Welcome, ladies and gentlemen, to the Whitehaven Coal full year FY23 financial results call. All participants are currently on mute. Following the presentation, we will open the call for questions from sell side analysts. To queue for questions, you may press star one on your touch tone keypad. Thank you for joining us today. I will now hand over to Managing Director and CEO, Paul Flynn. Thanks, Paul.
Thank you, Operator, good morning, everybody. Thanks, everyone, for taking the time to dial in to our full year results for FY 2023. As usual, I'm joined by Kevin Ball, our CFO, Ian Humphris, our General of Operations, and Kylie Fitzgerald, of course, here, who's our Head of Investor Relations. I'm gonna go through the presentation with Kevin as usual, then we'll open up the Q&A then after. I know a lot of this information, in terms of the physicals and so on, has obviously come out through the process of quarterly releases, I won't dwell on that too much. We'll get through this. I know everybody's, it's a jam-packed day in terms of other companies releasing their data today as well.
I know a number of you have places to be quickly after this call, so we'll try and get through it relatively quickly. On over to the highlights, over on page three, it just brought up some of the important changes in our business and results that we've achieved. Safety is continuing an excellent, excellent trend here at 13% improvement on our trip up to 4.7. Then this year we've had 0 environment enforcement actions, which is a fantastic result, something we aspire to all the time. But it's nice to actually see that, see that delivered.
The market, as everybody know, has delivered very good pricing for us this year, and the realized pricing at AUD 445 per ton is certainly a fantastic record result. Volumes for the year at 18.2, which you saw with the Q4 release. The translation volume times that good price, obviously with our cost base, delivered a record EBITDA number of AUD four billion and NPAT of AUD 2.7 billion Australian, which is fantastic. It's left us in a very good position, net cash wise. Our balance sheet's in strong shape, as many of you know, at AUD 2.65 billion at 30 June.
That's enabled the board to approve a final fully franked dividend of AUD 0.42 per share, which is a very good result overall. That, obviously, is complementing the progression of our buyback during the course of the year, where we spent nearly AUD 950 million on the buyback during the course of FY23. In aggregate, that adds up to a 52% total shareholder return for the year just passed, which puts us in the top 10 of the S&P/ASX 100. Of course, we're paying our share of taxes and royalties during the year.
Kevin's surprised, reacting when I say, "Pay maybe more than our share," he might think, but AUD 1.65 billion in taxes and royalties during the year is quite a significant contribution to both state and federal coffers. I'll move over to our markets, and obviously for the Whitehaven watchers, this is no new news to any of you. There's our markets and our spread between met and thermal. It's no real change in our business there, but I'll just call out a couple of little deviations as we've shifted weighting. Obviously, with sanctions and so on around the world, on thermal coal from Russia, or all coal from Russia, the thermal coal, most pointedly, has been taken up in the Korean market.
We sold less into the Korean market, but we shifted a lot of that volume into the premium market of Taiwan, which has been positive for us. Because you're not only is that a very good, reliable market, Taiwan, but you actually get longer terms than you do with the Korean market. We like, we like moving that coal into that market. Our, our footprint in Malaysia has expanded, also taking up 7% of our volumes. Now, this next slide really just speaks to Whitehaven as compared to other producing jurisdictions, so a company versus jurisdictions. I know that's an, an odd contrast, but just goes to point out to you where we sit in the quality curve for our thermal product.
So this gives you the distribution, if you like, between the lower levels of what people call high CV coal, versus the higher levels of, of CV, high CV coal, which is more like the product that, that Whitehaven produces. In FY23, depending on how you cut this, 94% of our sales were actually thermal coal. In excess of them, in excess of 35% were in the 6,200 and above level. I do note that other, other commentators classify high CV in different ways, and that's what we're just calling out here in, in this slide. Some are as low as 5,600, which we obviously don't classify that as high CV.
When you see us sell 5,600, we actually call that mid CV, just so you can reconcile the terminology that we've used in the past. High CV, from our reckoning, is the lower end of a gC NEWC contract, so that's at the 5,850 level. Anything above that in our, our numbers normally is classified as a high CV coal. What you can tell from this is obviously Whitehaven's portfolio is all in the high CV market, defined by McCloskey. The greater proportion of it is actually in the high, high CV market than pretty much anybody else going around. A very good position for us to inhabit. Over to the next slide.
Just again, one of the reasons why our coal is in such good demand is just the relative, the relative merits of it, as opposed to using other jurisdictions' coal. What this slide really just tells you, it just says that, you know, you need, 63% more coal if you use Indonesian coal to produce the same energy outcome as taking coal from Werris Creek. So that just gives you a sliding scale across various jurisdictions and the relative efficiencies of it. You can see who our main competitors are, if you like, in the, in the high CV end of the market. Going from left to right, right across the extreme of the Indo Sub Bit market, which is, obviously t he large rank coal.
I've said many times in our, in our presentations to a lot of you, that coal generally isn't a competitor for our coal. Generally, people blend it with ours. Just as a cost-saving measure, because of its low ash nature, generally people will blend that with ours to bring the average cost of their feedstock down. Over the next slide, again, just a really nice reinforcement. It'd be wishful thinking to think we could build a new coal-fired power station in this country and get the benefit of this, but I just sort of highlighted it again, just for the sake of everybody out there.
If you look at, if you look at the brown coal footprint of the Latrobe Valley and what that gives you from an emissions perspective, and you compared it to the types of ultra-supercritical power stations that we are fueling in Japan, Korea, and Taiwan, then you get an enormous benefit from an emissions reduction perspective. From those two extremes, that's a 42% difference across, you know, what are mass market solutions for, for large-scale energy production. That's, that's why people enjoy the use of our coal and are willing to pay a premium for it. Over across, again, this is a footprint with various markets. It's useful just to actually draw the connection between what it is we do and what it gets used for.
In the Japanese market here, you can see that we're providing 41 minutes of the day electricity for Japan. In South Korea, that's gone down to nine minutes because of what I mentioned there before, that they are taking more Russian coal and displacing Australian coal generally. Taiwan's gone the other way. It's gone up a little bit at 15.8 minutes. That's I'm sure nobody wants to have a blackout without Whitehaven Coal for anywhere between 41 minutes to 9 mines. In fact, on average, across the 200 million people that inhabit these three jurisdictions, on a weighted average basis, it's about 30 minutes of the day that we're fueling. An important role that we play that we don't want to lose sight of.
