Good day, and thank you for standing by, and welcome to the Yancoal First Half, 2024 Financial Results. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You'll then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would like to hand the conference over to your speaker today, our Chief Executive Officer, David Moult. Please go ahead.
Thank you, Victor. And thank you to everyone for joining this briefing on Yancoal's 2024 First Half Financial Results. I'm joined on the call by CFO, Kevin Su, and several members of the Yancoal executive team. I'll provide an overview of Yancoal's first half performance, then we will open the webcast to questions. The commentary provided is based on the first half 2024 financial results and associated materials published on the ASX and Hong Kong Stock Exchange yesterday. Slide one and two contain notices and disclaimers relevant to today's presentation and the forward-looking statements it contains. Please make yourself familiar with the content of these two slides. The first slide gives an overview of our operational and financial results for the first six months of the year. The first aspect I want to highlight is our safety performance.
Our primary reporting statistic, the Total Recordable Injury Frequency Rate, remains below our industry benchmark. That said, we need to improve our performance if we are to return to the level achieved last year. The programs we implemented proved successful, and we are committed to sustaining a workplace with a positive safety mindset. Our ROM production volumes and saleable production volumes were 7% and 18% higher than the first half of 2023. Like last year, we aim to deliver increased coal production during the second half of the year. Although our realized coal prices are lower than they were in the first half of last year, an average realized price of AUD 176 per ton generated a strong operating margin.
After cash operating costs of $101 per ton and royalties of $15 per ton, we had an implied cash operating margin of $60 per ton. Our per ton cash operating costs are expected to decrease in the second half, primarily due to the expected increased production profile. For the first half of 2024, we are pleased to report $3.14 billion in revenue, $990 million of operating EBITDA at a 32% margin, and $420 million in after-tax profit. We delivered $851 million net cash from our operating activities. After distributing $420 million in April for the 2023 fully franked final dividend, we held over $1.5 billion in cash at the end of June.
On the topic of shareholder returns, the board has not declared an interim dividend in respect of the six months ended 30 June 2024. The retained cash gives us flexibility to consider potential corporate initiatives and may be distributed in the future if not utilized. We have a proven history of growth through judicious acquisition and expansion, and we are again in a position to pursue various initiatives to the benefit of our shareholders. If such an opportunity transpires, we'll inform the market. Moving to slide four, our safety performance, as I have mentioned, we intend to focus on reinvigorating the program that delivered the sharp improvement in 2023 and reestablish that performance profile in 2024. Keeping our workforce safe is always our first consideration. We are keen to see both metrics return to the levels achieved 12 months ago.
Our focus on sustainability, as with safety, is continual and ongoing. This year, we moved beyond the Environmental, Social and Governance report published in previous years. In April, we replaced it with our first sustainability report, which integrates previous disclosures and begins our transition to align with the international sustainability disclosures. We will align with the Australian Sustainability Reporting Standards as they develop, as well as the requirements of the ASX and Hong Kong Stock Exchange. Slide six summarizes the operational drivers behind Yancoal's first half performance. The production volumes reflect a consolidation of our production recovery plans. Compared to last year, our attributable saleable production increased by 18% to 17 million tons. International coal market conditions were relatively stable during the past six months.
In all market settings, we continually seek to maximize our operational performance and product mix to meet our customers' needs. Turning to the coal markets, we observed various factors at work on both supply and demand sides. There were good levels of demand, but also relatively high-end user stockpiles in Japan and South Korea, as well as higher exports from Australia compared to last year. Rainfall and hydropower generation, or the lack of it, influenced coal demand in both China and India in recent months. For the past year, we consider that thermal coal markets have remained relatively balanced, but subject to short-term factors such as season, seasonal demand drivers and supply disruptions, and this remains our current view.
Thermal coal indices have been range bound for the past 12 months, and price differentials between coal indices reflect the inherent value of different coal types. In the metallurgical coal markets, reduced supply was countered by reduced demand, typically observed during the Northern Hemisphere summer. Although our met coal sale volume are the lesser component of our sales profile, they are a meaningful contributor to revenue. As a result of various factors affecting delivery schedules, our realized price during the past six months captured pricing from further back in time than is usually the case. The realized price also benefits from our product blending and optimization strategies. During the first half, 88% of our sales were thermal coal, with the balance being lower grade metallurgical coal.
