you know where to find us. Rounding out, Q3 sets us up well for Q4. Let's see how we manage in better weather conditions and a strong performance in Q4. Looking forward to it. Thank you.