Now for flick over, just in terms of the markets, obviously, lots of, lots of focus on the outlook. We have seen coal prices moderate from the highs, that we saw in the, in the first half of the year through to the second half. It's always useful just to reflect on the various, commentators and advisors and price decks that are published here. We thought we'd just line them up for everyone to see, how people are projecting, the demand, as we look through the forecast period out to 2040.
You can see here, WoodMac, we've used often, and we still continue to do that, but we've lined it up against AME and CRU and Commodity Insights to give you a bit of look as to how they see the market going. You know, you can see them all. Absent, absent Commodity Insights, you can see they're all trailing down, sort of in a way, more or less consistent with the IEA various scenarios that we measure ourselves against as far as TCFD perspective goes. The outlier here, quite interestingly, who in more recent years has been more right than wrong, is actually Commodity Insights, which I know a number of you also use.
They're actually projecting growth through this period from a thermal coal perspective in the order of about 25%. It's quite a, quite a big change relative to the others, and I think it's certainly reflective of what we've seen in the market in more recent times. Although, we are, we are talking obviously an outlook period here for, you know, another 17, 17 years, so things can vary, as we know. Flipping across to the next slide. When you have a look at that in relative terms, and you have a look at what's the demand growth, and then what's the runoff in supply, and what this points to is a very high delta emerging over that same outlook period in the high CV coal market in particular.
If your, if your supply is growing and then, then the decline's coming up by almost exactly an equal amount, then there's about a 50% delta here in aggregate terms, between what we think is the projected, the projected, growth through 2040 versus, what the supply available to satisfy those needs will be. Quite a big, quite a big delta. Now, this is not just the preserve of high CV thermal coal. It does also play out in, in, in the hard coal market as well. Again, this is Commodity Insights data, looking through the projected out to 2040. Then again, taking into account there is a runoff with existing production.
Not as dramatic, I have to say, but there is a runoff in existing production, which leads to a delta projected out of 2040, so in 17 years' time, of about 74 million tons. Quite a big difference. Not as big as the thermal market, but still a big difference. At the rate at which projects get approved these days, or constructed, it will be very difficult to see that, an extra 74 million tons coming on in annual production anytime soon. Just to summarize a few, a few of the factors that are impacting the company during the course of this year. It has been a little bit bumpy. The first half, obviously, heavily weather affected, as, as everybody knows. That's constrained us as a supplier, constrained our, our peers as suppliers, also.
Exports through the port have been low, year-on-year. As many of, many of the operators deal with excess water in their pits, which has caused lots of, lots of challenges and continues to do so for some players. It's been record pricing, obviously, which has contributed to the fantastic results that we've had. We achieved the 1% over GC realizations for the full year, which was, which is a very good result. We have been battling, though, with a number of different constraints in the market, and that is that labor has, labor has been quite challenging for us, as we've discussed over the various quarters throughout the year.
Of course, inflation is rife in our business, well over, well over what you'd hear as the stated, you know, inflation rate for the economy as a whole. I think everybody observes that the mining industry itself, is experiencing inflation well in excess of what the national experience is, and we'll speak to a little bit of that later on in, in our pack. Going on to the results, I'll just deal with our safety first. As I said, safety has been a very good story for us w ith our trend in safety continuing to improve year-on-year at 13%, and with no environmental non-compliances here, that's a really a really solid result, and something obviously we should be very focused on replicating in this new year.
Our engagement with the community and our people is continues to be very strong. These stats, I'm sure, are very familiar to many of you, and I'll just call out the material changes in here. You know, our female representation at workforce is actually jumping quite significantly. Actually, that's been quite a focus, and so 17% now, that's certainly improving quite dramatically. You can see the comparable stats there was 15 last year and 12 the year before. Making good progress there. Our workforce engagement's actually recorded a really nice bump as well, and so that's very positive. Our people are more engaged, despite the fact that it's a very tight labor market, as we've repeatedly talked about.
It's beholden on us to make sure that we keep the people we have, let alone find the ones that we need, to continue on our, on our merry way. Obviously, Indigenous representation in our business has always been a high and very strong, as has our devotion to spending our money locally with various businesses in our region. That's from Tamworth to Narrabri. Shares that AUD 350 million across a host of local businesses. Financial highlights. Again, you've seen most of this, I won't dwell on it too much, they are very good results. AUD 445 per tonne has been a great result. NPAT of AUD 2.7 billion is quite an extraordinary, extraordinary outcome off the back of AUD 16 billion in revenues.
AUD 4.2 billion in terms of cash generated from our operations. Unit cost of 103, so you can see the manifestation of inflation in our business, and lower volumes for that matter, as we commentated through the quarters, driving our costs up to some degree, but inflation quite significantly affecting that. Total shareholder returns during the course of the year, that AUD 0.42, fully franked dividend is an excellent result. AUD 1.6 billion in total, total returns to shareholders with the buyback and dividends together. That means that's the dividends paid during the year, plus the, plus the actual shares in the buyback program bought back during the course of the year, gives, gives the aggregate number of AUD 1.6 billion.
As I mentioned earlier, 52% total shareholder return, I think puts us number 9 on the S&P/ASX 100, which is a pretty solid, solid result. The ROM Waterfall, we thought we'd just break this out for you. You've seen this obviously across the quarters, but just categorized into the areas where we've had some differences from where we were in the previous year. Obviously, the flooding, you can see the flooding effect on both the smaller and larger mines are being called out there. We are heading into a drier period by all accounts, so that's generally good for mining.
Although, as I mentioned earlier, everybody has plenty of water, and having only been through droughts in 2018, 2019, we put a lot of drought-proofing related infrastructure in our business anyway to withstand a drought if that, or drier period, if that reemerges in the, in the short to medium term. Narrabri had a very good half, first half of the year. That was actually really good, relatively unaffected by the issues associated with weather for our open-cut mines. But it did have a slower exit of 110V as we moved into that very extensive change out, which we'll talk about a little bit later. Again, I won't go too heavily into this because you've seen all the results for our operations through Q4. But Maules Creek, certainly weather-affected.