This product split varies period to period, depending on which coal seams are in production at each mine, and how we can maximize the market opportunities. Turning to slide 10, we show our customer split. China is once again a significant offtake partner, both on a volume and revenue basis. Our Japanese customers purchase a significant portion of our high-value coal, resulting in this market being our second highest revenue generator. As coal markets stabilize, the relative dominance of customers in our four major markets recovered, and sales to other destinations reduced. There are various groups providing forecasts for international thermal coal markets. A common theme we see in recent forecasts is the ongoing revision of when coal demand will peak and at what level. Delays to projected closure dates for existing coal-fired power generation, combined with new facilities coming online, are behind the evolving demand profile.
In relatively balanced coal markets, a 5% shift in supply or demand can have notable influence on price indices. On slide 12, we look at projections for net changes in supply. The components in this chart present a year-on-year change from the prior period. These are not cumulative changes. These projections suggest a gradual supply reduction each year to 2027, then a much sharper deterioration in supply beyond 2027, a time horizon that aligns with the current demand peak depicted on the previous slide. This could support a more robust market in the coming years. Over time, global demand for coal will diminish as the energy market transitions. That said, there is a growing appreciation that coal has a meaningful role to play during the transition, and large-scale, low-cost mines, such as ours, are a key piece of that, of the energy market.
Total ROM coal on a 100% basis was almost 28 million tons. Our mines are much better placed to handle rainfall events after investing in additional water storage capacity. However, we still curtail activities during rainfall to ensure safety and to avoid asset damage. This was the case during the first half. At Moolarben and MTW, we adjusted the mining schedules to offset some of the impact, but there is a limit to what we can achieve without compromising future output. At HVO, additional operational factors constrained its capacity to respond to rain disruptions. The output we achieved in the second half of 2023 demonstrated what can be achieved when the mines are operating at near optimum levels. Attributable saleable coal production was up 18% compared to the first half of 2023.
At the start of last year, we were focused on overburden removal and reestablishing mining inventory. The relative increase in saleable production is a result of last year's successful mine recovery plans. Like last year, we are aiming for significantly higher output during the second half. Our three large open-cut mines drive the overall profile, but all the mines make an important contribution. We included this slide to put our three largest mines in context compared to other Australian thermal coal mines. Total cash costs are on an energy-adjusted basis. This counters the influence of coal quality on the operating margin. While there may be some aspects of the comparison not fully captured, the key takeaway is clear: Our three largest mines are some of the best thermal coal mines in Australia.
We also consider the people we have operating these assets as some of the best in the country. Cash operating costs were $101 per tonne. This is above the level we targeted for the year. Like last year, the expected production uplift in the second half should result in the per tonne costs falling. As we have explained previously, cost inflation factors from recent years, including labor, explosives, electricity, and spare parts, are now largely embedded in our cost base. Operating costs also escalate naturally as mines mature, typically resulting in higher strip ratios and increased haul distances. Given this is the case, production volumes are the key to lowering our cash operating cost per tonne. That said, our current cost profile has us positioned at the low end of the operating cost scale.
Turning to slide 17, we demonstrate why keeping cash costs, operating costs low is crucial. Our implied operating cash margin for the half was $ 60 per tonne. Keeping costs under control during periods of elevated coal price is often more challenging than when prices are low and there is less activity in the sector. We believe we did a good job in this regard over recent years. From the first of July this year, the New South Wales state government royalty increases came through at 2.6%. Coal sales from our New South Wales mines, which include Moolarben, MTW, and HVO, will be charged royalties of 10.8% on open-cut sales and 9.8% on underground sales.
Operating our large scale mines at the low end of the cost curve is essential to our ability to generate margins at all points in the coal price cycle. Slide 18 provides an overview of Yancoal's financial performance. Lower realized coal prices were the main factor behind revenue dropping by more than $ 800 million. When looking at the cash flow statement, the 856% increase in the operating cash flow stands out. However, as you may remember, we made a $ 1.4 billion tax payment in 2023 on our record earnings from 2022. This greatly reduced our operating cash flow in the comparable period from last year. From 2023 onwards, we have made monthly tax repayments on our earnings, and this provides a smoother cash flow profile.