Q3 was flat, Q4 was very solid, bringing home the results for the year. Our guidance for the new year is 10.1 to 11.2 in the new year, in FY2024. Hopefully, obviously, no weather. Our labor is in a better position, I'm sure, which will be a part of some Q&A at the end of this discussion. There are some AHJ constraints, which we've already spoken about in our last call, which we factored into this as we transition by the end of this calendar year into full in-pit dumping, and the need, obviously, to keep our AHJ project separate, segregated from our manned fleet in the short to medium term. Over to Narrabri. Again, we've spoken about this at some length already.
I think the key here to call out is really guidance for the new year. 6-6.7 million tonnes for the year. As I say, the slower exit of 110V, and we're now cutting away obviously in LW 203, which is, which is very positive to be back on that side of the mine. So that'll be the total for, for our ROM guides for Narrabri for this year. Now, just moving over, as I said, we're into LW 203. We've got our cut and fill operation now complementing the volumes coming off, off the longwall.
I'm, I'm gonna talk a little bit about this a little bit further because we've asked to pro- provide some more detail on just the CapEx associated with the 200 series panels where we currently are, and versus phase 3, which is the 300 series panels. I'll deal with that a little bit later. Going to our open cuts, the overall ROM of 3.4 million tonnes for the year from the 2 operations was 15% below the previous previous year. So that was obviously heavily weather-affected. It, it is sadly for Werris Creek, the mainstay, of the provision of coal under the Coal Reservation Policy, which is was not very popular, as you can imagine, with us or any of the coal producers.
We'll see that that's got to go through until 30 June, this, of this year. Obviously up for discussion as to what happens then after with that. Our guidance for the, for the new year, 2.6 to 2.8 million tonnes for, for the Gunnedah open cuts, acknowledging that Werris Creek finishes up early in the new calendar year, in this financial year. Over to the operational performance. Our drive in this year is to improve the operational consistency and reliability of our, of our business and our Project Lift, is our business improvement program to focus on doing that.
Really, essentially, we're just trying to make our business a little bit more consistent along the way, and drive productivity benefits, particularly at a time when we're seeing significant inflation in our business. I think cost outs, cost outs in a period of inflation and resource constraints and labor constraints in particular, is still quite challenging. Productivity, we believe, is the key to moving the dial here. We have put in place a range of labor initiatives to try and mitigate not just turnover, but find the people we need for our expanding business, and which is yielding good results.
In fact, on the basis that we keep a couple of fleets in AHS operation at Maules Creek for this year, and that's the basis of our budget and our guidance for the new year, the two fleets remain in that form. We're close to fully manned there at Maules, which is a big improvement on where we've been in the past. But Project Lift is definitely a focus, not just a year-on-year thing. This is actually a year-on-year improvement for our BI team, and looking forward to seeing results coming out of this over this year and the future. I'll just flick over quickly to our early mining Vickery. Very exciting, very exciting progress for us.
Yesterday, clearing of, and removal and storage of topsoil started yesterday out on site, so that's actually very, very exciting. Quite a milestone. As everybody knows, this is really just a small version, to take advantage of, of, the existing capacity down at our Gunnedah prep plant and, and our haulage capacity down to it, and our take-or-pay obligation. We're, we're starting in here ear-early. It's a low CapEx start-up at AUD 150, AUD 150 million, which will be spent entirely during this year. Nice to see that getting underway, and we should see the beginnings of coal at the end of this, the end of this financial year. We're in the process of obviously assembling a workforce.
With Werris coming off, we've got quite a few people over at Werris who want to come and work for Vickery. Generally, I have to say, the community, the community and employment interest to coming, coming out of Vickery has been, was really quite positive. Not often you get to see a new mine start, start up, so quite a nice milestone for, for everybody to witness. With that, I'll hand over to Kevin to deal with the financial results.
Thanks very much, Paul. We'll have a look at the, the 5 years of history. In here, you can see really the two strong years in 2023 and 2022, two years before that, COVID affected in 2021 and 2020. But really a record result for this year. Average coal price, AUD 445 a ton, AUD 6.1 billion in, in revenue, EBITDA of four, as Paul has said, and NPAT of AUD 2.7 billion. You know, after paying down our senior debt facility in FY22, we've really been delivering returns to shareholders in the form of franked dividends and our buyback program. We've decreased the shares on issue by about 19% since February 2022.
In addition to providing returns to shareholders, we've also built a balance of, of, of cash on the balance sheet, which really does provide some ballast in the share price. Over the coming slides, I'll take you through some headline numbers. On to the EBITDA margin. A 75% EBITDA margin compared with 72% the previous year. Two really strong years. Our, our average realization was about AUD 413 after purchase coal, coal reservation, and royalties. Average costs were about AUD 103. Now, that's a whole of company cost, and we'll take you through that on a slide, in a few slides to come. There's some really good news in here in terms of we have delivered a premium to gC Newc, which we expect to do on a regular basis.
A AUD 310 margin on 12.7 million tons of owned coal sales, so a really strong year. Let's turn the page and have a look at EBITDA. Really, the driver here was the increase in price. A AUD 1 billion increase in EBITDA, AUD 430 from FX. Our strategy in the year continued. We really washed coal hard. We could see the premiums in the high CV market, and we were working hard to provide a product that came with an increased cost. And we'll talk about that in a little bit, but we're able to utilize those high-quality washed coals to blend up coal, lower CV coal from Werris Creek and Narrabri into the high CV market. Only 14% of sales being mid CV in the year, which I think is pretty good.
80% of sales volumes were above 5850 NAR. The blending benefits from that washing strategy contributed about AUD 270 million in EBITDA to the business, so you can understand why we do it. Higher costs were AUD 238 million off the, off the, on the bridge. Input driven. Our diesel pricing was 36% higher. Our explosives were 21% higher. Our OEM suppliers took the opportunity to negotiate increased prices, and you'll see that through those guys, which would be the likes of Cat and Hitachi. Our wages and salaries reflected the, the difficult labor markets that exist and the fierce competition for labor. And because our volume was down, that impacted the costs across the business. FX, not really. FX did contribute to ours.
As the dollar fell from AUD 0.73 to AUD 0.67, there was some impact in costs in that, but more than sucked up by the FX on pricing. I'll take you through the cost bridge in a little while. Coming over to pricing, again, I'd leave you with the perspective that generally we expect to get to be trading at a premium to gC Newc every year. In a stable pricing environment, we'd expect that slight premium, and you see that in fiscal year, fiscal years 2019, 2020, and 2023. Then you see the impact in 2021 and 2022 of coal quality from Narrabri and that rise in coal price in FY22. Moving to unit costs, which I think is where everyone's trying to everyone's got some interest here.