As noted at the start of the call, we held over $ 1.5 billion in cash at the end of June, and other than some finance lease liabilities, we are debt free. The two charts on this slide show the correlation between realized price, revenue, operating EBITDA and operating EBITDA margin. As noted on prior calls, realized coal prices will almost always be the primary driver of our financial results, given our production and cost profiles. $ 990 million of operating EBITDA and 32% EBITDA margin from a six-month period in which we produced below our full year target rate is a good outcome. Annualizing the first half EBITDA and taking the share price at the end of June, gives Yancoal an EV to EBITDA ratio of less than four times.
The profit after tax and operating cash flow tend to replicate the revenue and EBITDA profiles. The step down in the operating cash flow incorporates tax payments and the first half 2023 profile I mentioned earlier. It is over a year since we repaid the last of our interest-bearing loans. In less than three years, we repaid more than $3 billion of loans, transforming the capital structure of the company. These loan repayments saved us almost $300 million in finance costs last year and should save a similar amount this year. The small difference between the cash position of over $1.5 billion and the net cash position of $1.4 billion primarily relates to lease liabilities recognized on mining equipment. Yancoal has rewarded its shareholders well over the past six years.
We have distributed to shareholders $ 2.5 billion of unfranked and $ 1.8 billion of franked dividends, a total of $ 44.3 billion. This total is approximately 50% of our $ 8.7 billion market cap at the end of June, or closer to 60% if you add back the franking credits. As I mentioned at the start of this webcast, the board has not declared an interim dividend in respect of the six months on 30 June 2024. The retained cash gives us flexibility to consider potential corporate initiatives and may be distributed in the future if not utilized. Over the past 20 years, we have grown through acquisition and expansion. The most notable event in recent years was the acquisition of MTW and HVO in 2017, a transaction that transformed the company.
We have a very capable team that continually looks at growth opportunities for the business. At this time, we will not be drawn on speculation about specific scenarios. If events warrant disclosure, then we will inform the market in accordance with our regulatory obligations. Slide 23 has our operational guidance for 2024. These remain unchanged. At the start of the year, we noted that 35-39 million tons attributable saleable production guidance allows for some downside disruption events. Unfortunately, this would prove to be the case during the first half. However, like last year, our production is skewed to the second half, and we aim to operate at higher output levels similar over the rest of the year. We aim to bring cash operating costs per ton down and are aiming for 89-97 per ton for the full year.
Delivering the production uplift in the second half is necessary for our full year cost to fall within guidance. Our capital expenditure guidance is $ 650 million-$ 800 million. Some 2024 expenditure appears likely to slip into 2025. Accordingly, capital expenditure in 2024 is expected to land at the low end of guidance. Each year, we will continually balance volume, product quality, efficiency metrics, operating costs, and capital expenditure to deliver the best possible outcome. This year is no different in that regard. Our executive team and people on site are focused on maximizing the company's performance. The remainder of the slides contain appendices and additional information for reference, which I do not intend to speak to. I will now hand back to Victor so that we can commence the question and answer session.
Thank you. At this time, we'll conduct a question and answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by. We'll compile the Q&A roster. Once again, that's star one one for questions. Star one one. One moment for our first question. Our first question will come from the line of Peter Lindsay Wang from China International Capital Corporation. You may begin.
Hi, this is Lindsay from CICC. I have two questions for the company. The first one is, as Yancoal set up production-
Sorry, Peter, let me just interrupt for a second.
... Victor, Peter, could you control the sound? We're getting a very faint audio signal coming through on our line. Could I please ask you to either speak up or turn up the volume and then restart the question? Sorry for the interruption.
Hi, do you hear me?
That's a little better. Please go ahead, Peter.
Hi, do you hear me?
Yes, Peter, please speak up.
Hi, everyone. Can you hear me?
We can.
Yeah, so, well, I actually have two questions for the company. So, the first one is, has the company ever set up production guidance for each specific mine? If that's so, what would be the production profile from MTW and Hunter Valley Operations this year?
Good. Thanks, Peter. We don't normally break out our mine-by-mine production data, so no, we don't do that. We look at the group as a whole, and we report on the performance of mines, but not by breaking down to individual mine data.
All right.
An additional comment on that topic, Peter. One of the reasons we aggregate is we do often take the opportunity to combine and blend products from across multiple mine sites. So that's why we look at the collective production from the group as opposed to individual production at the mine site level.
All right. I see. Thank you. My second question is, in terms of the cost, cost of production, AUD 101 cash operating costs, is a bit higher than the full year guidance. So with the production ramp in the second half of the year, do you suggest that it's more comfortable that we should see the full year cash operating cost in the high end of cost guidance, if that's achievable?