Our unit costs moved from 84 to 103. We've seen some temporary cost drivers, the impact of flooding on the volume of coal that we produce and move and sell. As previously indicated, at the half year, the benefit of having high coal prices played a role in the rise of cost, because our product quality strategy sees us washing more coal to produce a better quality product. Cost increases also reflect the underlying inflation that I talked about, diesel costs, explosives, labor, OEM parts. There's not much we can do about diesel, that just comes through. I'd say to you that this year, our procurement team spent a large proportion of their time dealing with demands for suppliers or from suppliers for increased costs.
This is probably the, the first year, I think, where procurement hasn't actually returned a multiple of their, their own investment. That tells you that there's pressure in the margin or in the market for costs. The NCIG, as we've talked about, the acceleration of the amortization of debt from NCIG. Because we expect coal prices to remain strong, we expect to see that cost continue for several more years. I'd say to you, you can calculate our unit costs off the face of the P&L. We're transparent. Have a look at the appendices in the presentation to see the calc, and our unit cost is a whole of company unit cost, not a mine unit cost, so you should, you should bear that in mind.
Come over to the page to our, our invested, our investment flows or total investing capital of AUD 307 million. We spent about AUD 240 million in the business on development projects and operations. AUD 154 million in open cuts, Narrabri sustaining CapEx, the Narrabri 200 Series main development, the Narrabri 200 Series precinct, and small CHP, P upgrades. Some other spend in environment and regulatory remains a spend that continues to grow, I think, in coal these days, and I don't expect to see that go away. You can see down on the acquisitions, and we've categorized those, deferred payments for the acquisition of EDF's interest in Narrabri.
A further deferred payment on the Narrabri private royalty, internalizing the Gunnedah Basin haulage business, and some other investing spends, but AUD 307 million in total there. Come over to the page. I mean, this is, this is a page that, that, that warms the cockles of a CFO's heart. At the start of FY23, we had a net cash balance of AUD 1.04 billion. I'd say to you, we delivered AUD 3.6 billion of operating cash flows. Let me say that again. We delivered AUD 3.6 billion of operating cash flows, and at the end of June, we had AUD 2.7 billion of net cash on the balance sheet. We put AUD 307 into the business, which I just talked about.
We returned AUD 1.6 billion in cash to shareholders in the form of dividends and share buybacks. There's another AUD 70 odd million there in lease payments, and some other things in there where we had to populate the employee share trust for Whitehaven Coal. That's the, the acquittal of the cash. I guess some people will ask us what we're doing with the AUD 2.65. This is a pretty good story. We're gonna give the government AUD 889. We paid them AUD 52 in June. We'll pay them another AUD 835 million in December.
We've got a final dividend here of AUD 337 million, and that leaves us with about AUD 1.4 billion on the balance sheet, a balance sheet that's in robust health, would be the way I'd say it, and gives us plenty of optionality. Net cash and liquidity, I don't plan to spend too much time on this. Strong cash position. We completed the refinancing in June. We've sourced the contingent credit support facilities, which is really guarantees for environmental bonding, rehabilitation, biodiversity, port, and rail. We are gonna retain some cash on the balance sheet for operating the business and for capital purposes. Just to remind people of our capital allocation framework, I'd say this is not a tough piece of math. We've got AUD 2.7 billion in NPAT.
Between dividends and share buybacks for the year, we will have allocated 1.35 or 1.50% of that. We do maintain, we do invest capital to, to, to maintain or optimize operations. We put some cash on the balance sheet, which you've seen. We are in the business of returning capital to shareholders and providing value to shareholders. After all of that, if there are opportunities that make sense in the form of growing the business, either through the development projects we have, through additional returns to shareholders or remina, that's where their decision comes down to. It's all built around value and what's of value for shareholders. Turn the page. I think I can say we did return 20%-50% of NPAT to shareholders through dividends and buybacks.
If you look down this page, we've done that in all but FY21, where we had a COVID-impacted year. I think it's a pretty good answer. The payout ratio of 50% includes AUD 609 million for dividends, which is a touch over the 20% that we've referred to and AUD 724 million in share buybacks. It's a good story. Paul, coming back to you.
Thanks, Kevin. I'll just move over to our, our outlook and talk about some of our guidance again, just to restate that. Look, from the market outlook perspective, the market actually is, is quite interesting. If you look at thermal and also as, also met, both prices actually look reasonably well supported in, in what's otherwise relatively subdued times. From the, the thermal side of things, obviously, the mad scramble for every molecule of energy last year and combined with a mild winter in the north, did leave people overstocked for this period of the year. Incremental buying has actually been relatively muted. Despite that, I think you've seen coal prices pretty steady at reasonable levels. Despite the turbulence you're seeing from a growth perspective, particularly in Asia and China.
With that discussion, Europe being quite flat, the met coal pricing also has actually been pretty good despite all that. The fundamentals, we think, for the outlook are actually pretty solid. Those factors that we've seen before seem to be underpinning a pretty good year for us in this, in this new year. Over to our guidance. As I mentioned, I've gone through the mine-by-mine guidance, but I haven't touched on the sales. Managed coal sales, we're looking 16 million-17.5 million tons. The equity number there at 12.7 million-13.9 million tons. Cost base, as I mentioned, we've got a range here, AUD 103-AUD 113.
Now that is a decent range, and we're just acknowledging the types of inflationary impacts that Kevin's outlined in some of the key ingredients to our business already. Of course, CapEx. The CapEx is stepping up at AUD 460-AUD 570. That's quite a significant portion of it, and I do want to spend a little bit of time just to work through this quickly for you. The key thing, the key thing that's easily, easy to able to excise from that number is really just obviously Vickery. You can take the AUD 150 straight out of there, because we've talked about that, and that's easy to understand. We do have a step-up in CapEx associated with Narrabri.