Yeah. Thanks, Peter. Look, yeah, we are confident the second half is gonna be a very, very strong half. And as you're aware, our cost, our unit costs are driven very much by volume. At this moment in time, we would expect to be well within the range that we have got in our guidance. We don't expect any difficulty of achieving that. So, yes, we're expecting a very strong second half, as we had last year, to deliver that further cost reduction.
All right. Thank you. That's all my question.
Thank you.
Thank you. One moment for our next question. Our next question will come from the line of June Liu from Caitong Securities. Your line is open.
Yeah, you know, hello, management. Thanks for taking my question. I also have two questions. The first question is about the volume. We have guidance on the 35 million to 39 million tons targeted for the full year. And also believe that to achieve our cost reduction, it also depends on our volume increase. So which means we have to achieve half on half increase of our production volume in the second half, right? But so we're also seeing that in the previous second quarter report, we have seen a La Niña weather observed in Australia, and there are above average rain drop like rainfall in Australia.
My question is that, do we concern about this above average rain to affect our production? Can we share some color on how we prepare to achieve our production volume? Thanks.
Okay, thank you for that question. I'll sort of take it back to front and talk a little bit about the weather impacts and the fact that we invested last year significantly in water storage, but also pumping and facilities for dealing with higher-than-average rainfall events. That's what's helped us in this early part of this year. Yes, we've had rain, but there've been no significant issues with-
Yeah
... with the rain. We're confident now, going forward, that we have the facilities to deal with what we classify as more the last few years' average, rather than looking at the longer-term average. I think we're now very confident that we are dealing with rain a lot better. As I said, on the cost, and it's the same comment on the volume, we're very comfortable that we're well in the range of our guidance. We're expecting extremely strong second half of the year. It is all about where we start in our mining sequences at the beginning of the year, as to how the coal flows.
So over the full 12 months, we expect to have a very strong year, and we expect to have a very strong end to the year in this second half from a production and cost point of view.
Okay. Thank you. My second question is about the price. Yeah, we are seeing the thermal coal price is kind of slightly rebound, leading by the natural gas price globally. But we are concerned about we are seeing the metallurgical coal price, especially in China, has seen a lot of pressures. So could you please share some colors on your view on the global or the seaborne, the thermal coal and metallurgical coal price trend in the second half, and what we expect to see on the price trend?
Thank you for that question as well. And I'll give a bit of a general comment, but then I might hand over to Mark Salem, my EGM Marketing, to give you a bit more detail. I mean, we've been talking now for quite a while about certainly in the thermal coal market, the market being far more balanced. And yes, we're getting variations, and we're getting dips, and we're getting lifts, but they're not huge variations. They are moving within a range. And that... Well, we think that's all to do with the fact that the market, from a supply and demand point of view, is far more balanced than it has been in previous years. But I mean, that's a more general comment.
What I might do is hand over to Mark and let him put a bit more detail onto your comment about thermal and met coal.
Sure. Thanks, David. Thank you. Thank you for your question. I think, you know, slide seven in the presentation pack that we've just demonstrated just shows, in particular, in the thermal coal market, how balanced that market is. And you can see that both the main indices, the API 5 and the gC NEWC, there's been relatively very little volatility over the last 18 months and typical ranges. So that supports the comment that David made in relation to it being a very balanced market. In terms of moving forward, again, we're not seeing any significant changes in the marketplace from a demand and supply point of view.
So as long as there's no significant outbreak, we did see a spike in the gC NEWC prices as a result of some of the conflict in the Middle East and the impact that could have on gas. And there's issues like that that we just have to keep a very watchful eye on, but very hard to predict at the same point in time. In relation to the met coal market, the met coal market is still under a little bit of pressure in terms of the steel prices, and but it's holding up, and it's maintaining its position. And so moving forward, again, we're expecting a relatively balanced position moving forward.
Okay. Maybe I follow up one question on the met coal. In our... Also, the slide we have mentioned, India has the demand is lower during the second quarter, and the Japan import is also, like, weakening. And to receiving the China, the steel market is quite soft in the second quarter, right? So could you please share some colors on what we are seeing in the third quarter for the Japan or India? What we can expect on those demand change?
Yeah, look, at the moment, we follow the activity in the steel industry. The steel prices have softened a little bit, and that will have flow-on effects. But in terms of our met coal business, we're not expecting that to have a significant impact on our met coal pricing structures.
Understand. Thanks for the question.
Thank you. And as a reminder, that's star one one for questions, star one one. I'm currently not showing any questions over the phone lines.
Thank you, Victor. I'll move on to the questions submitted via the webcast. We see several questions coming through. Some of them are similar in nature or touch on similar topics. I'll amalgamate and combine some of the questions so that we can effectively answer the topics being raised. I'll start with the topics of dividends. There's several questions coming through on that front. Could we start with a reiteration of the decision made for the interim period and put that in context of past activities, and perhaps extend to a comment on the existing policy that we have in our company constitution?
Thanks, Brendan. This is Kevin, the CFO of the company. Maybe I can just first of all talk about the company's dividend policy, which is unchanged, very, very clearly. We still have the policy in our constitution, which is a 50% of free cash flow, and then all 50% NPAT, whichever is higher. Then referring to what we just announced last night, with a decision, no interim dividend distribution, I just wanna make this a. The point here is, this is a strategic decision from the board for the company, as what David mentioned earlier, to prepare for some corporate activities. And then now it's very much about just balancing between the dividend return and the strategic growth.
And also, we wanna reinforce the position on our dividend policy is about to maximize shareholders' value. So once again, this is about to balance a short-term dividend return with a long-term shareholders' value, potential growth. And then finally, I just wanna make the point, the cash clearly is still there. As you can see, there's close to $ 1.6 billion cash there. So the cash will be available potentially for future distribution. If the, you know, opportunity may not be available, then yes, will be opportunities for the money to be further distributed potentially. Thanks.
Thank you, Kevin. Continuing on the topics of dividends, with regards to the policy, could we clarify the policy does not specifically refer to interim periods or final periods, it applies on an annual basis, and therefore, there is flexibility within any discrete period?
Yes, we can confirm that.
To the ability that you can speak to forward events and subjects which are still subject to board decision, is there any outward-looking comment on dividends for the full year?
The policy, as we just mentioned, stay the same, is unchanged, but this is a board decision, as what we just mentioned, and the board will make the strategic view on the priority about our capital management. Thanks.
Thank you, Kevin. The discussion around dividends tends to lead into a secondary discussion around the alternative use of the cash. We've made some commentary through the presentation and the announcements released overnight, and again, in the webcast today. What capacity do we have to comment on the potential use of cash and strategic initiatives that might be pursued?
I think that it's really being in a strong position to take advantage of whatever opportunities might present themselves to us. It's not for me to comment really on specific situations that may be there. However, we're very conscious that there are opportunities out there. We want to be in a strong position. We want to be in a position where we can respond, and we want to be in a position where we can respond in a way where we can acquire, if they become available, assets that will add further value to shareholders' investments.
There's a question here which relates to past activities. The company's grown through acquisitions in the past. Is it pursuing similar styles of initiatives going forwards, or is it looking for broader scenarios to consider?
In answer to that question, we look at all opportunities that might present themselves, but of course, the last one, as we talked about earlier on, which was the acquisition of Mount Thorley Warkworth and Hunter Valley Operations, was a very, very successful acquisition of two very low-cost tier one operations. And of course, if those opportunities present themselves again, we'd be very interested to look at them. So, but yes, we have a broad view. We look around, we assess what's available, but at the end of the day, it's all about adding value to shareholders. So we'll be looking at what potential opportunities there are in the way of value add.
And on the concept of strategic initiatives, is there any capacity to comment on the magnitude or scope that the company possesses for strategic initiatives in... I expect the question is relating to a dollar value that the company could contemplate.
I'm not sure it's for us to put a dollar value on what we think we can and can't do. However, I think by looking at the strength of our balance sheet and looking at our position where we are debt-free with net cash, I think most analysts will be able to work out that we're in a very strong position to finance whatever opportunities present themselves at the moment.
And a similar question on this topic, but from a slightly different angle: With the cash retained, if it's not utilized for corporate initiatives, would there be alternate activities that might be considered, such as a buyback? That's something we have touched on in previous conversations.
Yes, the same topic was discussed previously. Right now, buyback is not being considered due to the free float liquidity concerns, and we will make this point again. Yeah, thanks.
Thank you. Interestingly, that topic of free float and liquidity draws us into the next area of conversation. The observation coming through that Yancoal is close to a 30% free float and has the potential for index inclusion, ASX 200 or better index inclusion. What are we able to say about that topic of free float and potential index inclusion?