As I mentioned earlier, we do get lots of questions on this, so we wanted to try and help you all out and understand a little bit more about Narrabri and what's going on there. There's obviously lots of... It is CapEx hungry because a lot of the work goes in before you actually cut any coal. As everybody knows, the act of cutting the coal is actually quite minor, and the rest of the cost to produce is actually amortization of costs incurred in early before that, or in fact, in previous periods, where, whether it be for development plans and so on.
I will just scroll forward just over to a slide, just to remind everyone. Yep, this slide. Thank you very much. Just to remind everybody, what's going on here. We've obviously finished those, those panels, of the 100 series panels on the right-hand side of this slide. Now, we're now into 203, the start of the 200 precinct, but there's still a lot of work there to, to establish the full 200 precinct. Then Stage three as everybody has heard us talk about for a long time now, is really the 300 series panels. There's lots of work here, and I just really wanted to remind everybody about some of the important features of this transition from, if you like, from right to left on this, on this picture.
We have got a thinning seam as we progress to the left. Our longwall that we've had since the beginning of the mine, won't see out the full, the full life of this asset. It now goes to 2044. As we've always said, we will need to put an order in for a new longwall, and it will need to be reflective of the slightly thinning seam as you go to the south or to the left, as it's depicted on this picture. Acknowledging that, there's an opportunity for us to perhaps order that a little earlier, which is what we said we would like to do. Then we would have 2 longwalls, not operating concurrently, but offering, operating in sequence.
We'd have a walk-on, walk-off arrangement between a panel in the 200s and a panel in the 300s. That does necessitate CapEx being spent earlier in order to facilitate that. Obviously, you gain, you gain continuous production over the period that you're able to operate sequentially, those, those two longwalls. That's just to remind you of the context of that. I will go back a slide now and just focus and give you some numbers here to work with on Narrabri. The 200 series panels themselves, the CapEx spend for that over the 2024-2026 year period, FY2024 to FY2026, I should just be clear on that, is AUD 250 million-AUD 300 million. And that includes AUD 145 million for mains.
Last year, we spent AUD 34 million of that. Sorry, in 2022. In last year, we spent AUD 77 million of this total, AUD 250 million-AUD 300 million. Everybody understands what the bucket for the 200 precinct looks like. As I mentioned, we, we do need to set up the 300 series panels as well, so that we can actually walk on, walk off, once we've got 2 longwalls. There is a bunch of capital that needs to be spent on that as well, and we're dragging a little bit of that forward, obviously, to buy a new longwall and then also set up the precinct to be able to operate within. The CapEx for that is around the AUD 800 million-AUD 850 million.
That includes, that includes a new longwall and, and, recent estimates for this, if you need any more evidence of inflation, recent estimates of this is, is between AUD 300 million-AUD 350 million for, for a new longwall. Originally, when we talked about this concept, the numbers were less than half of that. It's quite an extraordinary, extraordinary, change, that that's, brought about due to inflation. Also, there are less of these things being produced. I suspect there's a little bit of, strategic pricing being delivered there from the very few people now who actually make this type, type of equipment.
We've had a relatively modest amount spent, obviously, in FY23, and the balance of that capital, as you can see, we're projecting out over 2025-2029. This, this is an important piece of the puzzle. I know there's a lot of data in here, so I'm not gonna go straight through it all now, but I just wanted to give you, give you a sense and give you some more information so you're able to work your way through what the step-up in, in CapEx is for in, in this new year. Obviously, Vickery, as I say, 150+, obviously, Narrabri, taking a big chunk of that also in our guidance for AUD 460 million-AUD 570 million in this next twelve months.
The balances, as you can see there, there are overhauls and normal things that apply to our open cut operations. There's biodiversity offsets, there's a bit of housing investment. Of course, we're trying to make it more attractive for people to move out to our region, so we are investing in housing initiatives. We've got some money in there for emissions reduction, studies and so on. As I say, a bit of land we've got to purchase as well. I'm sure there'll be some questions out of this which come. We better just start off with a bit of information for you, so you can actually use this for your projections going out, now that we are big level for Narrabri now going out to 2044. Guidance.
As I say, Project Lift is, is very much something we're dedicated to. We want to get this into a bit more of a boring, boring, and reliable pathway through the course of the year. Cost management in this time and productivity with that has to be a focus. You'll see plenty of effort invested in that. The Safeguard Mechanism, I think we have to respond to that in both. We'll obviously pay whether it's necessary as a result of that. We have got AUD one per ton included in our cost guidance there for that, just so everybody knows.
There's also initiatives there to look at the various means by which we can, we can actually mitigate some of our emissions, particularly, from Narrabri, because the underground mines across the industry are gonna pay a heavier burden here than the open cuts, as we've talked about before. Early mining at Vickery, obviously, fantastic to see that start yesterday, and we're pushing ahead with that. Of course, we think there's a good year ahead of us here, price-wise as well. The market looks pretty well supported, and prices are starting to rise as we see it moving back into periods approaching the northern winter again. And constraints across the whole energy complex are gonna see prices continue to improve. With that comes the responsibility, of course, to manage our capital prudently.
So we'll definitely be doing that. The share buyback is temporarily paused, as we've noted in our announcements already this morning, while we're considering application of that capital in the light of growth opportunities that have presented themselves. With that, I might bring the presentation to a close. Lisa, we might move into the Q&A session, given I know that we've got maybe 20 minutes there, and people have got a hard stop, they've told us, at 10:30 A.M.
Sure. Thanks, Paul.
Sorry, Lisa, can I just ask, can I just ask everybody to, once you've got the mic, let's not rattle off three or four questions. That's not really fair to everybody else on the call. Can I ask you all, we'll get to you all at some point, whether it be today or in this call, but later today. One to two questions, please, just to make sure everyone gets a go.
Sure. Thanks, Paul. We do have questions. Our first question is from Rahul Anand from Morgan Stanley. Go ahead, please.
Thank you. Thank you. Morning, team. Perhaps for my first question, just wanted to touch upon Maules Creek into next year. Just noting that the production there was somewhat weaker versus our forecast, and also, as far as I can see, in terms of consensus. Paul, perhaps if you can provide a bit of color, is this being driven by those automation trials again into next year? When do you think we start, you know, getting close to that run rate, nameplate run rate for the mine? How, how long is this gonna take? That's my first one, and I promise I'll only ask a second. Thanks.
Okay, thanks, Rahul. Unfortunately, because we're transitioning into the pit, now that's not unfortunately, I think that's a good thing in pit dumping. The need to keep the AHS fleet separate inside the pit is more challenging than opportunities. There is, there is a productivity constraint and a, and a cost, if you like, a penalty that comes from continuing this project. We feel that there's about We've only got about 12 months more that we can manage to keep these things separate. The pressure is on, obviously, us and Hitachi, obviously, to, to push this thing into commercialization. We are seeing positive signs of integrating manned and unmanned equipment, and so, we've got 2 fleets running now. We have got integration of, of some manned equipment in that space.
That is, that is giving us the encouragement that this penalty in this year is worth taking. It is, it is necessary if we want to continue this, what we hope is the last leg of this project to commercialization. About 40% of our trucks, our big, ultra-class trucks, are actually operating in autonomous mode. We'd obviously like to push that forward, but there is a penalty that we are consciously taking to give them another 12 months time to commercialize the product.
Okay. Sounds like, you know, 25 could be the year where you've got not just nameplate based on man-hours, but you've got, you know, a large portion of your trucks already in automation, sounds like?
Yeah, look, 25 would be a year we're either on, we're fully on it or we're not. 'cause, you know, there's only so much, only so much runway here, as, as I was saying before, and down roads where you're forcing more of the manned equipment on certain roads because you're having to keep them away from the, the autonomous zone. This is, this is a pretty solid and steady plan for this project now. The inflation is obviously manifesting itself in the CapEx. Just like that at all, of course, but, you know, as everybody knows, there's lots of heavy lifting that goes into setting up an area for underground mining.
You know, whether it be builds and shafts and things and ventilation and things that are required, it's, it is significant, and we thought it better to just put this on the table so people can see it, spread across not just the 200 domain that we're in now and opening up, but also where it will go with Stage 3.
Understood. Okay, that's all for me. Thank you.
Thank you. Our next question is from Chen Jiang, from Bank of America. Go ahead please, Chen.
Good morning, Paul and Kevin. Thank you for taking my questions. Two questions I promise. Firstly, on your valuation metrics regarding inorganic opportunities, I'm just wondering, beyond IRR and multiples, what else get factored into your decision-making? If you could also remind us your target gearing or leverage, if any? Thank you.
Look, Chen, that's an interesting one. I mean, the thing I would say to you is that, we're very conscious of the valuation of the business, and have been very conscious of that, obviously, for some time. We feel we're, we're perspective. If you're not guided by how you're currently valued, in consideration of anything organic, you, you are not doing your job properly. We are, we are definitely focused on, on that, and, that's probably about the limit to be assured that we're very much front of mind for us, and we're not planning on doing anything that's a, a deviation from those important parameters.
I think you'd have to go back a couple of years to, and stretching that, where we just step out and do something a little bit more, probably no more than 1.5 turns for short periods.
Maybe, another question or last question on the potential increase in New South Wales royalty. I understand the Whitehaven is part of the coal groups, the government, is in, consult. Are you able to provide any color in the, in the, in the, in a discussion, given the budget is in September?
Yeah. Thanks, Chen Jiang. Yeah, look, we, we, like everybody else, obviously very keenly interested in, in what... All, all I can say is I, I can, I can certainly say that it's the experience of being close to the experience in Queensland. But there's a little bit of, there's a little bit of runway here. We're not anything on the scale of what we've obviously seen to the north. So I would, I would-- There's, there's a little bit of work to do, as you say, September, I think the budget is out, so they'll want to put-
Thanks, Paul.
Yeah, morning, Paul and Kevin. Kevin, maybe a question for you to a certain extent, but, you know, when you're, when you're looking at opportunities in, with the backdrop of potentially changing Stage-Gate point, you know, how do you make these decisions?
Yeah, Youngy, as you say, are things that we take into account. I mean, if, if I, if, if you remember when the discussion started with Vickery and started with Narrabri Stage 3 and started with Winchester South, we're working our way through those things. We want to get a lot of comfort around cost, which is why we've put this paper out now on Narrabri Stage 3. We've got a view on where the CapEx is likely to be for Vickery, and we're likely to want to firm that up. On the others, I think, I think your question, whenever we-- I'd say to you on the, on the, on the inorganic side of the, the business, we've been in most processes over the last eight or nine years.
It's really been about a value consideration against the business and against where the business wants to go. To my mind, internally, we're trying to work out what's the best use of value, and you should think about value as being the thing that drives us in the way in which we think our way through these things. Youngy, I know that's probably a generic answer, but I'm expecting people to expect that we're going to be sensible in whatever we do.
Yeah, thanks, Kevin. I mean, you're basically saying it's NPV driven, and of course, that is therefore driven by, you know, long run coal price assumptions and costs. That's all fine. The next question then is a sort of part B, and that's on slide 51. Just looking at Vickery versus Winchester South, and, you know, it looks like Winchester South is actually somewhat caught up to Vickery on the decision-making process. If you look at the, I don't know, timeline or Gantt chart, what you've, what you've, you've put out there, and I think Winchester South has obvious synergies with, with, you know, one asset up for sale next door. I'm just curious around that decision. It looks like, is that the case, that Winchester South sort of has caught up to Vickery potentially?
Because permitting sort of within, within the sort of Coordinator-General, you know, house at the moment. And then second part of that is actually on, on port capacity, Paul. Do you, do you actually have available port capacity on Winchester South?
Yep. Two, two elements there. I wouldn't say Winchester South has caught up to Vickery. No, I wouldn't have said that. It's you're right that we're in the closing stages, week, of the Coordinator-General process, and so, having deemed our EIS to be adequate, the onus is now on them to pull together their evaluation report, and we are expecting that conclusion in the next 2 months, so that will be great. As you know, up in Queensland, you know, the, the same, the same thing happens there as, as has been happening in New South Wales for a long time now, that you find yourself bound up in legal shenanigans.