This is Kevin again. Yes, we also noticed the free float is very close to 30%. Whether the company will be incorporated into the ASX 200, 300, is very much subject to, I say, S&P's assessment. The company is, you know, being wishful to see such thing happen, and we will be, you know, observing the market, and then hopefully we will see more free float available to the market. Thanks.
Thank you, Kevin. Turning slightly away from growth through outside or opportunities outside the company to those within the company. What observations can we provide on expansions or potential expansions that might exist within the existing portfolio of assets?
Yeah, thank you for that question. I think, as you all know, from some of our reporting, we have organic opportunities. We do have, at a couple of our big operations, especially Moolarben, areas where we are applying for the approvals to increase the reserve base of those, that mine. At our Mount Thorley Warkworth operation, we're in the final stages of a pre-feasibility value engineering exercise, looking at an underground operation off of Mount Thorley Warkworth, and we would hope to have that completed by the end of this year, and then, assuming that there was no fatal flaws identified, then we'd be looking to move into the final stages of feasibility of that.
So that would be a good opportunity for Mount Thorley Warkworth. It's good quality thermal coal, but also semi-soft coking coal, and would increase the life of that mining complex. So we do have a few opportunities from a coal point of view internally, and of course, potentially, we do have our renewable energy project at Stratford Mine, which is just closed, which is again looking at repurposing an old mine site at the end of its life.
Thank you, David. Before I continue on with the webcast questions, Victor, could I ask you if there are any further questions coming through on the phone line, please?
Once again, that's star one one for questions, star one one, and I'm still not showing any questions on the phone lines.
Thank you, Victor. I'll return to webcast questions. One coming through on the topic of coal markets. The question says, "Compared to our forecast from one to two years ago, has more thermal or met supply come into the market than we might have expected? And does this change the way we think about coal markets going forwards?" I'm mindful that we don't have specific coal market forecasts that we share publicly, but in the context of our views on the coal markets, perhaps I'll turn to Mark Salem for some comments on what we've seen in evolution over the last one to two years.
Sure. Thanks, Brendan. I think in terms of our production profile over the last one or two years, it's naturally been impinged by COVID and heavy rains, and therefore has suppressed the production profile, and so therefore coming out of the rains, and as David mentioned, our water management plan, we were prepared for the growth in our production for this year in particular, so in terms of our marketing plan and our marketing strategy, yes, we did have a plan to ensure that our sales are well-placed and are being well-placed into the marketplace, in terms of accommodating that change in production profiles.
Thank you, Mark. On the topic of coal markets, and particularly coal prices, that we realized, there's an observation that we reported a realized coal price of $180 per ton in our 2Q second quarter production report. And then in the first half result, the average realized price is revised to $176 per ton. Could I turn to Mike for a comment on the provisional pricing impact, please?
Yeah, thanks, Brendan, so I think as most people understand, our contracts or many of our contracts include provisional pricing, where we receive revenue based on that provisional price, and then where the price is linked to an index, or a later price negotiation, a final agreed price is settled on at some point later in time. At the time of the Q2 report, we only report the revenue based on the invoiced sales at that point in time, but as part of our thirty June half-year accounts, we're required to include an estimate of what we think the difference between the provisional and that final estimate will be, and that $4 price difference takes account of that expected differential.
Okay. And to clarify, this is a regular and ongoing event, perhaps more noticeable in this particular period than it has been at other times. Is that correct? Thank you, Mike. Victor, I'll give you one last opportunity for any questions coming through on the phone line.
Once again, that's star one oh one for questions, star one oh one, and still no questions over the phone lines.
Thanks, Victor. One of the advantages of having a real-time webcast and shareholder interaction, we've got some observations coming through on the initial share price reaction to the announcements overnight. The initial observation internally is all the cash is retained, it still sits within the company. But perhaps we could reiterate and revisit the commentary around the utilization of the cash, the flexibility it provides us going forward, and what we have achieved in past years through corporate initiatives.
Thanks, Brendan. I've touched on this once, but I think it's well worth reiterating it. I mean, we and I think most shareholders like to see growth in our company, but we only grow in a way that adds value to our shareholders. And that's if you look back and look at the 2017 and how that transformed Yancoal at the time, and the value that's brought to shareholders over the last few years. What we're doing at the moment is strengthening ourselves. We've got a strong balance sheet. We've got no debt. We are retaining cash. There are many opportunities out there at the moment that may or may not present.