We're allocating, we're allocating a year for that, you know, and so that was always been the case, so that's not new. In fact, Winchester South got delayed by the fact that we had to go through a second round of exhibition. Therefore, further answering of submissions and so on. It was just two people, two opportunities for people to throw rocks. It was pretty annoying. Then you go through the Land and Environment Court type wrangling that goes on as a result of that. Of course, the EPBC overlay needs to get solved as well. Now, Winchester South is, is part of that, that EPBC logjam at the federal level, which Narrabri Stage 3 is also in, but Narrabri Stage 3 is in the early, the early hearing in September next month.
we're expecting to be able to make our way through that in due course. yeah, look, it hasn't, it hasn't caught up to Vickery, I'm afraid, mate. that's a bit annoying, but the opportunity obviously to take the top of Vickery and start in a very small way was a really good way to get that project started, and the board will look at the full version of Vickery by the end of this calendar year. yeah, moving parts, as you say, but that's, that's, that's very exciting. if you, if you look at all those things, I'd still say Winchester South is still probably two years away.
Okay, thanks, Paul. port capacity?
Port, port capacity, we haven't put our foot on any port capacity, but we are in the, we are in the expansion process. We have put our foot on a sizable piece of the expansion study for DBCT, that is, that is. We paid our money, so we definitely got our foot on a component of the next expansion capacity to come out of that port. It's not a full take or pay type thing, but we are essentially funding the feasibility study for that expansion. With that, with that commitment, those dollars that we put in there to fund that study, comes an entitlement to a good piece of the available extra capacity.
Okay. Thanks, Paul. Thanks, Kevin.
Thank you.
Thank you. Our next question is from John Schultz from Macquarie. Go ahead, please, John.
Good morning, all. Maybe just a, a question on the costs. Could you just dig in deeper as to which year, the year on year, is that mostly labor? Is there a particular asset where, where you see the costs? I'm assuming Maules Creek
John, I think, I think I'll, I'll give you three or four places. There is set up 36%, explosives up 21. They've, they've come off from their highs, and they're tracking back more. A leader that is. On OEM spare parts, the OEMs didn't meet skilled mining labor is hard to find. If you don't hear that from every miner in this country, I'll fall off my chair. Out of, out of, out of state, out of Queensland and New South Wales and fly in, fly out. We're not different to anyone else in this country. Our electricity contract expired on the thirtieth of June 2023, and we recontracted, and the rates we're paying are substantially higher than the rates we were paying.
A lot more than the national?
A lot more than the national. It's I think it's sticky, and I think it'll take a while for the industry to work its way through. It's got to solve the labor issues first, and but that'll take time. That's why I think when people look at the guidance, you should expect in that guidance that we've got an element of sticky costs coming in or staying in this business and coming out over the next few years, rather than trying to give you the hope that it's all going to come out in the next year.
Okay, understood. Maybe just broader thinking of the market. Japan's one of your, your key customers. Could you maybe just give us thought on how coal demand looks there, given the increase in nuclear, outlook in the country?
Yeah, I, I'd probably leave that to Paul.
Well, Japan's looking very good for us. In fact, as you've probably seen, John, year-on-year, our penetration into Japan has grown substantially. I mean, that's no surprise given obviously, the, the rush, reliance on Russian coal has obviously fallen away. The demand on Australia and Whitehaven, in particular, has seen us put more coal into it than ever before. Now, not to say we don't love that market, we do. Obviously, with all your eggs increasingly in that basket, diversification is a pretty important thing. That's why the developments such as the, the, you know, Taiwan and particularly Malaysia, are very, are very welcome in that regard. The nuclear start, I think is, is a good thing for them. So that.
We shouldn't fear, we shouldn't fear that generally, because coal is cheaper, is cheaper than gas, and the more nukes that come on, it's the gas that suffers as a result of that. Then there is the notion of the carbon budget they, they manage there as well. More nukes that come on, gives them more headroom in their carbon budget, and they can burn a cheaper fuel, being coal, as a result. I think that's i t's good for them to see more of those, those nukes come on, because I know how, how difficult it is for them to do that.
Many of these, many of these nuclear operators are actually our customers, and so we hear from them, you know, all the time about the difficulty of doing that, and it's nice to see one or two more units coming on.
Thank you.
Okay, thanks, Paul. Do we have time for one more question?
One more, if we can. Thanks, Lisa.
Okay, thank you. Next question, George Eadie from UBS.
Yeah, thanks. I was just wanting to clarify on the Narrabri CapEx for the 200 Series. That AUD 250 million-AUD 300 million, is AUD 34 million, AUD 74 million already spent? Does that mean there's AUD 150 million-AUD 200 million to be spent, or AUD 250 million-AUD 300 million to come?
No, that's right. The spent numbers are just down there below, George, as you've, you've quoted there. In the case of FY22, 34 and 77 last year, come out of those numbers, the 250-300. It's just a balance. I've just been reminded that these are managed numbers, and ours is 77.5% of that.
Yeah. Perfect. Okay, thank you. One more, just sustaining CapEx. You give it for Narrabri last month, AUD 7-AUD 8, but any guidance for the company as a whole, including the open cuts?
No, we haven't, we haven't included any on there, but, that's a good point. We'll, we'll take that away and, and come back to you or everyone.
Okay, awesome. Is it fair to say it'll be maybe slightly higher than Narrabri?
No, no. Generally, no, no, no. The underground sustaining CapEx is quite a lot higher than the open cuts as a general statement. It's lower than that, but it'll be inflationary effective, so we'll come back to you all with that.
Awesome. Thank you. If I can squeeze one last one, just on the EPBC update in September, if that is approved...
Yep
by the federal environment minister, is everything fully approved for that now?
Yep, that's the last piece of that puzzle. Yep.
Okay.
Yeah, we're, we're very, we're very strong on the prospects of that. I mean, that's, that's not a case with any serious merit. It's just a, a, an attempt to frustrate people. Yeah, we would like to get that. That's why we asked for it to be expedited and be in the first, the first round of cases considered, so we can move on. Lisa, I understand there's a couple more questions for people who can stay on. We're, we're willing to stay on for another few minutes if-
Okay.
if there's still a couple more.
Sure. Yes, there is. Our next question, I've got two more, is from Glyn Lawcock, from Barrenjoey. Go ahead, please.
Hey, Paul, I might as well hang around. I'll, I'll catch up later on the next one. Thanks.
Yeah, why not?
Yeah, why not? Can I just take it by your comments about, you know, you're looking at opportunities, that it is the BHP opportunity that you're, you're looking at? Is there others as well out there?
We're not, we're not commenting on anything specific there, there, Glyn. I'm sure you can draw your own conclusions.
Ah, you sure? Okay, I'll give it a go.
Sure.
You sure I can. Look, just the second one. I mean, I know it's your third smallest mine or your, you know, Tarrawonga, but you're talking about current production of 2.5. When you put the new fleet in, it feels like two or three years ago now, I thought the idea was to, to push that up towards 2.8 million tons. I mean, is that also struggling as well, or is my just my recollection poor?
No, look, I think Ian, Ian Humphris can talk to that. We definitely would like to, to take on more tons there. The challenge there, there's a number of different factors there, which are, which are actually. With that fleet, we do have more productive capacity, and we've looked at the numbers of and it's a five day operation generally, right? If you wanted to do more tons, we would you, you go seven days, and the analysis of that with the type of labor constraints that are in the market, actually look a little unproductive, and from a, from an NPV perspective, so we're, we're cautious on that. The other thing which is, which is constraining for us is, you've got a big strip ratio. You've got that big hill.
I, I know you've been out there before, so you've got the hill there. The strip ratio down volume, but you can see that the dirt movement is actually increasing. That's another one. The other thing which has changed, which is downstream of that, which is a constraint for us, is that the, the, the notion of going higher in from a volumetric perspective was predicated on a large portion of bypass for the suite of seams down at the prep plant. Because we're running the full wash strategy, we are choking the plant out there a little bit because there's w e're not washing, or sorry, we're not bypassing coal, because the differential between obviously API five and gC Newc is so large.
it's incentivizing us to wash everything, basically, and that we are jamming up the plant. We are looking at ways to optimize that, to free that up a little bit. There's a bunch of factors there on, on, an otherwise complex little operation there.
I think the only other two things I'd add to, Paul, is obviously the strip ratio there is high, so cost is, is sort of paramount to try and address that. The, you know, over the last couple of years, when we have considered it, changing from the roster to a seven-day roster would have required a lot more people. You know, obviously in the labor market, that, that was not going to be something that was easily achievable. We've sort of left it as it is and are working on just trying to optimize that place and get its cost profile as low as possible, whilst achieving that better quality product that Paul's talked about.
The last thing I'd probably say to that, Glyn, is that the strip at Tarrawonga is probably about 11.
Yeah.
Eleven?
Yep.
The strip at Vickery is about eight. Right? There's going to be a tune to play between those two assets over time with resourcing.
Correct.
Okay, so if I just to summarize then, probably best to stay at 2.5 for now and just expect t hat for 9 more years, it runs 2.5 with probably a slightly elevated cost base coming through as that 11 to 1 that Kevin just mentioned. Does sound like that's going to lift as well.
Yeah, that's sensible.
All right. Thanks very much.
Thanks, Lee.
Thank you, Paul. Our last question is from Chris Drew, from Jefferies. Go ahead, please, Chris.
Morning, guys. Thanks very much for extending the call a little bit. Kevin, one for you. You, you, you touched on this briefly a little bit earlier, but just wanted to drill into perhaps the medium-term cost outlook a little bit more. You know, is there much prospects for, for reversing some of this cost inflation you've, we've seen, or, or are we really sort of reset costs at, at these sorts of levels, and it's down to, you know, volume gains and efficiency gains to, to, to lower them from here? How do, how do you see that picture playing out over the next few years? Thanks.
Well, Chris, I think that's a great question. I mean, when I look at it, we've seen the input commodity costs come off, you see that the tires and diesel and explosives. You've had probably 3 years of stimulus in this country and then COVID stimulus around the planet, and skilled labor is difficult. We're finding people from offshore and bringing them in, we're running flight, FIFO operations to bring people in. It is a little sticky on the cost side. As I said to the OEMs, have taken the opportunity after a difficult 2020 and 2021 to actually get their returns back in order, and as I said, they didn't miss us. I think this is sticky for a period of time.
I think there's the world will find its rhythm over the next 12 months, two years, and then I think we're probably, you know, you're sort of looking for things to come back into control over, you know, that sort of period, not over 12 months. I think you're talking probably two-three years out on costs.
Yeah. I think it's really hard on the labor side to see an improvement there. I mean, you've got the governments at all stripes in every state, building lots of infrastructure, competing for the same people we need in order to run our business. I know you can see that obviously, they're ramping up their answer to this question, which they believe is immigration, which is certainly an important piece of the puzzle. But that's not coming cheaply. That's not bringing cheap people in, that's bringing expensive people in. So it's, it's, it's definitely going to be a challenge here. I think if you look at the cost curve over time, it, it doesn't go back down too often.
Obviously, what happens is it becomes the new normal, sadly, coal prices adjust as a result, upwards. As we mentioned earlier, our BI program is really, you know, in, in the short to medium term, our, our, our pathway to, to better costs, you know, through productivity, because there's the cost out opportunities are quite limited at the moment.
Thank you. Chris, I'd say, look, the, the procurement team last year, for the last seven years, procurement has pretty much paid for itself multiples of, multiples of times in, in dealing with suppliers and, and working our way through that. Last year it was really holding the line. The electricity side of the world was probably the one that, that changed changed them from being a net contributor or net detractor.
Yeah.
Yeah. It's, in my view, this is not going away in the next 12. Yeah.
Great. Thanks. Thanks. If I could, a second question. Just with the AUD 800 million-AUD 850 million spend on, on, on, on Narrabri, is that... If we assume that's slightly front-end loaded with, you know, the longwall purchase in FY25, is there any guidance as to the, the spend profile for that, for that amount? Thanks.
We haven't carved it up year-on-year, Chris. No, we haven't. Yes, there is, there is a. There's a deposit in the next 12 months. It's relatively minor in the scheme of things. I think some AUD 20 million or so of that. There's a deposit that will go down for that. I would have said, there's still three, four y ears before you're going to see that on the ground. That's spread out over a good period from now. We can, we can, we can draw out the phasing of that for everybody, perhaps in our, in our next communication for people to see a little bit more how that's staged. Just give you the range of years that it comes out over. Yeah.
most are sort of past that by 25, you know?
The more shafts, et cetera.
Yeah.
Development.
Yeah.
Okay. Thank you.
Thanks, Chris.
Thank you. Thanks, Paul. We have come to the end of our time.
Yeah, that's perfect, Lisa. Thank you for your help today. Thanks, everyone, for their attendance, and we look forward to catching up with you individually, collectively over the next little while, as we engage with these results and look forward to catching up. Thank you.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.