And we may or may not be involved, but we need to be in a very strong position to do it, because we think they will add significant value to shareholders going forward. If they didn't and don't even eventuate, then the cash is still in the business. It is still shareholders' cash, and of course, we will look at that going forward, depending on what we do later this year. And there is the opportunity and the potential that it can be returned to shareholders through dividends or whatever at the end of this year.
However, our focus at the moment is keeping ourselves in a strong position, because we need to be able to respond and be competitive in whatever the market opportunities are.
Thank you, David. In regards to market opportunities, earlier in the presentation, we highlighted the strength of our existing asset portfolio, particularly our position in the thermal coal market with those large-scale, low-cost assets, which drive the business through all parts of the coal cycle. The question coming through is: Do we have any preference with regards to metallurgical or thermal coal opportunities going forwards?
I think we've made it quite clear over recent times that our preference would be for metallurgical assets if they became available. We do look at other thermal assets, but at the end of the day, we've got, in my opinion, the three best thermal coal mines in Australia, and we're already the owner of those mines, and they are our three Tier 1 operations that account for around 80% of everything we do. What we would like to do, though, is balance that portfolio. We've had quite a few questions about thermal and met coal markets this morning, and I think one of the things we'd like to do is to put some balance in there and increase our exposure to met coal.
So we are looking for the same sort of opportunities that we developed when we acquired the Coal & Allied mines back in 2017, and we're looking for that similar sort of opportunity in met coal to try to balance our portfolio.
And on that concept of potential opportunities, with regards to funding scenarios, is there any comment we can make on the level of support we anticipate from the existing shareholder base? And whether we would have an appetite for debt finance, having recently removed all of our corporate debt, save for those finance lease liabilities you mentioned?
That's a very good question. From a shareholder support perspective, if we look at Yancoal's history, there is very consistent shareholder strong support to the company. Such support will, I believe, to be there all the time. And then, from the debt funding perspective, the company currently, as David just mentioned, is debt-free, which means there's a strong capacity available to the company. We may or may not use it, but it really depends on the scenario or any particular opportunity. If we feel that's the way we should pursue, and the way as a company, as a management team, we will explore different possibilities. Thanks.
Thank you, Kevin. We're getting towards the end of the questions. One in relation to a timeline horizon. Do we have any capacity to make an observation on whether we would have resolution on various scenarios ahead of the full year results due next February, and the board decisions that would be made at that time with regards to utilization of existing cash?
I think it's a little bit early for us to discuss what's gonna be happening in the next six months, and how that's gonna impact our full year reporting. If there's anything that we think we should be disclosing to shareholders, then we will certainly be disclosing them to shareholders. Depending on what happens in that period, really will depend how the board decides to make a decision on future dividends and capital management within Yancoal. But certainly, if there is anything that we think we need to inform shareholders of, we will do that through our normal disclosures.
Thank you, David. I've worked through all the questions on the webcast, having amalgamated and bundled them up as appropriate. Victor, could I turn back to you one last time to confirm if there are any phone line questions before I hand to David for closing remarks?
I'm not showing any phone line questions at this moment.
Okay. Thank you, Victor. David, closing remarks, please.
Well, thank you for everyone attending this morning's teleconference, and listening to Yancoal's first half results. I believe we've had a very strong performance in this first half. We have had a few challenges. And we've talked quite a bit about the market, and yes, it has softened. But if you look at the market, it's still very strong if you compare it to historic averages. So even though it's softened year on year, it's still a very competent, very strong, supportive market. I think the other point to note out of this morning is the strength of our three Tier 1 operations, and those mines are three of the most efficient mines in Australia. And the slide that was in the pack gives a good indication of where they sit.
But they drive our low cost base, and I think what you'll see is that cost base will continue to come down over this second half of the year, as we've forecasted it will. And I think if you do your comparisons across the industry, you'll see that we're sitting at the bottom end of the cost curve. Which is the only place to be, 'cause no matter what happens to the market, if you're at the bottom, the lowest point of the cost curve, then you're in the strongest position. So I want to thank everybody again for coming this morning. Yancoal is in a strong financial position. We've talked about our balance sheet, we've talked about the cash that we're carrying. If...
And it puts us in a very strong position to take advantage of what opportunities may present to us during this next six months. So thank you again, and I hope you all have a good day.
Thank you, David. Could I hand back to Victor to close the call?
Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.